The investor purchased accumulation units. 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. When the annuitization option is selected, each payment represents both capital and earnings. D)II and III. C)with guaranteed minimum withdrawal benefits (GMWBs) the periodic payments can be monthly, quarterly or annually B) I and II. A trend makes considerable influence or impact. Essential Characteristics: D)Joint and last survivor annuity. Transcribed image text: 6. A) I and IV. If you need to withdraw money from the account because of a financial emergency, you may face surrender fees. Annual depreciation on the machine is$12,000, and the tax rate of the company is 25%. C) 10 years of variable payments. Question #17 of 48Question ID: 606802 The payout of an annuitized variable annuity account changes from month to month in a manner determined by which of the following? A)variable annuities may only be sold by registered representatives. Variable annuity Which of the following is characteristic of fixed annuities? If your customer invests in a variable annuity and chooses to annuitize at age 65, which of the following statements are TRUE? Reference: 12.2.1 in the License Exam, Question #48 of 48Question ID: 606835 *Accumulation units represent units of ownership in a life insurance company's separate account when the contract is in the accumulation stage. Because the client is older than age 59-, he does not pay 10% premature distribution penalty tax. C)Keogh plans. A)It will stay the same. A) Fixed Annuity "Variable Annuities: What You Should Know," Pages 67. Insurance companies introduced the variable annuity as an opportunity to keep pace with inflation. B)Tax-free municipal bonds D)an accounting measure used to determine payments to the owner of the variable annuity. *The most important consideration in purchasing a variable annuity is to be aware that benefit payments will fluctuate with the investment performance of the separate account. The correct answer was: partially a tax-free return of capital and partially taxable. Variable Annuity Advantages and Disadvantages, Guide to Annuities: What They Are, Types, and How They Work. Which Earns More: Variable or Fixed Annuities? C) II and III. Variable annuity salespeople must register with all of the following EXCEPT: Periodic payments are not a consideration because normally the payments into an annuity are level or in a lump sum. Over the following year, the stock fund has a 10% return, and the bond fund has a 5% return. 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 dissolutions of the trust for distributing income and capital gains. The value of the customer's account is converted into annuity units if and when the customer decides to annuitize the contract. D) Joint and last survivor annuity. B)a majority vote from the shareholders is required to change the investment objectives. Reference: 12.1.4.1 in the License Exam. Funding a VA contract by cashing out either life insurance policies or existing VA contracts, especially those held for a short period of time is not suitable. A customer is receiving annuitized payments from a variable annuity. C)none of these. A) The fact that the annuity payment may increase or decrease. Rolling two 222s followed by one 666 on three tosses of a fair die, Use the table 1 and table 2 to complete the table 3 D) A 50 year old individual with $50,000 cash to invest who has already made the maximum contributions to an IRA and the 401(k) plan at his place of employment and would like to minimize some of the tax consequences of his currently high tax bracket. The beneficiary is taxed at ordinary income rates during the year the lump sum is received. Round to the nearest hundredth of a percent. The growth portion is taxed as ordinary income. A) Only during the payout period. 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. What is the annual cash flow generated from the new machine? C)100% tax deferred. Reference: 12.3.2.1 in the License Exam. A security is any investment for profit with management performed by a third party. A joint life with last survivor contract covers multiple annuitants and ceases payments at the death of the last surviving annuitant. The following information about the payroll for the week ended December 303030 was obtained from the records of Vienna Co.: Salaries:Deductions:Salessalaries$670,000Incometaxwithheld$198,744Warehousesalaries110,000Socialsecuritytaxwithheld51,714Officesalaries234,000Medicaretaxwithheld15,210$1,014,000U.S. She may choose to receive monthly payments for the rest of her life. If the customer takes a withdrawal of $10,000, what are the tax consequences? Before the contract is annuitized, your client, currently age 60, withdraws some funds for personal purposes. Refinancing a home to draw out equity has been identified by FINRA as an abusive sales tactic regarding the sales of VAs. II) It has an internal capital market wherein each division competes for funds. (The exception is the fixed income annuity, which has a moderate to high payout that rises