If an investor has purchased an immediate variable annuity, which of the following statements best describe the investment? A registered person recommends the purchase of a variable annuity to one of his clients. D) II and IV. Reference: 12.3.1 in the License Exam. a. it performs a single task b. it is self-contained and independent of other modules c. it is relatively short d. all of the above are chamcleristics of a program module 7. Consequently, the client pays taxes only on the growth portion of the withdrawal ($10,000). When a variable annuity contract is annuitized, the number of annuity units is fixed. D) Capital gains tax on earnings exceeding basis. Universal variable life policies When the contract is annuitized, the annuitant is credited with a fixed number of annuity units. B) value of annuity units. 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. All of the following are accurate statements to make to the client EXCEPT A joint life with last survivor contract covers multiple annuitants and ceases payments at the death of the last surviving annuitant. The features of variable deferred annuities are many. This customer has no spouse or dependents, which negates the value of the death benefit. When the first party dies, the annuity payment is made to the survivor. C)Corporate bonds. A) two people are covered and payments continue until the second death. D) minimum guaranteed death benefit. While variable annuities have greater potential for earnings, since their interest rate rises and falls with their underlying investments, they can lose money. Distributions to the annuitant will fluctuate during the payout period. *Since this is a nonqualified annuity (with no tax deduction), the client pays taxes only on the growth portion or, in this case, $10,000. 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. B)FINRA. *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. Can I Borrow from My Annuity for a House Down Payment? A) It will be higher. Sample problems from Chapter 9. . C)I and IV. B)Variable annuities. 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? If at all you go deeper, then you will find a wide range of annuity products from a variety of companies. Designed to protect against inflation. Policyholders . D)money market funds. C)prime rate. \hspace{10pt} \text{Warehouse salaries} & 110,000 & \hspace{10pt} \text{Social security tax withheld} & 51,714\\ Each of the remaining statements are true. && \hspace{10pt}\text{Group insurance} & \underline{45,630}\\ IBM Noida, Uttar Pradesh, India1 month agoBe among the first 25 applicantsSee who IBM has hired for this roleNo longer accepting applications. B)part earnings and part cost basis 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. Once the contract is annuitized, monthly payments to the customer are: A) mortality guarantee. A)an accounting measure used to determine the contract owner's interest in the separate account. 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. What percentile is represented by $710? Variable annuity salespeople must be registered with FINRA and the state insurance department. Your 65-year-old client owns a nonqualified variable annuity. Classifying annuities There are many categories of annuities. Question #47 of 48Question ID: 606813 Based only on these facts, the variable annuity recommendation is The investor purchased accumulation units. Fixed annuities, on the other hand, provide a guaranteed return. A) periodic payment immediate annuity. Question #25 of 48Question ID: 606819 Practice all cards. B) I and II. This makes a total of $4,000 tax and penalty paid on the random withdrawal. Do homework Doing homework can help you learn and understand the material covered in class. A)II and IV. D)an accounting measure used to determine payments to the owner of the variable annuity. Payments from a variable annuity depend on the securities' value in the separate account's underlying investment portfolio. However, the web version (cat. Fixed Annuity, Retirement Annuities: Know the Pros and Cons. A) 4000. C)II and IV. A) a lifetime withdrawal benefit (LWB) or lifetime income benefit will make a periodic payment even if the account balance falls to zero A)variable annuities will protect an investor against capital loss. A) II and IV. national origin, genetics, disability, age, veteran status, or any other characteristic protected by law. 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. Expert Answer. C)earnings only and taxable order now. D) value of accumulation units. A)II and III. B)fixed in value until the holder retires. D) the number of annuity units becomes fixed when the contract is annuitized. When the annuitization option is selected, each payment represents both capital and earnings. Reference: 12.3.3 in the License Exam. Reference: 12.3.2.1 in the License Exam. D) II and IV. If an investor has a fixed-annuity contract with an insurance company, which of the following risks is assumed by the investor? Question #29 of 48Question ID: 606831 The money paid in will be returned tax free, but the earnings portion will be taxed as ordinary income. A) I and III. When the first party dies, the annuity payment is made to the survivor. D) There is no guarantee regarding the investment results of the separate account. Reference: 12.3.3 in the License Exam. C) value of underlying securities held in the separate account. 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. What is the taxable consequence of this withdrawal to your client? C)not suitable because a lifetime income rider is only for someone who is already retired *The return on a variable annuity is not guaranteed; it is determined by the underlying portfolio's value. During the accumulation phase, you make purchase payments. B) The proceeds minus John's cost basis taxed as ordinary income at Sue's tax rate. Drives - are hardwired characteristics of the brain that correct deficiencies or maintain an internal equilibrium by producing emotions to energize individuals. C)II and IV. C) payments continue for a pre-determined period of time. The value of these units varies with the performance of the separate account. D)the safety of the principal invested. C)II and IV. 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. For an investor, which of the following is the most important factor in determining the suitability of a variable annuity investment? 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: IV. Variable annuities operate in similar ways to . B)I and III. Over the past five years, 's dividend yield has averaged % per year. is required by the Securities Act of 1933. regulated under both securities and insurance laws. 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. Listing tax-deferred growth as an objective for retirement income, which of the following investments is most suitable? They can be classified by: Nature of the underlying investment - fixed or variable B) Life annuity. D) Variable Annuity. D) Life annuity with 10-year period certain. Round to the nearest hundredth of a percentile. C)the yield is always higher than bond yields. Question #14 of 48Question ID: 606823 Fixed Annuity: A fixed annuity is a type of annuity contract that allows for the accumulation of capital on a tax-deferred basis. This guideline has been prepared for use by Federal agencies. B) the state insurance department. All of the following statements concerning a variable annuity are correct EXCEPT: A)III and IV. Generally, a life-only contract pays the most per month because payments cease at the annuitant's death. B) 0. Question #13 of 48Question ID: 606822 Reference: 12.1.4.1 in the License Exam. The earnings are taxable but the cost basis is returned tax free. B) variable annuities. 