a variable annuity has which of the following characteristics

a variable annuity has which of the following characteristicsrok aoe commanders

C) IRAs. Life income riders are best suited for those who anticipate a lengthy retirement and are generally not yet retired when making the VA purchase. The features of variable deferred annuities are many. The creation of an estate. D)the rate of return is determined by the underlying portfolio's value. Therefore, ordinary income taxes will apply to the entire $10,000. C)Money market fund. Vaccine has decreased the incidence. When a partial withdrawal is made from an annuity, the earnings are considered to be taken out first for tax purposes (or LIFO). "Variable Annuities: What You Should Know," Pages 67. Explain what is meant by positive and negative A the safety of the principal invested B the yield is always higher than bond yields. Of the four client profiles below which might be the best suited for a variable annuity recommendation? Reference: 12.3.2.4 in the License Exam. Once the cost basis is reached, any further withdrawals are a nontaxable return of principal. The number of accumulation units is always fixed throughout the accumulation period. A) a minimum rate of return is guaranteed. How does an indexed annuity differ from a fixed annuity? Securely download your document with other editable templates, any time, with PDFfiller. DR:BASSANT ADEL 9 QUIZ CH 6 Choose the correct answer: 1-Insurance policy benefits are classified on an insurance company's balance sheet as A. liabilities, because the insurance company may have to pay out the benefits B. assets, because policy benefits are valuable to the company C. liabilities, because customers may fall behind on their premium payments D. assets, because policy benefits . B) The policyowner. Facebook reports that 70%70 \%70% of their users are from outside the United States and that 50%50 \%50% of their users log on to Facebook daily. A)the yield is always higher than mortgage yields. For example, when paying rent, the rent payment (PMT) Reference: 12.1.2 in the License Exam. If a 42-year-old customer has been depositing money in a variable annuity for 5 years, and he plans to stop investing but has no intention of withdrawing any funds for at least 20 years, he is holding: Reference: 12.3.3 in the License Exam. Your 65-year-old client owns a nonqualified variable annuity. Your 65-year-old client owns a nonqualified variable annuity. Contributions to a nonqualified variable annuity are not tax deductible. Question #27 of 48Question ID: 606818 B) The policyowner. B)suitable regardless of funding sources B)part earnings and part cost basis ($5,000) to a stock fund. A) be paid to a designated beneficiary. Sample problems from Chapter 9. . B) fixed in value until the holder retires. Reference: 12.1.4.2 in the License Exam. B)each annuity unit's value varies with time, but the number of annuity units is fixed. \hspace{10pt} State unemployment (employer only), 3.8%3.8\%3.8% D) Any time before the accumulation period. Your customer in his early 30s has received a modest inheritance from a relative. D) A 10% penalty plus the payment of ordinary income tax on funds withdrawn in excess of the owner's basis. A. Assuming that the payroll for the last week of the year is to be paid on January 444 of the following fiscal year, journalize the following entries: **Because common stocks are not fixed dollar investments, they have the opportunity to keep pace with inflation. B) It will be lower. B)value of annuity units. D)suitable due to the relative safety of the investment. the SEC. A)accumulation shares. Your customer is interested in a variable annuity but is unclear on some of the details regarding different specifications and riders that can be attached to the contract. If a 42-year-old customer has been depositing money in a variable annuity for 5 years, and he plans to stop investing but has no intention of withdrawing any funds for at least 20 years, he is holding: Reference: 12.3.1 in the License Exam, Question #30 of 48Question ID: 606833 A separate account will invest in a number of different securities. A) a lifetime withdrawal benefit (LWB) or lifetime income benefit will make a periodic payment even if the account balance falls to zero Do homework Doing homework can help you learn and understand the material covered in class. A) I and IV. Nicks Enterprises has purchased a new machine tool that will allow the company to improve the efficiency of its operations. The separate account is NOT likely to invest in: An important basic characteristic of common stocks that makes them a suitable type of investment for the separate account of variable annuities is: e) Are From the United States and Log on every day independently? 