Monday, December 19, 2011

Kentucky CE Update (Annuities)

Speaking of annuities, Kentucky has recently added a new suitability requirement to its Continuing Education regulations. Ohio's had that a little while, as well.

Annuities aren't for everyone, but they do have a place in many folks' financial plans. Growth in an annuity, unlike a CD, is tax-deferred, which can allow for higher growth. And one can "annuitize" an annuity, which can provide for a lifetime income stream.

There are some downsides as well, of course: significant penalties if one cashes out too early, and the taxes are deferred, not eliminated.

The CE requirement is there to make sure that agents are explaining these advantages and disadvantages, and that the client understands all the risks, benefits and rules of what could be a major purchase. Above all, it's designed to ensure that such purchases are appropriate.
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