a variable annuity has which of the following characteristics a variable annuity has which of the following characteristics

Reference: 12.1.4 in the License Exam. 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 client agrees to purchase the contract and informs the RR that he will be cashing out a VA he purchased 2 years ago to fund the new contract and will forward the check as soon as he receives it. Unit 12: Variable Annuities Flashcards | Chegg.com B) taxed as ordinary income. A)I and IV. If you need to withdraw money from the account because of a financial emergency, you may face surrender fees. 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: 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. B) During the accumulation period. B)cost of living. D)Joint and last survivor annuity. The annuitized payments are viewed for tax purposes as Life annuity has the largest payout because less risk is assumed by the insurance company; there is no beneficiary in the event the annuitant dies. How does an indexed annuity differ from a fixed annuity? If the annuitant dies during the accumulation period, his/her beneficiary will receive the promised annuity payments. Once annuitized, the number of annuity units does not vary. The remainder of the premium is invested in the separate account. A)equity funds. The growth portion is taxed as a capital gain. a variable annuity does not guarantee an earnings rate of return. Then find the probability of the event. If an investor has a fixed-annuity contract with an insurance company, which of the following risks is assumed by the investor? Your customer, still working, informs you that she will be funding a variable annuity you have recommended from 2 sources: a refinancing of her primary home where she will be able to draw out equity that has built up since it was purchased 15 years ago, and cashing out another variable annuity that she recently purchased within the past 2 years without a lifetime income rider like the one you have recommended. B)Life annuity with period certain. D)suitable if she has enough equity in the home to fund the variable annuity without cashing out the other VA contract, Based on the information given in the question, the VA recommendation would not be suitable. Question #11 of 48Question ID: 606816 Distributed along a dermatome. B) II and III A) I and III. The annuity unit's value represents a guaranteed return. *Variable annuity contracts were devised to help investors keep pace with inflation. *A joint life with last survivor contract covers multiple annuitants and ceases payments at the death of the last surviving annuitant. "Variable Annuities: What You Should Know," Page 6. D) reevaluate whether the recommendation for the VA contract is still suitable based on the clients proposed funding of the investment. C)not suitable because a lifetime income rider is only for someone who is already retired In addition, if the customer is not at least 59-, there will be a tax penalty of an additional 10%. Question #40 of 48Question ID: 606800 What is the annual cash flow generated from the new machine? *The owner of a life annuity with 10-year period certain will receive payments for life, subject to a minimum of 10 years. When the contract is annuitized, the annuitant is credited with a fixed number of annuity units. A variable annuity is both an insurance and a securities product. B) The death benefit cannot ever be more than the guaranteed benefit. A guaranteed lifetime annuity promises to pay the owner an income for the rest of their life. B) Age 78, retired for 20 years, lives comfortably and wants to leave all liquid assets to children How Variable Life Insurance Works: Pros and Cons - ValuePenguin 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. D)A 10% penalty plus the payment of ordinary income tax on funds withdrawn in excess of the owner's basis. The number of accumulation units can rise during the accumulation period. These contracts come with high surrender charges. Distributions to the annuitant will fluctuate during the payout period. A 10% penalty applies only if distributions begin before age 59-. C)earnings only and taxable B) the rate of return is determined by the underlying portfolio's value. All of the following investment strategies offer either fully or partially tax-deductible contributions to individuals who meet eligibility requirements EXCEPT: A)2800. An investor who has purchased a nonqualified variable annuity has the right to: A)II and III. C)III and IV As part of the registration requirements, a prospectus must be filed and distributed to prospective investors. IBM Noida, Uttar Pradesh, India4 weeks agoBe among the first 25 applicantsSee who IBM has hired for this roleNo longer accepting applications. 