1. Internal Replacements

2. Objectives Review definition of an Internal Replacement
Identify the Good Order Requirements for Internal Replacements along with any state specific forms needed
Review step by step procedure for handling an Internal Replacement case including the estimation process
Locate, interpret, and recognize any exceptions to the replacement grid
Identify and resolve NIGO issues

3. Internal Replacement
An internal replacement occurs when an existing annuity contract or life insurance policy is being replaced by a new annuity or life insurance policy from the same or affiliated financial services company
An internal replacement takes place when an annuity or life insurance policy from company A is being replaced by another annuity or life insurance policy from company A, or one of their affiliates.
An internal replacement occurs when an Prudential Annuities Life Assurance Corporation contract replaces an Prudential Annuities Life Assurance Corporation contract, when a Prudential contract replaces a Prudential contract, or when Prudential replaces Prudential Annuities Life Assurance Corporation or vice versa. Pruco Life Insurance Company (in New York, Pruco Life Insurance Company of New Jersey) AND The Prudential Insurance Company of America. All are Prudential financial companies.
ALWAYS consult the website to see if the internal transfer can take place for the Prudential Annuities Life Assurance Corporation products. There are specific rules in place provided by the Annuity Product Department that prohibits some internal transfers from being accepted.
We will look at the website in a little while.

4. Good Order Requirements
Application
TOA paperwork completed with the old contract information
Allocation Page
State specific forms (if applicable)
State Replacement form (if applicable)
Internal website
For the state specific forms and state replacement form you need to consult the replacement chart to verify the states which need the information.
(Review replacement chart again)
Point out CA for Statement of Values
FL for Rights to Disclosure and Comparative Information form(if specified by client) The form is on our website and FP can fax that into us. Both forms are required ONLY if the client indicates yes on the FL SRF.
SC for the note in the internal transactions require box
NY is part of Reg.60
We will look at the internal website more closely in a few minutes.

5. Handling Internal Replacements
For Estimation - Clone the New Business case to Financial Control Estimation
CFE Notes for Estimation Clone:
Reason for estimation
Timeframe for estimation
Effective Date
Transfer from contract xyz to contract abc
Allocations
Dollar Amount
Funds coming from an Annuity the status of the New Business case will be CHANGED to Internal Funds Needed
Funds coming from a Mutual Fund, Life Insurance, or Command Account the New Business case will be CLONED to TOA
Funds coming from a Securities Account the New Business case will be CLONED to Pru Securities Needed
Review the step by step procedure.
You MUST clone the case to Financial Control Estimation as the internal replacement is actually a 2 day process. We clone to estimation because we do not want the client’s funds to be uninvested for any period of time.
(Go over Quick hit List)
The notes in CFE need to include:
Reason for estimation – The reason you will write for an internal is just that internal transfer
Timeframe for estimation – The default is 1 day. If you are cloning the case after 4pm you will need to estimate for 2 days.
Effective Date – This is the date the case became in good order
Transfer from contract xyz to abc – This is where you indicate the contract number the money is coming out of and going into
Allocations – This is where you are going to list ALL the allocations and percentages the client is in. If the client is in an asset allocation model you just need to list the name of the model.
Dollar Amount – You will get this number from a couple of different places. The first place is the Adjusted Policy Total in the contract values screen in VPAS. If it is a partial transfer then you will get the amount from the TOA paperwork.
You will CHANGE the status of the New Business case to Internal Funds Needed when the funds are coming from an Annuity.
You will CLONE the New Business case to TOA and then open the TOA clone and change the status to Internal Funds needed when the funds are coming from a mutual fund, life insurance or command account. You will pend the New Business case waiting funds. Pend for 6 months.
You will CLONE the New Business case to Pru Securities Needed when the funds are coming from a Securities account.

6. Internal Replacement Assessment Grid
Located in AKC, Annuities Forms Pages, Internal Rollover
To access the Internal Replacement Assessment Grid you need to open AKC, on the left column there is a link that reads Annuities Forms Page which you will click on, then scroll to the bottom where the tab reads Internal Rollover.
This will bring you to the Internal replacement assessment grid. Here is a screen shot of the Full rollover during cdsc
Let’s review the grid on the computer
How you can tell if a contract is still in CDSC go to VPAS, Contracts, Contract Values and in the box labeled Surrender Charges. If there is a dollar amount in that field then the contract is still in surrender.

7. Exceptions for Replacement Grid
The three most common exceptions to the answer of “not allowed” on the replacement grid are:
Consolidating all contracts to reduce fees
Opened incorrect product (FP)
Benefit on new contract can’t be added post issue
There are 3 common exceptions to the answers on the grid. Those are
Consolidating all contracts to reduce fees – This is just that. The client has a number of accounts with us and to help reduce fees to the client they are consolidating to 1 contract.
Opened incorrect product (FP) – This is when the FP opened an incorrect product and we have received a letter of indemnity.
Benefit on new contract can’t be added post issue – This is what it says. The benefit elected on the new contract can’t be added to the old one.
The benefits that can’t be added post issue are All Death Benefits, GMIB, and GMWB

8. NIGO Most common NIGO issues are: Rollover not allowed
TOA paperwork is missing or incomplete
Missing forms
NQ is not like for like
The most common NIGO issues are:
Rollover not allowed – FP tries to do a transfer when the replacement grid says they can’t. This is a call out to the FP first asking what the purpose of the transfer is if they did not state it on the application. If the FP requests an exception you can send for one. Be aware the exception may be denied.
TOA paperwork is missing or incomplete – The FP still needs to complete the correct sections of the TOA paperwork. We can take the correction via fax with the client’s initials.
Missing Forms – This is any forms. If there is a death claim involved then you need to make sure the death claim paperwork is there. Also any other forms. We will accept these forms via fax.
NQ is not like for like – IF the FP decides to change the old contract then they need to fax in an Annuity life and change form. If the FP is changing the new contract then we need the application corrected, initialed by the client and faxed in.

9. Thank You
Investors should consider the contract and underlying portfolios’ investment objectives, risks, and charges and expenses carefully before investing. This and other important information are in the prospectuses, which can be obtained from our National Sales Desk. Have your clients read them carefully before investing.
 All guarantees are based on the claims paying ability of the issuing company. Guarantees do not apply to the investment performance of safety of underlying sub-accounts in the variable annuity. Annuity contracts contain exclusions, limitations, reductions of benefits and terms for keeping them in force. Your licensed financial professional can provide you with complete details.
All products are not available in all states.
Annuities are issued by Pruco Life Insurance Company (in New York, Pruco Life Insurance Company of New Jersey), Newark, NJ and The Prudential Insurance Company of America, Newark, NJ, and Prudential Annuities Life Assurance Corporation, Shelton, CT. Variable annuities are distributed by Prudential Annuities Distributors, Inc, Shelton, CT. All are Prudential Financial companies..
Prudential Financial and the Rock logo are registered service marks of The Prudential Insurance Company of America and its affiliates.