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AAPA 273 — Annuity Principles and Products

Course Type: Traditional Designation Course
Topics: Retirement & Annuities
Designations: AAPA, ACS
Language: English


AAPA 273 introduces the principles of annuities, the annuity contract process, and the major types of annuity products. The course includes information on individual and group annuities, the marketing of annuities, and the taxation and regulation of annuities.


  • Annuity Basics
  • The Annuity Contract
  • Fixed Annuities
  • Variable Annuities
  • Investment Basics
  • Individual and Group Annuities
  • Taxation of Annuities
  • Regulation of the Annuity Industry
  • Marketing and Distributing Annuities
  • The Future of Annuities

CHAPTER 1: Annuity Basics

Key Figures in an Annuity Purchase

Contract Owner





Types of Annuities

Immediate and Deferred Annuities

Single-Premium and Flexible-Premium Annuities

Fixed and Variable Annuities

Individual and Group Annuities

Qualified and Nonqualified Annuities

The Annuities Market

Changing Demographics

Changing Retirement Income Needs

Concerns About Current Retirement Savings Programs

Savings and Money-Management Features of Annuities

CHAPTER 2: The Annuity Contract

Formation of the Annuity Contract

The Completed Annuity Application

The Initial Premium

Contract Provisions

Entire Contract Provision

Administration of Annuities During the Accumulation Period

Crediting Earnings

Fees and Charges

Payment of Death Benefits


Nonannuitized Payout Options

Annuitized Payout Options

Payout Options for Variable Annuities

Calculating Annuity Payments

CHAPTER 3: Fixed Annuities

Traditional Fixed Annuities

Principal Guarantees

Interest Rate Guarantees

Payout Guarantees

Inflation Erosion

Equity-Indexed Annuities

Principal Guarantees

Interest Rate Guarantees

Vesting Rights

Market Value Adjusted Annuities

Investment Options

Market Value Adjustments

Future of the Fixed Annuity Market

CHAPTER 4: Variable Annuities

Investment Risk and Return

Subaccount Investments

Asset Classes

Asset Allocation

Subaccount Values

Contract Values

Special Services

Automatic Dollar Cost Averaging

Transfers Between Subaccounts

Automatic Rebalancing

Guaranteed Living Benefits

Guaranteed Death Benefits

CHAPTER 5: Investment Basics

Investment Principles

Risk and Return

Time Value of Money

Dollar Cost Averaging

Diversification and Asset Allocation

Investment Features of Variable Annuities and Other Financial Products

Investment Security

Access to Funds

Tax Advantages

Payout Options

CHAPTER 6: Individual and Group Annuities

Individual Annuities

Saving for Retirement

Managing Lump Sum Distributions

Funding Education

Group Annuities

Qualified Retirement Plans in the United States

Registered Retirement Plans in Canada

Nonqualified Retirement Plans

CHAPTER 7: Taxation of Annuities

U.S. Income Taxes

Income Taxes on Annuity Premiums

Income Taxes on Annuity Earnings

Income Taxes on Annuity Benefit Payments

Income Taxes on Withdrawals

Income Taxes on Loans

U.S. Penalty Taxes

U.S. Estate Taxes

Other U.S. Taxes on Annuities



Canadian Taxation of Annuities

CHAPTER 8: Regulation of the Annuity Industry

U.S. State Regulation

Solvency Regulation

Market Conduct Regulation

U.S. Federal Regulation

Securities Regulation

Canadian Provincial Regulation

Solvency Regulation

Market Conduct Regulation

Canadian Federal Regulation

CHAPTER 9: Marketing and Distributing Annuities

Market Selection

Product Development

Product Planning

Comprehensive Business Analysis

Product Technical Design

Product Implementation

Sales Monitoring and Product Review

Financial Design

Product Promotion

Personal Selling


Sales Promotion and Marketing Materials


Product Distribution

Personal Selling Distribution Systems

Financial Institutions Distribution Systems

Direct Response Distribution Systems

CHAPTER 10: The Future of Annuities

Economic Changes

Market Volatility

Corporate Changes

Demographic Changes

Aging of the Population

Changing Employment Profile

Slower Wage and Earnings Growth

Regulatory Changes

Industry Consolidation

Tax Reforms

Reclassification of Annuities

Social Security Changes

Tax Increases

Benefit Reductions

Program Privatization

Industry Response

New Fixed Annuity Products

New Equity-Indexed Annuity Products

New Variable Annuity Products

Financial Services



Course Format

AAPA 273 will be offered only through the end of 2014.

Exam Format

The AAPA 273 exam has 50 questions and a time limit of 2 hours. The exam is available via I*STAR and Prometric.

Study Materials

Annuity Principles and Products, Second Edition (LOMA, 2004)
     ISBN 1-57974-194-0
     PBD Order # 273-10-04

Test Preparation Guide for AAPA 273 (LOMA, 2004)
     ISBN 1-57974-195-9
     PBD Order # 273-40-04   

Ordering printed study materials

For the United States and Canada, you can order study materials for designation courses through PBD by using the form and information below:


PBD Worldwide
P.O. Box 930108
Atlanta, Georgia 31193-0108
Tel: 1-800-887-3723 or 770-280-4178
Fax: 770-280-4150

Additional textbook order forms

Forms include applicable mailing and contact information


Note: Most of the courses require a textbook and a Test Preparation Guide (TPG). Be sure to order all assigned materials as listed in the Education and Training Catalog. Students are responsible for ordering the correct study materials.

How to Enroll

Traditional Course Access

LOMA's traditional-access designation courses teach industry topics using printed study materials and proctored examinations. Study materials include print textbooks and Test Preparation Guides (TPGs) with printed and electronic versions of the course's Practice Questions and Sample Exam. Enrollment for an I*STAR, Prometric or Paper exam is purchased separately through LOMANET.

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