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. C) Corporate bonds. Variable Annuities Flashcards - Cram.com *A variable annuity payout is determined by comparing account performance with AIR, and this month's payout with last month's payout. the SEC. Table1. C)Growth mutual funds Reference: 12.3.2.4 in the License Exam. Once the contract is annuitized, monthly payments to the customer are: D)the state insurance department. The entire amount is taxed as ordinary income. C)Variable annuity contract with a discussion regarding interest rate risk Outgoing personality with the ability to develop relationships (i.e., "People Person") and a sincere desire to help others Fearless, positive attitude, and willingness to be accountable for results Organized, detail-oriented, and excellent time-management skills A desire for continuous learning A demonstrated ability to quickly learn and continuously develop functional knowledge and an understanding of company products as well as administrative, claims, underwriting and marketing functions. 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: A prospectus for a variable annuity contract: Question #24 of 48Question ID: 606806 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. For an investor, which of the following is the most important factor in determining the suitability of a variable annuity investment? You can tailor the income stream to suit your needs. A)III and IV. Reference: 12.1.2 in the License Exam, Question #21 of 48Question ID: 606812 Your client has a large sum of money to invest from the proceeds of the sale of his home. This recommendation is: D) unsuitable because her situation exposes her to surrender charges and early withdrawal penalties in exchange for insufficient benefits. However, it does guarantee payments for life (mortality). When may a variable annuity account be surrendered? *A periodic payment immediate annuity is a contradiction in terms. D) Variable Annuity. Question #35 of 48Question ID: 606810 All of the following are characteristics of variable annuity contracts An annuity is an agreement for one person or organization to pay another a series of payments. Hire Velocity hiring Customer Escalation Agent in Tampa, Florida A customer has contributed $1,000 a year for 10 years to his tax-deferred nonqualified variable annuity. Question #43 of 48Question ID: 606809 Reference: 12.1.2 in the License Exam. A) Only during the payout period. C) be returned to the separate account. Are There Penalties for Withdrawing Money From Annuities? 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. This factor is used to establish the dollar amount of the first annuity payment. B) Ordinary income taxation on the earnings withdrawn until reaching the owner's cost basis. B)suitable regardless of funding sources Because the client is older than age 59-, he does not pay 10% premature distribution penalty tax. The tax on this is $2,800 ($10,000 x 28%). Supplemental income stream for retirement, not preservation of capital should be the catalyst to consider a VA and for anyone who may need access to the sum invested for any reason a VA would not be considered a suitable recommendation. B)Universal variable life policy. Reference: 12.1.2 in the License Exam. Question #45 of 48Question ID: 606795 B) life income LESSON 7: ANNUITIES - FIXED AND VARIABLE - course.uceusa.com A) 4000. 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. *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. Reference: 12.3.3 in the License Exam. The remainder of the premium is invested in the separate account. Based on the clients profile which of the following would be the best recommendation? The Project Gutenberg eBook of Memoirs of Extraordinary Popular The owner of a life annuity with 10-year period certain will receive payments for life, subject to a minimum of 10 years. As part of the registration requirements, a prospectus must be filed and distributed to prospective investors. variable annuity without paying tax at the time of the transfer. who needs access to the sum invested at later time. 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. Therefore only a fixed annuity could be considered as suitable. the state banking commission. D) an accounting measure used to determine the contract owner's interest in the separate account. C)II and IV. MetLife, Inc. Senior Customer Care Advocate Annuities ($22 per hour 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. must provide full and fair disclosure. Once a customer annuitizes a variable annuity, which of the following statements are TRUE? All of the following are characteristics of a variable annuity, except 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. d. Each month the payment will increase, decrease, or remain the same as the previous month's payment . A) complete all paper work to purchase the annuity contract and obtain the clients signature immediately. D)suggest to the client that perhaps a loan or refinancing his vacation home might be a better way to fund the contract purchase. When the second party dies, all payments cease. 