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AAPA 323 — Regulation and Taxation of Annuities

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


AAPA 323 describes the state and federal laws and regulations governing insurance companies, producers, and annuity products in the United States and how insurers comply with these laws and regulations. The text also describes how income, gift, and estate taxes affect annuities.


  • Introduction to Annuity Regulation
  • State Regulation of Insurance Companies
  • State Regulation of Insurance Operations
  • State Regulation of Producers and Products
  • State Regulation of Insurer Solvency
  • State Regulation of Market Conduct
  • Federal Regulation of Annuities
  • Taxation of Individual Nonqualified Annuities

Module 1: Regulation of Insurance Company Structure and Operations

Chapter 1: Introduction to Annuity Regulation

The Evolution of Insurance and Annuity Regulation

Interstate or Intrastate Commerce

Insurance or Financial Services

Structure of State Regulation

State Regulatory Systems

National Association of Insurance Commissioners

Scope of State Insurance Regulation

Federal Regulation

Scope of Federal Insurance Regulation

Regulatory Compliance and Ethics

The Compliance Function

Improving Industry Ethics

Chapter 2: State Regulation of Insurance Companies

Regulation of Insurers

Formation of an Insurance Company

Incorporation Requirements

Licensing Requirements

Unauthorized Insurers

Regulation of Other Insurance Organizations


Third Party Administrators

Regulation of Insurance Holding Company Systems

Types of Holding Company Systems

Advantages of Holding Company Affiliations

State Insurance Holding Company Laws

State Regulation of Bank Insurance Activities

Chapter 3: State Regulation of Insurance Operations

Antifraud Regulation

Fraud Prevention Requirements

Reporting Requirements

Customer Privacy Regulation

State Privacy Acts

Privacy Requirements

Customer Access to Personal Information

Rules for Health Information

Enforcement Provision

Regulation of Claim Practices

Claim Investigation

State Unfair Claims Settlement Practices Acts

Regulation of Complaint Handling

Responding to Complaints

Complaint Reporting Requirements

Module 2: State Regulation of Insurance Business

Chapter 4: State Regulation of Producers and Products

Regulation of Producers

Types of Licenses

Licensing Requirements

License Issue

License Suspension or Revocation


Regulation of Annuity Products

Contract Form Requirements

Contract Provision Requirements

Contract Value Requirements

Group Annuity Contracts

Regulation of Market-Linked Annuity Products

Market Value Adjusted (MVA) Annuities

Equity-Indexed Annuities (EIAs)

Chapter 5: State Regulation of Insurer Solvency

Tracking Insurer Solvency

The Balance Sheet

The Income Statement

Reporting for Stakeholders and Regulators

The Annual Statement

The Annual Report

Solvency Requirements

Reserve Requirements

Asset Requirements

Capital and Surplus Requirements

Monitoring Insurer Solvency

IRIS Ratios

FAST System

Financial Condition Examinations

Regulatory Action in the Event of Impairment or Insolvency

Guaranty Associations

The Role of Guaranty Associations in Insolvencies

Multistate Insolvencies

Guaranty Fund Limitations

Insurer Compliance Responsibilities

Chapter 6: State Regulation of Market Conduct

Regulation of Insurer and Producer Business Practices

Unfair Sales Practices

Unfair Financial Planning Practices

Unfair Replacement Practices

Regulation of Annuity Marketing

Annuity Advertising Requirements

Annuity Disclosure Requirements

Annuity Replacement Requirements

Annuity Suitability Requirements

Market Conduct Examinations

Examination Scheduling

Types of Examinations

Scope of Examinations

The Examination Report

Module 3: Federal Regulation and Taxation of Annuity Products

Chapter 7: Federal Regulation of Annuities

Federal Regulation of Financial Business Practices

Regulation of Investment Practices

Regulation of Corporate Accounting Practices

Regulation of Illegal Money Laundering Practices

Federal Regulation of Market Conduct



Dispute Resolution

Advertising Materials and Sales Literature

Product Suitability

Federal Regulation of Annuity-Based Retirement Plans

Individual Retirement Annuities

Group Retirement Plans

Chapter 8: Taxation of Individual Nonqualified Annuities

Income Taxes

Income Taxes on Annuity Premiums

Income Taxes on Surrenders and Exchanges

Income Taxes on Withdrawals

Income Taxes on Annuity Earnings

Income Taxes on Periodic Income Payments

Gift Taxes

Exclusions and Deductions

The Unified Credit

Tax Code Changes

Calculating the Gift Tax

Annuities as Gifts

Estate Taxes

Calculating Estate Taxes

Annuities Owned at Death



Course Format

AAPA 323 will be offered only through the end of 2015.

Course Portals include the following elements:

  • PDFs of the assigned course materials that can be printed or read online
  • The same interactive Practice Questions and Sample Exams currently found in LOMA Test Preparation Guides (TPGs)
  • Recommended study plans to help learners set goals and manage their study schedule
  • A variety of additional media-oriented features designed to enhance the study and review process

Exam Format

The AAPA 323 exam has 50 questions and a time limit of 2 hours. The exam is available in I*STAR and Prometric only.

Study Materials

Regulation and Taxation of Annuities, Third Edition (LOMA, 2012)
ISBN 978-1-57974-394-9

Test Preparation Guide for AAPA 323 (LOMA, 2012)
ISBN 978-1-57974-395-6

Optional printed textbook (not included in bundled fee)

Regulation and Taxation of Annuities, Third Edition (LOMA, 2012)
ISBN 978-1-57974-394-9
PBD Order # 323-10-12

About Bundled Study Materials

Some courses ("bundled courses") include study materials with your enrollment. A growing list of English-language courses include access to bundled study materials.

For some of these courses, once you enroll, you gain access to the study materials through your My Learning page in LOMANET. These include the Course Portal courses and the Need 2 Know courses.

How to Enroll

Enrolling for Exams and Bundled Courses

LOMA requires proctored examinations for many of its professional designation courses. Exams are administered in LOMA member organizations and in independent testing locations. This section provides information about exam formats, enrollment procedures for both exams and bundled courses, and exam fees.

LOMA exams vary in length from two–three hours. Consult your Test Preparation Guide (TPG) or see the Designation Study Materials Roadmap for specific information about the length of your exam. As new or revised LOMA courses are released, the number of examination questions for some course examinations may change. If you enroll for a bundled course delivered through a LOMA Course Portal, the assigned study materials are included in your enrollment and are accessible via the Course Portal. Your enrollment process will depend on the type of examination you choose to take:

LOMA offers two options for exam enrollment:

  • Online enrollment via LOMANET, our Internet-based education administration system
  • Enrollment forms for paper exams, for use by independent students only, can be found here.

I*STAR and Paper Exam Center Directories for testing at third-party locations


Students who fail exams must pay full dates to retake the exams, in most cases. However, bundled courses (those courses that include exam fees and study materials) have a reduced rate to retake the exam. See LOMA’s Education & Training Catalog for fees.

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