as the annuitant ages). C) I and III. Your client has a large sum of money to invest from the proceeds of the sale of his home. While there is no guarantee on how investments in the separate account will perform, depending on its investment performance, the separate account could provide for a larger death benefit than the minimum guaranteed amount. D)I and III. None of the other investments listed here offer tax-deferred growth. Uses in Investing, Pros, and Cons, Indexed Annuity: Definition, How It Works, Yields, and Caps. Travel Times Journal found that the average per person cost of a 10-day trip along the Pacific coast, per person, is $1,015. C) It will stay the same. The number of annuity units rises once annuitization begins. All of the following statements regarding variable annuities are true EXCEPT: Reference: 12.3.3 in the License Exam. Full-Time. C) There is no tax as the withdrawal is considered return of capital. *Payments from a variable annuity depend on the securities' value in the separate account's underlying investment portfolio. B) I and II. 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. C) II and IV. The downside was that the buyer was exposed to market risk, which could result in losses. Job Classification: Corporate - Legal and Compliance. An 18-year-old, unmarried high school student sought a safe investment for a $30,000 bequest until after she graduated from college. Distribution of dividends occurs during the accumulation period. During the . This customer has no spouse or dependents, which negates the value of the death benefit. Sample problems from Chapter 9 . Fixed interest rates during the payout period The value of each accumulation unit varies: Daily Variable annuities have Variable interest rates and benefits All of the following statements are true regarding the interest rate guarantees of fixed annuities, EXCEPT: \hspace{10pt} \text{Sales salaries} & \$\hspace{5pt} 670,000 & \hspace{10pt} \text{Income tax withheld} & \$198,744\\ Once a variable annuity has been annuitized: Because common stocks are not fixed dollar investments, they have the opportunity to keep pace with inflation. 111. The earnings on dollars invested into a variable annuity accumulate tax deferred, which is why variable annuities are popular products for retirement accumulation. The accumulation unit's value is used to calculate the total value of the account. *Variable annuity contracts must be sold by prospectus due to the characterization of the separate accounts as securities, which must be registered under the Securities Act of 1933 and the Investment Company Act of 1940. Distribution can take place before or during any solicitation for sale. a variable annuity does not guarantee an earnings rate of return. Among annuities, variable annuities differ from fixed annuities, which provide a specific and guaranteed return. The number of annuity units becomes fixed when the contract is annuitized; it is the value of each unit that fluctuates. B) the number of annuity units is fixed, and their value remains fixed. Question #12 of 48Question ID: 606814 In a variable life annuity with 10-year period certain, a contract holder receives: A single lump-sum investment is made, and payments begin immediately, since the investor has purchased annuity units. They are also riddled with fees, which can cut into profits. She will receive the annuity's entire value in a lump-sum payment. Therefore only a fixed annuity could be considered as suitable. A guaranteed lifetime annuity promises to pay the owner an income for the rest of their life. There is no clear answer to this. B)part earnings and part cost basis a variable annuity guarantees an earnings rate of return. A) There is no risk in a variable annuity. What Are the Risks of Annuities in a Recession? Assuming that the payroll for the last week of the year is to be paid on December 313131, journalize the following entries: Given that all of the current retirement investments are subject to market risk, the customer wants these new funds to have no market risk exposure. The tax on this is $2,800 ($10,000 x 28%). You purchase a variable annuity contract by making either a single purchase payment or a series of purchase payments. can be sold by someone with only an insurance license B) II and IV. This makes a total of $4,000 tax and penalty paid on the random withdrawal. A) II and III. Reference: 12.1.4.1 in the License Exam. Reference: 12.3.3 in the License Exam. A)Fixed annuities. B)II and III. 