7 - Annuities Flashcards | Quizlet Variable annuities grow tax-deferred, so you dont have to pay taxes on any investment gains until you begin receiving income or make a withdrawal. B)Tax-free municipal bonds Annuities due are a type of annuity where payments are made at the beginning of each payment period. The value of the annuity units is fixed. C) Tax-free municipal bonds The money paid in will be returned tax free, but the earnings portion will be taxed as ordinary income. A)number of annuity units. Reference: 12.2.1 in the License Exam, Question #48 of 48Question ID: 606835 A) I and II B) II and IV. Flashcards - Securities and Tax - FreezingBlue In a joint-and-last-survivor option, the annuity payment is made jointly to both parties while both are alive. A rider or statement of condition that allows a variable life insured to maintain policy coverage after becoming disabled is a benefit known as An annuity factor is taken from the annuity table, which considers, for example, the investor's sex and age. B)Value of each annuity unit each month. *Mortality risk- If an annuitant lives longer than expected, the insurance company will have to continue payments longer than expected. Contributions to an IRA may be tax deductible, depending on the individual's earnings and participation in a company-sponsored qualified retirement plan. Variable annuity salespeople must register with all of the following EXCEPT: A) FINRA. They offer broad diversification in the securities market and potential growth, all while using the power of tax deferral. Reference: 12.1.2.1.2 in the License Exam. At the end of the year your account has a value of 10750. Periodic payment deferred annuity. A) I and II. Spartan Technology Services and Solutions Private Limited is a subsidiary of IBM (International Business Machines) Corporation. You can learn more about the standards we follow in producing accurate, unbiased content in our. D) a minimum of 10 years of variable payments, followed by additional variable payments for life. C) IRAs. It was a lump-sum purchase. She will receive the annuity's entire value in a lump-sum payment. Reference: 12.1.2 in the License Exam, Question #39 of 48Question ID: 721469 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. C) such an annuity is designed to combat inflation risk. C) A 25year old public school teacher who would like to save enough for the purchase of her first home within the next 3 to 5 years. This recommendation is: && \hspace{10pt}\text{Group insurance} & \underline{45,630}\\ Consequently, the client pays taxes only on the growth portion of the withdrawal ($10,000). However, if you take a withdrawal during the contractssurrender period, which can be as long as 15 years, youll generally have to pay a surrender fee. A Variable Annuity Has Which of the Following Characteristics Fixed annuities, on the other hand, provide a guaranteed return. This makes a total of $4,000 tax and penalty paid on the random withdrawal. 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 . As of March 03, 2023, had a relative dividend yield of % compared to the industry median of %. C)It will be higher. C) II and IV Annuities are complicated products, so that may be easier said than done. Francisco R. - Financial Professional - Prudential Financial | LinkedIn Ideally they should be funded with readily available cash rather than using funds liquidated from existing investments. C) 10% penalty plus payment of ordinary income tax on all funds withdrawn exceeding basis. a. 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? &&& \underline{\underline{\$341,718}} This would not align with the couple's criteria for coverage as long as they both live. B) The policyowner. *Contributions to a nonqualified variable annuity are not tax deductible. B)part earnings and part cost basis D) I and II. a variable annuity guarantees payments for life. D) III and IV. C)A 10% penalty plus the payment of ordinary income tax on all of the funds withdrawn. Which of the following is NOT associated with characteristics of shares C) insurance guarantee. B) payment guarantee. A) Fixed annuities. A) I and II 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. The amount taxed is the amount of the lump-sum payment minus the deceased's cost basis in the investment. A registered representative explaining variable annuities to a customer would be CORRECT in stating that: Reference: 12.2.1 in the License Exam. D)suitable due to the relative safety of the investment. An individual who purchases a Life annuity is given protection against: the risk of living longer than expected The type of annuity that can be purchased with one monetary deposit is called a (n) Immediate annuity N purchases an annuity by making payments in an amount no less than $100 quarterly. Your customer in his early 30s has received a modest inheritance from a relative. *When money is deposited into the annuity, it is purchasing accumulation units. Her agent recommended she choose a variable annuity as a safe haven for the funds. Portfolio Compliance Risk Analyst Job in Newark, NJ at Prudential A variable annuity is a combination of 2 products: an insurance contract and a mutual fund. Annuities | FINRA.org Income that cannot be outlived by the owner If a customer is about to buy a variable annuity contract and wants to select an annuity with a payout option providing the largest possible monthly payment, which of the following payout options would be most suitable? Annuity death benefits are generally paid in a lump sum. Since the client is older than 59 at the time of distribution, the additional 10% penalty tax is not incurred. 