*The accumulation period of a variable annuity may continue for many years. Reference: 12.1.2 in the License Exam, Question #23 of 48Question ID: 901858 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. C) early annuity phase-in If the contract holder dies before the period expires, the remaining payments are made to the beneficiary. Refinancing a home to draw out equity has been identified by FINRA as an abusive sales tactic regarding the sales of VAs. A) Joint tenants annuity. An investor who has purchased a nonqualified variable annuity has the right to: Variable annuities must be registered with: All of the following statements concerning a variable annuity are correct EXCEPT: D) variable annuities will protect an investor against capital loss. The Three Main Types of Annuity Insurance - Fixed, Variable, and Equity All of the following are characteristics of variable annuity contracts B) the number of annuity units is fixed, and their value remains fixed. 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. 111. Premiums made into the annuity purchase accumulation units. A joint life with last survivor contract covers multiple annuitants and ceases payments at the death of the last surviving annuitant. # 7 Annuities Flashcards | Quizlet A) I and II Her agent recommended she choose a variable annuity as a safe haven for the funds. A 10% penalty applies only if distributions begin before age 59-. Based on this information the RR should: Of the answer choices given the best would be to reevaluate the recommendation based on the new information tendered by the client. To comply with Regulation SP, a brokerage firm is required to do all of the following EXCEPT: A) deliver an annual notice of its information collecting and sharing policies to all customers. \hspace{10pt} Federal unemployment (employer only), 0.8%0.8\%0.8%. Science Health Science Nursing. Immediate annuities purchase annuity units directly. c) Construct a contingency table showing all the joint and marginal probabilities. B)4200. 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. a variable annuity has which of the following characteristics You can buy an annuity with either a lump sum or a series of payments, and the accounts value will grow accordingly. 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) partially a tax-free return of capital and partially taxable. Describe. B) The policyowner. B) the client may vote for the board of directors or board of managers. A) II and III. The money paid in will be returned tax free, but the earnings portion will be taxed as ordinary income. This includes transportation, food, lodging, and entertainment. externalities. Simple and general annuities problems with solutions IV. Immediate life annuity. \end{array} Question #44 of 48Question ID: 606797 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: Both products typically have a wide range of options across equities, bonds and money market instruments. Reference: 12.3.3 in the License Exam. While variable annuities have greater potential for earnings, since their interest rate rises and falls with their underlying investments, they can lose money. d) What is the probability that a user is from the United States, given that he or she logs on every day? C) value of underlying securities held in the separate account. Reference: 12.1.2.1.1 in the License Exam. Similarly, CDs are insured, thereby eliminating risk and guaranteeing a return. The annuitant may not contribute and withdraw simultaneously. B) variable annuities. Which of the following is NOT associated with characteristics of shares C) insurance companies keep variable annuity funds in separate accounts from other insurance products. If an investor has purchased an immediate variable annuity, which of the following statements best describe the investment? B) accumulation units. B) be paid to any legal heirs as recognized by the annuitant's state of domicile. D)I and II. *The owner of a life annuity with 10-year period certain will receive payments for life, subject to a minimum of 10 years. A) III and IV. There is a guaranteed minimum interest rate, normally amounting to between 1 and 3 percent. D)Dow Jones Industrial Average. no. A)defined contribution plans. must be filed with FINRA. continues payments only as long as all annuitants are still alive. A registered person recommends the purchase of a variable annuity to one of his clients. Every annuity has some characteristics in common. As part of the registration requirements, a prospectus must be filed and distributed to prospective investors. A)equity funds. A) waiver of premium Variable annuities provide protection from inflation because their monthly income can increase depending on the separate account's performance. Changes in payments on a variable annuity correspond most closely to fluctuations in the: B) Age 78, retired for 20 years, lives comfortably and wants to leave all liquid assets to children Which of the following statements is not true about the characteristics of a trend? Practice all cards. Question #46 of 48Question ID: 606796 Registration with FINRA is de facto registration with the SEC; no registration is required by the state banking commission. All of the following investment strategies offer either fully or partially tax-deductible contributions to individuals who meet eligibility requirements EXCEPT: Reference: 12.3.1 in the License Exam. B)each annuity unit's value varies with time, but the number of annuity units is fixed. Annuities are similar to other forms of investing in that the owner invests money with the hope that it will gain in value, but annuities also come with higher fees than most mutual funds. For an insurance company, mortality risk turns out unfavorably if: A customer has an investment objective of keeping pace with inflation while assuming moderate risk. Variable annuities provide protection from inflation because their monthly income can increase depending on the separate account's performance. D) Variable annuity. A) waiver of premium 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? B)fixed in value until the holder retires. B)variable annuities are classified as insurance products. 