You can tailor the income stream to suit your needs. C) insurance companies keep variable annuity funds in separate accounts from other insurance products. The funds in an annuity are off-limits to creditors and other debt collectors. There are two interest rates under fixed annuities. B)changes in common stock prices tend to be more closely related to changes in the cost of living than changes in bond prices. Question #11 of 48Question ID: 606816 A client has purchased a nonqualified variable annuity from a commercial insurance company. A)III and IV. \hspace{7pt} b. December 303030, to record the employers payroll taxes on the payroll to be paid on December 313131. 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. C) value of underlying securities held in the separate account. Fixed annuities typically earn at a lower, stable rate. C) II and III. Determine whether the following events are independent or dependent. The downside was that the buyer was exposed to market risk, which could result in losses. Reference: 12.1.4.2 in the License Exam. Prudential's businesses offer a variety of products and services, including life insurance, annuities, retirement-related services, mutual funds, asset management, and real estate services. As of March 03, 2023, had a relative dividend yield of % compared to the industry median of %. An investor who has purchased a nonqualified variable annuity has the right to: A) II and IV. B) II and III used for the investment of funds paid by contract holders. D)all return of cost basis and nontaxable, Annuitized payments from a variable annuity are viewed for tax purposes as part earnings and part cost basis. Anthony Battle is a CERTIFIED FINANCIAL PLANNER professional. 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. A)IPO. If the customer takes a withdrawal of $10,000, what are the tax consequences? When the annuitization option is selected, each payment represents both capital and earnings. Question #15 of 48Question ID: 606804 PGIM Fixed Income has over $900 billion in assets under management across a broad array of fixed . Variable annuities should be considered long-term investments due to the limitations on withdrawals. A)variable annuities will protect an investor against capital loss. The number of annuity units is fixed at the time of annuitization. As part of his profile he stresses that he has had uncomfortable experiences in the past with the stock market and is not inclined to invest in anything that is based on stock market performance and would opt for principal protection instead. Job Classification: Corporate - Legal and Compliance. It is innate and universal. A variable annuity is just a tax-deferred annuity in which you get to choose how the value of the annuity is invested. In a joint-and-last-survivor option, the annuity payment is made jointly to both parties while both are alive. Which of the following is NOT an accurate statement concerning a variable life insurance contract? Distribution can take place before or during any solicitation for sale. Question: The following are characteristics of a public conglomerate: I) It is designed to operate various divisions for the long run. The wage for applicants for this position is $45,979.00 per year. c. The separate account provides for a guaranteed minimum return. However, the web version (cat. Vaccine has decreased the incidence. Variable Annuity Advantages and Disadvantages, Guide to Annuities: What They Are, Types, and How They Work. During payout, distributions will fluctuate due to performance in the separate account. I. A) a lifetime withdrawal benefit (LWB) or lifetime income benefit will make a periodic payment even if the account balance falls to zero Contributions to a nonqualified variable annuity are not tax deductible. All of the following are characteristics of Variable Annuity contracts EXCEPT The possibility of higher returns and greater income than fixed annuities, but there's also a risk that the account will fall in value A There are no surrender fees B Guaranteed death benefit C Tax deferred growth D Training Explanations An accumulation unit in a variable annuity contract is: Question #13 of 48Question ID: 606822 D) Age 27, saving for first home. It's somewhat similar to a variable life insurance policy in that: You can choose how the product's value is invested. Your 55-year-old client invested $50,000 four years ago in a nonqualified variable annuity. Reference: 12.2.1 in the License Exam. Once a variable annuity has been annuitized: The annuity unit's value represents a guaranteed return. D) I and IV. Of the answer choices given the best would be to reevaluate the recommendation based on the new information tendered by the client. continues payments only as long as all annuitants are still alive. *Once a variable annuity is annuitized, the accumulation units are converted into a fixed number of annuity units. A) an accounting measure used to determine payments to the owner of the variable annuity. \hspace{7pt} a. December 303030, to record the payroll. A variable annuity does not guarantee an earnings rate because earnings will depend on the performance of the separate account. D)I and IV. Reference: 12.1.2.1.1 in the