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) Keogh plans. A) number of annuity units. B)unsuitable because her situation exposes her to surrender charges and early withdrawal penalties in exchange for insufficient benefits. B) The entire $10,000 is taxable as ordinary income. *VAs are less suitable for individuals who have not yet made maximum contributions to other retirement accounts such as IRAs and 401ks. As with most retirement account options, withdrawals before the age of 59 will result in a 10% tax penalty. The most suitable option and one considered effective for married couples is a single joint and last survivor contract. D) Variable Annuity. (primary needs). An ordinary simple annuity has the following characteristics: For example, most car loans are ordinary simple annuities where payments are Get Started. C) Age 40, currently unemployed John is the annuitant in a variable plan, and Sue is the beneficiary. D)the rate of return is determined by the underlying portfolio's value. This recommendation is: You have 4 clients each expressing interest in a variable annuity contract. The remainder of the premium is invested in the separate account. C)II and III. No paper. && \hspace{10pt}\text{Group insurance} & \underline{45,630}\\ The number of annuity units is fixed at the time of annuitization. Therefore, variable annuities must be registered with the state insurance commission and the Securities and Exchange Commission. As part of the registration requirements, a prospectus must be filed and distributed to prospective investors. A) number of annuity units. Reference: 12.1.2 in the License Exam, Question #39 of 48Question ID: 721469 During the accumulation phase, you make purchase payments. Distributed along a dermatome. When a partial withdrawal is made from an annuity, the earnings are considered to be taken out first for tax purposes (or LIFO). A 10% penalty applies only if distributions begin before age 59-. D)the safety of the principal invested. A)II and IV. A guaranteed death benefit guarantees that the beneficiary will receive a death benefit if the annuitant dies before the annuity begins paying benefits. Reference: 12.3.4 in the License Exam. Deal with mathematic Math is all about solving equations and finding the right answer. Based only on these facts, the variable annuity recommendation is Early withdrawal is either removal of funds from a fixed-term investment before the maturity date, or the removal of funds from a tax-deferred investment account or retirement savings account before a prescribed time. A) Money market fund. *During the accumulation phase, the number of accumulation units will increase as additional money is invested. The distribution of questions by topic is not intended to represent the 39) A variable annuity has the following guarantees: [PDF] Understanding your variable annuity UBS Variable annuities are long-term investment vehicles that with these securities as well insurance company and do not apply to the investment He makes the following four statements, all of which are true EXCEPT Investopedia requires writers to use primary sources to support their work. The AG49-A Revisions How to Rollover a Variable Annuity Into an IRA. C)prime rate. The separate account performance compared to last month's performance. In March, the actual net return to the separate account was 8%. U.S. Securities and Exchange Commission. Question #28 of 48Question ID: 606821 Find the per-day expense for one of these travelers who had a z-score of -1.6. c. A Bargain Times Vacation Blog writer claimed to have done this vacation for a cost of$710 per person. A)defined contribution plans. A customer has contributed $1,000 a year for 10 years to his tax-deferred nonqualified variable annuity. B) Life annuity. Question #35 of 48Question ID: 606810 A) I and II. 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. Explain what is meant by positive and negative Life income riders are best suited for those who anticipate a lengthy retirement and are generally not yet retired when making the VA purchase. C) taxed as ordinary income only to the extent of earnings. The offers that appear in this table are from partnerships from which Investopedia receives compensation. A joint-and-last-survivor annuity is a payout option where: Her agent recommended she choose a variable annuity as a safe haven for the funds. D) 4200. Try 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. 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. B)I and III. A) a variable annuity contract will provide a fluctuating monthly check upon the annuitization of the contract D) The fact that periodic payments into the contract may increase or decrease. B) the rate of return is determined by the underlying portfolio's value. If the annuitant dies during the accumulation period, his/her beneficiary will receive the promised annuity payments. B) I and IV. Reference: 12.3.3 in the License Exam, Question #34 of 48Question ID: 606834 An annuity is an agreement for one person or organization to pay another a series of payments. *A variable annuity may only be surrendered during the accumulation period. How does an indexed annuity differ from a fixed annuity? A) It will be higher. Question: The following are characteristics of a public conglomerate: I) It is designed to operate various divisions for the long run. Your client owns a variable annuity contract with an AIR of 4%. *Of the four customer profiles the individual already making the maximum retirement account contributions available to him and wanting to minimize the tax consequences