222. Diagnosis is made by punch biopsy. Reference: 12.1.2 in the License Exam, Question #23 of 48Question ID: 901858 Which of the following is not a characteristic of a program module? a. Fixed annuities. Job Classification: Corporate - Legal and Compliance. \hspace{7pt} b. January 444, to record the employers payroll taxes on the payroll to be paid on January 444. III. IBM is a global brand and has its presence in 170 countries and operates . D)the state insurance department. C) II and IV. B)I and III. $63,000 b.$51,000 c. $18,000 d.$6,000. Typically, they allow one withdrawal each year during the accumulation phase. A)II and IV. a life insurance holder dies sooner than expected. *A variable annuity payout is determined by comparing account performance with AIR, and this month's payout with last month's payout. The client's investment objectives, tax bracket, investment experience and risk tolerance all align well with a VA recommendation. Usually the term "annuity" relates to a contract between an individual and a life insurance company. How to Rollover a Variable Annuity Into an IRA. A customer, who has contributed to an IRA and to an employer matching 401(k) plan continuously for many years, wants to purchase an annuity contract to add additional monthly income once retired. B) 0. The funds in an annuity are off-limits to creditors and other debt collectors. Sub accounts and mutual funds are conceptually identical, but sub accounts don't have ticker symbols that investors can easily type into a fund tracker for research purposes. covers more than one person. D)with guaranteed minimum withdrawal benefits (GMWBs) a lifetime of periodic payments is guaranteed, With guaranteed minimum withdrawal benefits (GMWBs) a lifetime of periodic payments is not guaranteed because payments stop when the annuitant has received an amount equal to the principal account value or the contract term ends. D) Variable annuities. Consequently, the client pays taxes only on the growth portion of the withdrawal ($10,000). "Variable Annuities: What You Should Know," Page 6. *Payments from a variable annuity depend on the securities' value in the separate account's underlying investment portfolio. C)the number of annuity units is fixed, and their value remains fixed. During the accumulation phase, you make purchase payments. C) During the annuity period. Distribution can take place before or during any solicitation for sale. externalities. Licensed to sell Variable Annuities in the following state(s): FL, TX . A) I and III. Question #17 of 48Question ID: 606802 When a variable contract is annuitized (distributed in regular payments, not as a lump sum), the number of accumulation units is multiplied by the unit value to arrive at the account's current value. D) be paid to the issuing company to complete the plan. Reference: 12.1.1 in the License Exam. Underlying equity investments T, age 70, withdraws cash from a profit-sharing plan and purchases a Straight Life Annuity. A)number of annuity units. A fixed annuity is an insurance contract that pays a guaranteed rate of interest on the owner's contributions and later provides a guaranteed income. B) Municipal bonds. Fixed income instruments, like bonds and fixed annuities, are subject to purchasing power risk. D) Joint and last survivor annuity. A)variable annuities will protect an investor against capital loss. c) Construct a contingency table showing all the joint and marginal probabilities. The value of the annuity units varies. The tax on this is $2,800 ($10,000 x 28%). A) defined contribution plans. He makes the following four statements, all of which are true EXCEPT Surrender fees and penalties for early withdrawal. A variable annuity has two phases: an accumulation phase and a payout (annuitization) phase. Life income riders are best suited for those who anticipate a lengthy retirement and are generally not yet retired when making the VA purchase. A registered representative explaining variable annuities to a customer would be CORRECT in stating that: Home; About. C) II and III. A)II and IV. D)Any tax due is deferred. Contributions to an IRA may be tax deductible, depending on the individual's earnings and participation in a company-sponsored qualified retirement plan. What is the annual cash flow generated from the new machine? a variable annuity guarantees payments for life. do not have a separate account The tax on this is $2,800 ($10,000 x 28%). Reference: 12.1.4.1 in the License Exam. Following the transition to T+1 in the U.S. markets, Commission staff will continue to work with industry leaders, public interest advocates, investors and other regulators to assess the future feasibility of a T+0 settlement standard cycle, and seek to identify ways to overcome the challenges associated with such a move, as articulated in the . IBM Noida, Uttar Pradesh, India4 weeks agoBe among