License Exam. e) Are From the United States and Log on every day independently? *During the payout period, payments are based on a fixed number of annuity units established when the contract was annuitized. C)Growth mutual funds Before the contract is annuitized, your client, currently age 60, withdraws some funds for personal purposes. *Accumulation units represent units of ownership in a life insurance company's separate account when the contract is in the accumulation stage. We also reference original research from other reputable publishers where appropriate. do not have a separate account \text{Salaries:} && \text{Deductions:}\\ Variable annuities are riskier than fixed annuities because the underlying investments may lose value. A single lump-sum investment is made, and payments begin immediately, since the investor has purchased annuity units. Question #41 of 48Question ID: 606801 Life with period certain will produce a smaller check for life because the insurance company will guarantee payments to a beneficiary for a certain period of time designated in the contract should the annuitant die within that period. A variable annuity is a combination of 2 products: an insurance contract and a mutual fund. If the data is normally distributed with standard deviation$198, find the percent of vacationers who spent less than $1,200 per day. B) the safety of the principal invested. 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. Reference: 12.1.2 in the License Exam, Question #23 of 48Question ID: 901858 Can I Borrow from My Annuity for a House Down Payment? D)Municipal bonds. An annuitant assumes the investment risk of a variable annuity and is not protected by the insurance company from capital losses. 's dividend yield was % last year. B) The entire $10,000 is taxable as ordinary income. Reference: 12.1.2.1.2 in the License Exam. can be sold by someone with only an insurance license You can learn more about the standards we follow in producing accurate, unbiased content in our. *BEST Suited for VA-Age 56, available cash to invest, maxes out IRA and 401(k) plan VA will be supplemental income, would not be suitable for cust. A) mortality guarantee. Your customer in his early 30s has received a modest inheritance from a relative. Immediate annuities purchase annuity units directly. The number of annuity units is fixed at the time of annuitization. A variable annuity's separate account is: A separate account will invest in a number of different securities. Question #46 of 48Question ID: 606796 In addition, if the customer is not at least 59-, there will be a tax penalty of an additional 10%. C)prime rate. \hspace{10pt} \text{Warehouse salaries} & 110,000 & \hspace{10pt} \text{Social security tax withheld} & 51,714\\ C)A 10% penalty plus the payment of ordinary income tax on all of the funds withdrawn. Nicks Enterprises has purchased a new machine tool that will allow the company to improve the efficiency of its operations. When may a variable annuity account be surrendered? (primary needs). D) Two-thirds of the withdrawal is taxable as ordinary income. U.S. Securities and Exchange Commission. A prospectus for a variable annuity contract: Question #31 of 48Question ID: 606836 Your client has $50,000 to invest. B) The entire $10,000 is taxable as ordinary income. None of the other investments listed here offer tax-deferred growth. If an investor has purchased an immediate variable annuity, which of the following statements best describe the investment? D) an accounting measure used to determine the contract owner's interest in the separate account. Spartan Technology Services and Solutions Private Limited is a subsidiary of IBM (International Business Machines) Corporation. C) number of accumulation units. An annuity may be purchased under all of the following methods EXCEPT: B) a variable annuity contract is not required to be sold by prospectus because it is an insurance contract The beneficiary is taxed at ordinary income rates during the year the lump sum is received. Life Insurance vs. Annuity: What's the Difference? The tax on this amount is $3,000. 2019 Ted Fund Donors An accumulation unit in a variable annuity contract is: A)an accounting measure used to determine the contract owner's interest in the separate account. Salaries:SalessalariesWarehousesalariesOfficesalaries$670,000110,000234,000$1,014,000Deductions:IncometaxwithheldSocialsecuritytaxwithheldMedicaretaxwithheldU.S. If the annuitant should die during that time, any death benefit would be paid to a beneficiary designated by the annuitant at the time the annuity was purchased. B) It will be lower. C)municipal bonds. U.S. Securities and Exchange Commission. *Payments from a variable annuity depend on the securities' value in the separate account's underlying investment portfolio. A universal variable life policy should be purchased primarily for its insurance features, not its investment features. C)II and III. A 10% penalty applies only if distributions begin before age 59-. What Are the Risks of Annuities in a Recession? Annuity death benefits are generally paid in a lump sum. A Variable Annuity has which of the following characteristics? Do homework Doing homework can help you