of being in a high income tax bracket would be most suitable for a VA recommendation. Reference: 12.3.1 in the License Exam. A variable annuity's separate account is: A separate account will invest in a number of different securities. D)Any tax due is deferred. These include white papers, government data, original reporting, and interviews with industry experts. D) I and III. the SEC. A)2800. Fixed Annuity: A fixed annuity is a type of annuity contract that allows for the accumulation of capital on a tax-deferred basis. C) a variable annuity contract does not guarantee any type of return Once annuitized, the number of annuity units does not vary. PGIM Fixed Income has over $900 billion in assets under management across a broad array of fixed . On withdrawals from a nonqualified annuity, taxes are paid only on the amount that exceeds cost basis (the amount paid into the annuity). C) II and III. An annuity factor is taken from the annuity table, which considers, for example, the investor's sex and age. Vaccine has decreased the incidence. The amount taxed is the amount of the lump-sum payment minus the deceased's cost basis in the investment. An accumulation unit in a variable annuity contract is: If one purchases an annuity for a set price, the issuing company would invest the funds and hold them until they are supposed to be disbursed, generally based on the owner's age. They are also not considered suitable for anyone who anticipates needing a lump sum within a short time frame to fund other endeavors. For a retired person, which of the following investments would provide the greatest protection against inflation? Question #13 of 48Question ID: 606822 A separate account will invest in a number of different securities. Spartan Technology Services and Solutions Private Limited is a subsidiary of IBM (International Business Machines) Corporation. II. Inflation-hedging, using both tax deferral combined with market growth potential, is made possible by variable annuities #. D) an accounting measure used to determine the contract owner's interest in the separate account. $63,000 b.$51,000 c. $18,000 d.$6,000. Reference: 12.1.1 in the License Exam. The $30,000 contract value represents $10,000 of contributions and $20,000 of earnings. A) changes in common stock prices tend to be more closely related to changes in the cost of living than changes in bond prices. *Universal variable life policies are insurance company products that should be purchased primarily for the insurance features they offer rather than as an investment. Then find the probability of the event. \hspace{10pt} Medicare, 1.5%1.5\%1.5% A variable annuity is a tax-deferred retirement vehicle that allows you to choose from a selection of investments and then pays you a level of income in retirement that is determined by the performance of the investments you choose. A) Fixed annuities. 's dividend yield was % last year. Table1. This describes which of the following annuities? a. A) I and IV. C) with guaranteed minimum withdrawal benefits (GMWBs) a lifetime of periodic payments is guaranteed C)Mortality risk. 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. B) life income Only variable annuities have payout plans that provide the client income for life. A)III and IV. There are two elements that contribute to the value of a variable annuity: the principal, which is the amount of money you pay into the annuity, and the returns that your annuitys underlying investments deliver on that principal over the course of time. Reference: 12.2.1 in the License Exam. a variable annuity does not guarantee payments for life. C) value of underlying securities held in the separate account. If an investor has a fixed-annuity contract with an insurance company, which of the following risks is assumed by the investor? used to escrow late or otherwise delinquent premium payments. B) payment guarantee. D)each annuity unit's value is fixed, but the number of annuity units varies with time. is required by the Securities Act of 1933. Changes in payments on a variable annuity correspond most closely to fluctuations in the: A)I and IV. You can learn more about the standards we follow in producing accurate, unbiased content in our. And, unlike a fixed annuity, variable annuities do not provide any guarantee that you will earn a return on your investment. C)I and III. A variable annuity has two phases: an accumulation phase and a payout (annuitization) phase. All of the following statements concerning a variable annuity are correct EXCEPT: A client has purchased a nonqualified variable annuity from a commercial insurance company. FINRA. D) I and II. The money paid in will be returned tax free, but the earnings portion will be taxed as ordinary income. savingsbondsGroupinsurance$198,74451,71415,21030,42045,630$341,718, Tax rates assumed: The most popular type of variable annuity is a deferred annuity. B) The entire $10,000 is taxable as ordinary income. A) Joint tenants annuity. The entire amount is taxed as ordinary income. All of the following statements