FINRA Series 6 Investment Company and Variable Contracts Products Representative ExaminationProcessing Customer Orders and TransactionsEasy
A client requests to change the beneficiary on their variable annuity contract. Which of the following is the most appropriate action for the registered representative?
- AInform the client that beneficiary changes are only permitted during the annuity's annuitization phase.
- BProvide the client with the necessary forms and advise them to submit the request in writing to the insurance company.
- CVerbally confirm the change with the client and update their records.
- DMake the change directly in the client's online portal using their credentials.
Show answer & explanationAnswer & explanation
Correct answer: B. Provide the client with the necessary forms and advise them to submit the request in writing to the insurance company.
Beneficiary changes for variable annuities (and most financial contracts) require written instructions from the owner to the issuing insurance company. The registered representative's role is to facilitate this process by providing forms and guidance, not to make the change directly or verbally accept it.
Why the other options are wrong
- A. Beneficiary changes can typically be made at any time before annuitization or death, not just during the annuitization phase.
- C. Verbal instructions are insufficient for a legal change of beneficiary; written documentation is required.
- D. Making changes directly using client credentials is a breach of security and firm policy.
Variable Annuity Beneficiary Change
To change a beneficiary on a variable annuity, the contract owner must submit a written request to the issuing insurance company.
- Requires owner's signature and often a witness.
- Takes effect upon receipt and approval by the insurance company.
- RR facilitates the process, does not execute the change.
Memory trick: Beneficiary's Blessing: Written Wishes, Not Words.