learn and understand the material covered in class. C) A 10% penalty plus the payment of ordinary income tax on all of the funds withdrawn. Question #43 of 48Question ID: 606809 B)reevaluate whether the recommendation for the VA contract is still suitable based on the clients proposed funding of the investment. Instructions\textsf{\textcolor{#4257b2}{Instructions}}Instructions B) 0. is required by the Securities Act of 1933. IV. D) I and II. Which 2 of the 4 client profiles would a VA be LEAST suitable for? variable An immediate annuity consists of a Single Premium T has an annuity that guarantees an income payment for the rest of his life. A)There is no tax as the withdrawal is considered return of capital. A) Life-only annuity B)Value of each annuity unit each month. The client's investment objectives, tax bracket, investment experience and risk tolerance all align well with a VA recommendation. During the payout period, payments are based on a fixed number of annuity units established when the contract was annuitized. B) I and III. This makes a total of $4,000 tax and penalty paid on the random withdrawal. C) annuity units. B) II and III. Therefore, ordinary income taxes will apply to the entire $10,000. VAs, blue chip mutual fund portfolios, ETFs and ETNs are all tied to market performance in some way and have risk characteristics that would not align in terms of suitability for this client. During the accumulation phase, you make purchase payments. This role is also eligible for annual short-term incentive compensation. B) payments continue until the death of the primary owner. C)Mortality risk. *The number of variable annuity accumulation units can rise during the accumulation period when additional units are being purchased. This compensation may impact how and where listings appear. B) I and III. He makes the following four statements, all of which are true EXCEPT Full-Time. A) changes in common stock prices tend to be more closely related to changes in the cost of living than changes in bond prices. C)III and IV Periodic payment deferred annuity. D) Growth mutual funds. Which of the following statements regarding variable annuities are TRUE? Post navigation The amount of the purchase payments that go into the account may be less than you paid because fees were taken out of the purchase payments. C)none of these. *Only variable annuities have payout plans that provide the client income for life. A 45-year-old investor takes a lump-sum distribution from a nonqualified variable annuity. Reference: 12.3.1 in the License Exam. Reference: 12.2.1 in the License Exam. Future annuity payments will vary according to the separate account's performance. Refinancing a home to draw out equity has been identified by FINRA as an abusive sales tactic regarding the sales of VAs. A) not suitable Contributions to an IRA may be tax deductible, depending on the individual's earnings and participation in a company-sponsored qualified retirement plan. A variable annuity is both an insurance and a securities product. A) 2800. B)100% taxable. A)Fixed annuities. Of the four client profiles below which might be the best suited for a variable annuity recommendation? His objective is monthly income that he can receive after he retires to supplement his small pension and social security benefits. D) Variable annuity. D) Joint and last survivor annuity. A universal variable life policy should be purchased primarily for its insurance features, not its investment features. *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. Your client has a large sum of money to invest from the proceeds of the sale of his home. can be sold by someone with only an insurance license *Insurance companies introduced the variable annuity as an opportunity to keep pace with inflation. The investor purchased accumulation units. A prospectus for a variable annuity contract: These contracts come with high surrender charges. C)the number of annuity units is fixed, and their value remains fixed. Science Health Science Nursing. If in the following year, the S&P 500 declined by 5%, the annuities value would remain at $107,000 because gains are locked in each year. D)suggest to the client that perhaps a loan or refinancing his vacation home might be a better way to fund the contract purchase. A) variable annuities offer the investor protection against capital loss. B) During the accumulation period. *Mortality risk- If an annuitant lives longer than expected, the insurance company will have to continue payments longer than expected. Her intent was to use the funds for the down payment on a house after graduation. an annuitant lives longer than expected. A variable annuity is a security and must be registered with the SEC, not FINRA. She may choose to receive monthly payments for the rest of her life. & \underline{\underline{\$1,014,000}} & \hspace{10pt} \text{U.S. savings bonds} & 30,420\\ II. The value of the separate account is now $30,000. B)It will be lower. Which of the following are defined as securities? D)Any tax due is deferred. C)I and III. D)separate account may consist of mutual funds. In a variable annuity contract, the provision that guarantees the annuitant payments for life is