FINRA Series 6 Investment Company and Variable Contracts Products Representative ExaminationProcessing Customer Orders and TransactionsMedium
A client with a variable annuity contract wants to change the designated beneficiary. Which of the following statements is true regarding this request?
- AThe client must surrender the existing contract and open a new one.
- BThe change typically becomes effective upon receipt of written notification by the insurance company.
- CA new prospectus must be issued to reflect the change.
- DThe change requires the approval of a FINRA principal.
Show answer & explanationAnswer & explanation
Correct answer: B. The change typically becomes effective upon receipt of written notification by the insurance company.
Changing a beneficiary on a variable annuity is generally a non-financial transaction that becomes effective upon written notification to and receipt by the insurance company. It does not require a new prospectus, principal approval, or surrendering the contract.
Why the other options are wrong
- A. This is incorrect; beneficiary changes are administrative and do not require a new contract.
- C. A new prospectus is not required for a beneficiary change.
- D. While the representative may assist, principal approval is not required for a beneficiary change.
Variable Annuity Beneficiary Change
An administrative request to alter the designated recipient of death benefits on a variable annuity contract.
- Non-financial transaction.
- Requires written request to insurer.
- Effective upon insurer's receipt/recordation.
Memory trick: Write it, send it, then it's done.