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. A variable annuity is both an insurance and a securities product. Question #18 of 48Question ID: 606827 covers more than one person. *Contributions to a nonqualified annuity are made with the owner's after-tax dollars. A) mortality guarantee. D) Capital gains tax on earnings exceeding basis. B) The proceeds minus John's cost basis taxed as ordinary income at Sue's tax rate. A) I and IV. withdraw funds without any tax consequences. Reference: 12.3.3 in the License Exam. The second phase is triggered when the annuity owner asks the insurer to start the flow of income, often referred to as the payout phase. C)III and IV. She will receive the annuity's entire value in a lump-sum payment. During the payout period, payments are based on a fixed number of annuity units established when the contract was annuitized. Premiums made into the annuity purchase accumulation units. C)the yield is always higher than bond yields. There are also immediate annuities, which begin paying income right away. Securely download your document with other editable templates, any time, with PDFfiller. C) II and III. B) During the accumulation period. PGIM Fixed Income has over $900 billion in assets under management across a broad array of fixed . A client has purchased a nonqualified variable annuity from a commercial insurance company. 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. A)Ordinary income taxation on the earnings withdrawn until reaching the owner's cost basis. 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) I and III. Question #17 of 48Question ID: 606802 When money is deposited into the annuity, it is purchasing accumulation units. B) the number of annuity units is fixed, and their value remains fixed. D) II and IV. *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. Shortening the Securities Transaction Settlement Cycle D) the number of annuity units becomes fixed when the contract is annuitized. A variable annuity is a security and must be registered with the SEC, not FINRA. 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. Her agent recommended she choose a variable annuity as a safe haven for the funds. B) 0. He originally invested $29,000 4 years ago; it now has a value of $39,000. A) II and III. B) fixed payments for 10 years, followed by variable payments for life. Reference: 12.2.1 in the License Exam. 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. During the accumulation phase, you make purchase payments. D) 4200. Her intent was to use the funds for the down payment on a house after graduation. The number of annuity units is fixed at the time of annuitization. Dividing the funds available so as to fund 2 separate contracts, whether they be joint with last survivor or life income, would not be cost efficient for spouses. B) IPO. Each of the remaining statements are true. The Three Main Types of Annuity Insurance - Fixed, Variable, and Equity 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. C) II and IV. No paper. D) I and III. A) defined contribution plans. He makes several statements regarding the contract. B) the state insurance department. Complete a blank sample electronically to save yourself time and money. D)an accounting measure used to determine payments to the owner of the variable annuity. Full-Time. The income was deferred from tax over the plan's life, so it is taxable as ordinary income once distributed. (primary needs). B) the client may vote for the board of directors or board of managers. D) a minimum of 10 years of variable payments, followed by additional variable payments for life A)II and IV. In addition, an element of risk must be present. Solved The following are characteristics of a public | Chegg.com Drives - are hardwired characteristics of the brain that correct deficiencies or maintain an internal equilibrium by producing emotions to energize individuals. All of the following statements about variable annuities are true EXCEPT: The creation of an estate. A)Corporate debt securities D) Joint and last survivor annuity. vote on proposed changes in investment policy. II. B)Variable annuities. No Hibernation for Issuers of Index-Linked Variable Annuities and Index $63,000 b.$51,000 c. $18,000 d.$6,000. A) changes in common stock prices tend to be more closely related to changes in the cost of living than changes in bond prices.