called the: An example would be if a life annuity with 10-year period certain contract holder died after 5 years, payments would continue for 5 more years to the beneficiary and then stop. Question #22 of 48Question ID: 606803 *A variable annuity payout is determined by comparing account performance with AIR, and this month's payout with last month's payout. D)variable annuities offer the investor protection against capital loss. A) A variable annuity There is a guaranteed minimum interest rate, normally amounting to between 1 and 3 percent. A)Joint tenants annuity. An ordinary simple annuity has the following characteristics: For example, most car loans are ordinary simple annuities where payments are. \hspace{10pt} Medicare, 1.5%1.5\%1.5% The paper publication will not be rereleased. Reference: 12.1.2.1.1 in the License Exam. III) A hierarchy of corporate staff evaluates divisions' plans and performance. What is her total tax liability? C) none of these. D) III and IV. Question #17 of 48Question ID: 606802 You purchase a variable annuity contract by making either a single purchase payment or a series of purchase payments. Fixed Annuity, Retirement Annuities: Know the Pros and Cons. Before the contract is annuitized, your client, currently age 60, withdraws some funds for personal purposes. Reference: 12.1.2 in the License Exam. D)variable annuities. A)not suitable d) What is the probability that a user is from the United States, given that he or she logs on every day? B) I and II. The owner of a variable annuity has all of the following rights EXCEPT the right to vote: a. for the board of trustees b. to change the separate account's investment objective c. for distributing income and capital gains d. for dissolution of the trust c. for distributing income and capital gains. D) III and IV. Carefully look at your options when choosing an annuity. D)partially a tax-free return of capital and partially taxable. She will receive the annuity's entire value in a lump-sum payment. When a variable annuity contract is annuitized, the number of annuity units is fixed. A) taxed at a reduced rate. He makes the following four statements, all of which are true EXCEPT do not have a separate account When the second party dies, all payments cease. required to be located off of the company's premises. B) fixed payments for 10 years, followed by variable payments for life. A) II and III. Based only on these facts, the variable annuity recommendation is A)accumulation shares. Reference: 12.3.3 in the License Exam. A 45-year-old investor takes a lump-sum distribution from a nonqualified variable annuity. On withdrawals from a nonqualified annuity, taxes are paid only on the amount that exceeds cost basis (the amount paid into the annuity). P=525p2+65,326p185,000E=326p+185,000P=-525 p^{2}+65,326 p-185,000 \quad E=-326 p+185,000P=525p2+65,326p185,000E=326p+185,000. Contributions to an IRA may be tax deductible, depending on the individual's earnings and participation in a company-sponsored qualified retirement plan. B)a majority vote from the shareholders is required to change the investment objectives. An annuity payment is the dollar amount of the equal periodic payment in an annuity environment. Because they have a separate account in which the investor assumes the investment risk, they can only be sold by individuals with both insurance and securities licenses. c) Construct a contingency table showing all the joint and marginal probabilities. A) The policy provides a minimum guaranteed death benefit. This chapter was updated on 15 December, 2005. Which of the following is characteristic of variable annuities? Reference: 12.1.2 in the License Exam. Based on this information the RR should: a variable annuity does not guarantee payments for life. b) What probability is the 20%20 \%20% mentioned above? C)3800. Which of the following recommendations would best meet the customer profile? Policyholders . How to Navigate Market Volatility While Saving for Retirement, Variable Annuity: Definition and How It Works, Vs. For example, when paying rent, the rent payment (PMT) For a retired person, which of the following investments would provide the greatest protection against inflation? A) periodic payment immediate annuity. If your customer invests in a variable annuity and chooses to annuitize at age 65, which of the following statements are TRUE? Variable annuities offer the possibility of higher returns and greater income than fixed annuities, but theres also a risk that the account will fall in value. C) be returned to the separate account. For this potential advantage, the investor, rather than the insurance company, assumes the investment risk. Your 65-year-old client owns a nonqualified variable annuity. B)II and III. A)value of underlying securities held in the separate account. Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield, Claudia Bienias Gilbertson, Debra Gentene, Mark W Lehman, Eric W. Noreen, Peter C. Brewer, Ray H Garrison. B)II and III. When the first party dies, the annuity payment is made to the survivor. Clusters of vesicles in various stages. C) II and IV. A) There is no risk in a variable annuity.
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