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. The offers that appear in this table are from partnerships from which Investopedia receives compensation. We also reference original research from other reputable publishers where appropriate. Similarly, CDs are insured, thereby eliminating risk and guaranteeing a return. It was a lump-sum purchase. I. It is innate and universal. Question #37 of 48Question ID: 606817 C) II and IV. 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 deferred annuity is an insurance contract that promises to pay the buyer a regular stream of income, or a lump sum, at some date in the future. 10.1 This chapter addresses a number of ABS statistics relating to the economically active population which were not discussed elsewhere. How to Navigate Market Volatility While Saving for Retirement, Variable Annuity: Definition and How It Works, Vs. Life income riders are best suited for those who anticipate a lengthy retirement and are generally not yet retired when making the VA purchase. \hspace{10pt} Social security, 6%6\%6% on first $100,000\$100,000$100,000 of employee annual earnings B) The proceeds minus John's cost basis taxed as ordinary income at Sue's tax rate. A registered representative recommends a variable annuity with an income rider to a client. Science Health Science Nursing. An 18-year-old, unmarried high school student sought a safe investment for a $30,000 bequest until after she graduated from college. B) accumulation units. An ordinary simple annuity has the following characteristics: For example, most car loans are ordinary simple annuities where payments are. B) Ordinary income taxation on the earnings withdrawn until reaching the owner's cost basis. Question #38 of 48Question ID: 606798 Assuming that the payroll for the last week of the year is to be paid on December 313131, journalize the following entries: Skylar Clarine is a fact-checker and expert in personal finance with a range of experience including veterinary technology and film studies. Explain what is meant by positive and negative Complete a blank sample electronically to save yourself time and money. The value of the customer's account is converted into annuity units if and when the customer decides to annuitize the contract. Periodic payment deferred annuity. D) A 10% penalty plus the payment of ordinary income tax on funds withdrawn in excess of the owner's basis. a variable annuity guarantees an earnings rate of return. Typically, they allow one withdrawal each year during the accumulation phase. the state insurance commission. B) contact the issuer of the clients existing VA contract to facilitate the clients surrender of the contract. D) The investment risk is shared between the insurance company and the policyowner. The number of annuity units rises once annuitization begins. D) II and IV. C) II and III. Reference: 12.1.2.1.1 in the License Exam. The value of the separate account is now $30,000. A) variable payments for 10 years, followed by fixed payments for life. Distribution can take place before or during any solicitation for sale. *During the payout period, payments are based on a fixed number of annuity units established when the contract was annuitized. 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. If the annuitant dies during the accumulation period, his/her beneficiary will receive the promised annuity payments. The client's investment objectives, tax bracket, investment experience and risk tolerance all align well with a VA recommendation. B) accumulation units. D) a minimum of 10 years of variable payments, followed by additional variable payments for life. B) A 30 year old construction worker recently unemployed who wants to invest his severance pay amounting to 9 months salary. A security is any investment for profit with management performed by a third party. A)I and IV. If the contract holder dies before the period expires, the remaining payments are made to the beneficiary. PGIM Fixed Income has over $900 billion in assets under management across a broad array of fixed . The earnings on dollars invested into a variable annuity accumulate tax deferred, which is why variable annuities are popular products for retirement accumulation. B) The death benefit cannot ever be more than the guaranteed benefit. Variable annuities gave buyers a chance to benefit from rising markets by investing in a menu of mutual funds offered by the insurer. *Contributions to a nonqualified variable annuity are not tax deductible. All of the following statements regarding variable annuities are true EXCEPT: B) The entire $10,000 is taxable as ordinary income. However, a discussion should occur regarding the risks that are associated with a fixed annuity; purchasing power risk. Which of the following recommendations would best meet the customer profile? & \underline{\underline{\$1,014,000}} & \hspace{10pt} \text{U.S. savings bonds} & 30,420\\ What is the annual cash flow generated from the new machine? For example, when paying rent, the rent payment (PMT) . *The number of variable annuity accumulation units can rise during the accumulation period when additional units are being purchased. A 45-year-old employed individual with no other retirement accounts in place A separate account will invest in a number of different securities. B)IRAs. A) Ordinary income tax on earnings exceeding basis. 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. Her intent was to use the funds for the down payment on a house after graduation. A)not suitable B)Value of each annuity unit each month. C)annuity units. EEO IS THE LAW . A guaranteed death benefit guarantees that the beneficiary will receive a death benefit if the annuitant dies before the annuity begins paying benefits. An important basic characteristic of common stocks that makes them a suitable type of investment for the separate account of variable annuities is: A) I and IV. The tax on this amount is $3,000. Determine the revenue equation given the profit and expense equations. *Accumulation units represent units of ownership in a life insurance company's separate account when the contract is in the accumulation stage. The number of annuity units is fixed. B) variable annuities. A)IPO. 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 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. What type of annuity has a cash value that is based upon the performance of it's underlying investment funds? The tax on this is $2,800 ($10,000 x 28%). However, it does guarantee payments for life (mortality). Which of the following statements regarding variable annuities are TRUE? It is the starting point of motivation because they generate emotions. C) The insurance company. 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. D) the payout plans provide the client income for life. A) Fixed annuities. Question #28 of 48Question ID: 606821 Question #17 of 48Question ID: 606802 B) 10% penalty plus payment of ordinary income tax on all funds withdrawn. C) 3000. 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: A) defined contribution plans. 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

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