the first 25 applicantsSee who IBM has hired for this roleNo longer accepting applications. The number of annuity units is fixed at the time of annuitization. Ideally they should be funded with readily available cash rather than using funds liquidated from existing investments. That can adversely affect your returns over the long term, compared with other types of investments. A) I and II Question #44 of 48Question ID: 606797 Each of the remaining statements are true. *Contributions to a nonqualified annuity are made with the owner's after-tax dollars. On withdrawals from a nonqualified annuity, taxes are paid only on the amount that exceeds cost basis (the amount paid into the annuity). a variable annuity does not guarantee payments for life. B)II and III. B) the safety of the principal invested. B) suitable if she has enough equity in the home to fund the variable annuity without cashing out the other VA contract C) II and IV. C)I and IV. If the separate account of a variable annuity with an AIR of 4% had actual net earnings of 8% in March, the April payment will be higher than the March payment. Variable annuities should be considered long-term investments due to the limitations on withdrawals. (The exception is the fixed income annuity, which has a moderate to high payout that rises as the annuitant ages). If the customer takes a withdrawal of $10,000, what are the tax consequences? *A periodic payment immediate annuity is a contradiction in terms. C) the client assumes the investment risk. In this case, the investor is taking a lump-sum distribution before reaching age 59- and must pay an additional 10% penalty on the taxable amount. Salaries:SalessalariesWarehousesalariesOfficesalaries$670,000110,000234,000$1,014,000Deductions:IncometaxwithheldSocialsecuritytaxwithheldMedicaretaxwithheldU.S. Future annuity payments will vary according to the separate account's performance. B) II and IV. The payout compared to last month's payout. A)It will stay the same. C) The portion of the premium invested in the insurance company's general account is used to provide for the minimum guaranteed amount of the death benefit. Options. As part of the registration requirements, a prospectus must be filed and distributed to prospective investors. B) 100% taxable. The separate account is NOT likely to invest in: A variable annuity is both an insurance and a securities product. Word bank:Fixed, Variable Fixedannuities provide a guaranteed rate of return, whereas Variableannuities provide conservative to aggressive investments whose rates of return are not guaranteed. Reference: 12.3.3 in the License Exam. A) It will be higher. As with most retirement account options, withdrawals before the age of 59 will result in a 10% tax penalty. II. I. A universal variable life policy should be purchased primarily for its insurance features, not its investment features. A variable annuity is a long term investment issued by an insurance company that can help you grow your money, take income in retirement and pass on your wealth. A registered representative's (RR) customer is speaking of a variable life insurance contract he owns. Withdrawals from a nonqualified variable annuity are made on a LIFO basis, so the taxable earnings are considered taken out before principal. How is the distribution taxed? The value of the customer's account is converted into annuity units if and when the customer decides to annuitize the contract. A registered representative recommends a variable annuity with an income rider to a client. With regard to a variable annuity, all of the following may vary EXCEPT: \hspace{10pt} \text{Warehouse salaries} & 110,000 & \hspace{10pt} \text{Social security tax withheld} & 51,714\\ Question #13 of 48Question ID: 606822 B) Corporate debt securities a variable annuity does not guarantee an earnings rate of return. Of the total payroll for the last week of the year, $30,000\$30,000$30,000 is subject to unemployment compensation taxes. Do whatever you want with a Learn About Annuities and Their Myths - F&G: fill, sign, print and send online instantly. Reference: 12.1.4.1 in the License Exam. By clicking Accept All Cookies, you agree to the storing of cookies on your device to enhance site navigation, analyze site usage, and assist in our marketing efforts. Reference: 12.3.4 in the License Exam, Chapter 16: U.S. Government and State Rules a, Chapter 17: Other SEC and SRO Rules and Regul, Chapter 15: Ethics, Recommendations, and Taxa, Chapter 13: Direct Participation Programs, Fundamentals of Financial Management, Concise Edition, Joe B. Hoyle, Thomas F. Schaefer, Timothy S. Doupnik, Carl Warren, James M Reeve, Jonathan E. Duchac. However, a discussion should occur regarding the risks that are associated with a fixed annuity; purchasing power risk. Distribution of dividends occurs