Certified Annuity Specialist (CAS)

What Is a Certified Annuity Specialist (CAS)?

A certified annuity specialist (CAS) is a professional who holds a certification indicating expertise in fixed-rate and variable annuities. Individuals with the CAS designation can offer clients expert advice in regard to investment opportunities in annuities that provide a stream of income to those who are nearing or in retirement. The cost of the CAS is $1,365, which includes registration, textbooks, and exams.

Understanding Certified Annuity Specialist (CAS)

The CAS designation is issued by the Institute of Business & Finance (IBF) through a six-module self-study program and requires 30 hours of continuing education every two years. The course includes three exams and a case study administered by the Financial Industry Regulatory Authority (FINRA). According to FINRA, a candidate must complete the following requirements to obtain the CAS designation:

The IBF created the designation in 2006 to focus on building financial advisors’ knowledge of annuities. The certification boosts an individual’s knowledge of fixed and variable annuities, as well as annuity contracts, titling options, living benefits, and litigation issues. 

The IBF calls the course intermediate-to-advanced and can be beneficial for financial advisors, as well as financial planners, bankers, brokers, accountants, or money managers. The course also focuses on portfolio theory, which can be useful for analyzing annuity products. 

Requirements for Selling Annuities

While the CAS certificate represents a high level of expertise, it is not a requirement for the sale of annuities. Only licensed insurance brokers may sell fixed-rate annuities. Each state has different regulations for fixed-rate annuities, and these rules are often based on the recommendations of the National Association of Insurance Commissioners.

Variable-rate annuities are further regulated by the SEC and FINRA, and brokers are required to have both the Series 6 and Series 63 securities licenses in addition to state life insurance requirements.

Variable-rate annuities are legally considered securities and are regulated by both the SEC and FINRA. In order to sell variable rate annuities, an insurance broker must also have an appropriate securities license.

Special Considerations 

An annuity contract is a written agreement between an insurance company and a customer outlining each party's obligations in an annuity agreement. Such a document will include the specific details of the contract, such as the structure of the annuity (variable or fixed), any penalties for early withdrawal, spousal and beneficiary provisions — such as a survivor clause and rate of spousal coverage, and more. More broadly, an annuity contract may simply refer to any annuity.

An annuity contract is beneficial to the individual investor in the sense that it legally binds the insurance company to provide a guaranteed periodic payment to the annuitant once the annuitant reaches retirement and requests commencement of payments. Essentially, it guarantees risk-free retirement income.

Annuities can be particularly difficult for consumers to understand. They're not insured by the government and instead backed by the insurance companies who sell them. This means your stream of income is only as good as the company that issues the annuity. Several independent companies, such as A.M. Best and Moody's, provide insurer financial stability ratings and give the public free access to this information.