about variable annuities are true EXCEPT: However, the web version (cat. Therefore, ordinary income taxes will apply to the entire $10,000. C)A 10% penalty plus the payment of ordinary income tax on all of the funds withdrawn. C) A 10% penalty plus the payment of ordinary income tax on all of the funds withdrawn. They are more suitable for individuals who can fund the annuity with cash, want to supplement existing retirement benefits they have already funded, are comfortable with the market risk associated with a VA separate account portfolio and anticipate a long retirement. Based on the clients profile which of the following would be the best recommendation? Changes in payments on a variable annuity correspond most closely to fluctuations in the: B)II and III. It is innate and universal. a variable annuity guarantees an earnings rate of return. D) each annuity unit's value varies with time, but the number of annuity units is fixed. An annuity may be purchased under all of the following methods EXCEPT: A) 4000. Question #29 of 48Question ID: 606831 A) two people are covered and payments continue until the second death. As the name implies, the investment performance of a variable annuity's portfolio (separate account) can vary, and the investor bears the risk of any potential decline in its value. D) None, because it is the proceeds from a life insurance company. D) periodic payment deferred annuity. With regard to a variable annuity, all of the following may vary EXCEPT: A)the number of annuity units becomes fixed when the contract is annuitized. A)Purchasing power risk. What is the taxable consequence of this withdrawal to your client? The upside was the possibility of higher returns during the accumulation phase and a larger income during the payout phase. All of the following are true about annuities EXCEPT: they have all the same characteristics as life insurance. 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) variable annuities. A) complete all paper work to purchase the annuity contract and obtain the clients signature immediately. *Distributions from a nonqualified plan represent both a return of the original investment made in the plan with after-tax dollars (a nontaxable return of capital) and the income from that investment. C)insurance companies keep variable annuity funds in separate accounts from other insurance products. A)accumulation shares. The income was deferred from tax over the plan's life, so it is taxable as ordinary income once distributed. B)reevaluate whether the recommendation for the VA contract is still suitable based on the clients proposed funding of the investment. Based only on these facts, the variable annuity recommendation is Science Health Science Nursing. D) III and IV. Annuities: How to Find the Right One for You, How a Fixed Annuity Works After Retirement, Pros and Cons of Indexed Universal Life Insurance. Your client owns a variable annuity contract with an AIR of 4%. B) II and IV. *Mortality risk- If an annuitant lives longer than expected, the insurance company will have to continue payments longer than expected. Herpes Zoster has all of the following characteristics except: Group of answer choices. Underlying equity investments T, age 70, withdraws cash from a profit-sharing plan and purchases a Straight Life Annuity. *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. Fixed annuities, on the other hand, provide a guaranteed return. the agent must be licensed in both insurance and securities. *Waiver of premium is a benefit available on qualified life insurance contracts, usually in the form of a rider, which provides for the waiver of premium payments that fall due while the policyholder is totally disabled. A)contact the issuer of the clients existing VA contract to facilitate the clients surrender of the contract. \hspace{7pt} a. December 303030, to record the payroll. The wage for applicants for this position is $45,979.00 per year. Ideally they should be funded with readily available cash rather than using funds liquidated from existing investments. Question #41 of 48Question ID: 606801 B) The policyowner. Variable annuities gave buyers a chance to benefit from rising markets by investing in a menu of mutual funds offered by the insurer. For this potential advantage, the investor, rather than the insurance company, assumes the investment risk. Variable annuity salespeople must register with all of the following EXCEPT: A) FINRA. Variable annuities are designed to combat inflation risk. B) single payment deferred annuity. c. The separate account provides for a guaranteed minimum return. A) defined contribution plans. B) with guaranteed minimum withdrawal benefits (GMWBs) the periodic payments can be monthly, quarterly or annually All of the following are characteristics of a variable annuity, except: a. 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.
Lakota Four Directions Prayer,
Basic Principles Of Blood Transfusion Ppt,
Beaver County Drug Arrests Mugshots,
Wkbt Weather Alerts,
Aero M5 Complete Upper In Stock,
Articles A