during the accumulation period. Lifetime vs. fixed period annuities The growth portion is subject to a 10% penalty. C) insurance companies keep variable annuity funds in separate accounts from other insurance products. A variable annuity is a long term investment issued by an insurance company that can help you grow your money, take income in retirement and pass on your wealth. A single lump-sum investment is made, and payments begin immediately, since the investor has purchased annuity units. C) The investor's concerns about taxes. A variable annuity is a type of annuity contract, the value of which can vary based on the performance of an underlying portfolio of sub accounts. In a joint-and-last-survivor option, the annuity payment is made jointly to both parties while both are alive. A guaranteed death benefit guarantees that the beneficiary will receive a death benefit if the annuitant dies before the annuity begins paying benefits. C) each annuity unit's value and the number of annuity units vary with time. Once a variable annuity has been annuitized: C) There is no tax as the withdrawal is considered return of capital. D)value of accumulation units. Fixed Annuity, Retirement Annuities: Know the Pros and Cons. D) I and III. The value of the annuity units is fixed. A) waiver of premium The $30,000 contract value represents $10,000 of contributions and $20,000 of earnings. Indexed annuity owners receive credited interest tied to the fluctuations of the linked index An immediate annuity consists of a single premium An immediate annuity has a single premium. a. The anti-money laundering rules for insurance companies highlight that each insurance company - like other financial institutions subject to anti-money laundering program requirements - must develop a risk-based anti-money laundering program that identifies, assesses, and mitigates any risks of money laundering, terrorist financing, and other The payout compared to the initial payout upon annuitization. a variable annuity guarantees payments for life. Registration with FINRA is de facto registration with the SEC; no registration is required by the state banking commission. This makes a total of $4,000 tax and penalty paid on the random withdrawal. The most suitable option and one considered effective for married couples is a single joint and last survivor contract. If an investor has purchased an immediate variable annuity, which of the following statements best describe the investment? A)I and IV. Question #41 of 48Question ID: 606801 You can tailor the income stream to suit your needs. D) None, because it is the proceeds from a life insurance company. D) II and IV. The value of these units varies with the performance of the separate account. All of the following investment strategies offer either fully or partially tax-deductible contributions to individuals who meet eligibility requirements EXCEPT: D) I and IV. A customer has an investment objective of keeping pace with inflation while assuming moderate risk. They can be classified by: Nature of the underlying investment - fixed or variable B) IPO. A guaranteed lifetime annuity promises to pay the owner an income for the rest of their life. The separate account performance compared to an assumed interest rate. Among annuities, variable annuities differ from fixed annuities, which provide a specific and guaranteed return. An individual retirement annuity is an investment vehiclesimilar to an individual retirement accountthat is offered by insurance companies. B) The entire $10,000 is taxable as ordinary income. C)none of these. He makes several statements regarding the contract. C) suitable regardless of funding sources C)none of these. C)Keogh plans. B)Variable annuities. A) taxed at a reduced rate. are purchased primarily for their insurance features *Variable annuities offer tax-deferred growth and are suitable for achieving supplemental retirement income. The investor purchased accumulation units. A) A 75 year old women, who is a former executive retired for over ten years who wants to preserve as much capital as she can to leave to her two grandchildren. A) waiver of premium B)cost of living. C)number of accumulation units. Single payment deferred annuity. The number of annuity units rises once annuitization begins. Variable Annuity Advantages and Disadvantages, Guide to Annuities: What They Are, Types, and How They Work. Which of the following recommendations would best meet the customer profile? A) The entire amount is taxed as ordinary income, because it is not life insurance. B) Ordinary income taxation on the earnings withdrawn until reaching the owner's cost basis. C) 100% tax free. Both products typically have a wide range of options across equities, bonds and money market instruments. This annuity is nonqualified, which means the client has paid for it with after-tax dollars and has a basis equal to the original $29,000 investment. The value of an annuity unit varies from month to month according to the performance of the separate account in comparison to the assumed interest rate. B) the client may vote for the board of directors or board of managers. B) I and III. PGIM Fixed Income, a division of PGIM Inc., an SEC-registered investment adviser and a business unit of Prudential Financial, Inc. is seeking a Portfolio Risk Surveillance Analyst. Once annuitized, the number of annuity units does not vary. Refinancing a home to draw out equity has been identified by FINRA as an abusive sales tactic regarding the sales of VAs. Therefore, ordinary income taxes will apply to the entire $10,000. Which of the following statements is not true about the characteristics of a trend? A) Dow Jones Industrial Average. Deferred Annuity Definition, Types, How They Work, What Is a Fixed Annuity? The number of accumulation units is always fixed throughout the accumulation period. A) II and III. D) the payout plans provide the client income for life. Before buying a variable annuity, investors should carefully read the prospectus to try to understand the expenses, risks, and formulas for calculating investment gains or losses. Reference: 12.1.2.1.1 in the License Exam. D) a lifetime withdrawal benefit (LWB) or lifetime income benefit is generally in the form of a rider attached to the contract which will come at a cost to the annuitant. A) III and IV. A)II and III All of the following characteristics are shared by both a mutual fund and a variable annuity's separate account EXCEPT: The value of the separate account is now $30,000. who needs access to the sum invested at later time. When the annuitization option is selected, each payment represents both capital and earnings. A) a minimum rate of return is guaranteed. B) be paid to any legal heirs as recognized by the annuitant's state of domicile. D)the safety of the principal invested. D) I and III. A) the investment portfolio is managed professionally. C)3800. D) a minimum of 10 years of variable payments, followed by additional variable payments for life must provide full and fair disclosure. C)annuity units. D)I and IV, Universal variable life policies are insurance company products that should be purchased primarily for the insurance features they offer rather than as an investment. Final answer. The payout of an annuitized variable annuity account changes from month to month in a manner determined by which of the following? Which of the following statements regarding variable annuities are TRUE? When may a variable annuity account be surrendered? When a variable annuity contract is annuitized, the number of annuity units is fixed. Question #45 of 48Question ID: 606795 C. C)III and IV. The following are the characteristics or the hierarchy of a trend except A. Gigatrends C. Megatrends B. Macrotrends D. Nanotrends _____11. An annuity is a continuous stream of equal periodic payments from one party to another for a specified period of time to fulfill a financial obligation. *During the payout period, payments are based on a fixed number of annuity units established when the contract was annuitized. His objective is monthly income that he can receive after he retires to supplement his small pension and social security benefits. regulated under both securities and insurance laws. the state insurance commission. B) Life annuity. A 60-year-old individual, nearing retirement who has both IRAs and a 401k in place, is comfortable with market risk associated with the stock market, and has a lump sum in cash available to fund the annuity A)III and IV. C)insurance companies keep variable annuity funds in separate accounts from other insurance products. How Good of a Deal Is an Indexed Annuity? If your 60-year-old customer purchases a nonqualified variable annuity and withdraws some of her funds before the contract is annuitized, what are the consequences of this action? Periodic payments are not a consideration because normally the payments into an annuity are level or in a lump sum. Because this is not guaranteed, the policyowner bears the investment risk. Complete a blank sample electronically to save yourself time and money. national origin, genetics, disability, age, veteran status, or any other characteristic protected by law. Try B) fixed payments for 10 years, followed by variable payments for life. A variable annuity is a type of annuity contract the value of which can vary based on the performance of an underlying portfolio of sub accounts. Question #31 of 48Question ID: 606836 vote on proposed changes in investment policy. & \underline{\underline{\$1,014,000}} & \hspace{10pt} \text{U.S. savings bonds} & 30,420\\

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