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? 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. C)the SEC. can be sold by someone with only an insurance license C) II and III. D) periodic payment deferred annuity. A) I and III. 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. 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. Variable annuities must be registered with: A) I and III. A joint life with last survivor annuity: B)It will be lower. Her agent recommended she choose a variable annuity as a safe haven for the funds. How does an indexed annuity differ from a fixed annuity? C) II and III. When the second party dies, all payments cease. Simple and general annuities problems with solutions *During the accumulation phase, the number of accumulation units will increase as additional money is invested. C) III and IV B) II and III B) life income && \hspace{10pt}\text{Group insurance} & \underline{45,630}\\ D)Variable annuity. Sub accounts and mutual funds are conceptually. His objective is monthly income that he can receive after he retires to supplement his small pension and social security benefits. A rider or statement of condition that allows a variable life insured to maintain policy coverage after becoming disabled is a benefit known as 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. D)Any tax due is deferred. Herpes Zoster has all of the following characteristics except: Group of answer choices. The growth portion is subject to a 10% penalty. *A joint life with last survivor contract covers multiple annuitants and ceases payments at the death of the last surviving annuitant. Which is it? Which of the following is not a characteristic of a program module? A) defined contribution plans. &&& \underline{\underline{\$341,718}} A) Only during the payout period. With variable annuities policyholders can choose from a number of investment opportunities. Assuming that the payroll for the last week of the year is to be paid on December 313131, journalize the following entries: C)100% tax deferred. B) During the accumulation period. What will this transaction provide? D) variable annuities may only be sold by registered representatives. B) fixed payments for 10 years, followed by variable payments for life. A variable annuity's separate account is: A) used for the investment of monies paid by variable annuity contract holders B) separate from the insurance company's general investments C) operated in a manner similar to an investment company D) as much a security as it is an insurance product All of the above C) 3800. This role is also eligible for annual short-term incentive compensation. The value of these units varies with the performance of the separate account. Question #12 of 48Question ID: 606814 A)II and IV. Reference: 12.1.2 in the License Exam. The number of accumulation units is always fixed throughout the accumulation period. *Payments from a variable annuity depend on the securities' value in the separate account's underlying investment portfolio. A 45-year-old investor takes a lump-sum distribution from a nonqualified variable annuity. A Variable Annuity has which of the following characteristics? Based on this information the RR should: Any withdrawals you make prior to the age of 59 may also be subject to a 10% tax penalty. must provide full and fair disclosure. A life with period certain contract guarantees payments for a specified number of years to a named beneficiary if the annuitant dies during that time. A registered representative recommends a variable annuity with an income rider to a client. A) Money market fund. *A periodic payment immediate annuity is a contradiction in terms. The tax on this amount is $3,000. D) accumulation shares. An ordinary simple annuity has the following characteristics: For example, most car loans are ordinary simple annuities where payments are. A customer is receiving annuitized payments from a variable annuity. Trends Networks and Critical Thinking Module 2 B) The death benefit cannot ever be more than the guaranteed benefit. How is the distribution taxed? vote for the investment adviser. C) During the annuity period. Changes in payments on a variable annuity correspond most closely to fluctuations in the: D) II and III. If you die before the payout phase, your beneficiaries may receive a. A)Fixed annuities. national origin, genetics, disability, age, veteran status, or any other characteristic protected by law. An annuity is an insurance product that promises to pay out income at a future date based on invested funds. How Are Nonqualified Variable Annuities Taxed? Investopedia requires writers to use primary sources to support their work. Typically, they allow one withdrawal each year during the accumulation phase. Question #18 of 48Question ID: 606827 B) Municipal bonds. A trend makes considerable influence or impact. That can adversely affect your returns over the long term, compared with other types of investments. The payout compared to the initial payout upon annuitization. Because common stocks are not fixed dollar investments, they have the opportunity to keep pace with inflation. And, unlike a fixed annuity, variable annuities do not provide any guarantee that you will earn a return on your investment. He wants to ensure that the client, in addition to meeting suitability requirements, is aware of certain variable annuity contract characteristics. An ordinary simple annuity has the following characteristics: For example, most car loans are ordinary simple annuities where payments are Get Started. A)the number of annuity units becomes fixed when the contract is annuitized. B) II and III The company's well-known Rock symbol is an icon of strength, stability, expertise and innovation that has stood the test of time. 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. Prudential Retirement Security Annuity VI is a group variable annuity (GVA) issued by Prudential Retirement Insurance and Annuity Company (PRIAC) which utilizes a Separate Account offered C) Corporate bonds. B)part earnings and part cost basis B)II and III. Life Insurance vs. Annuity: What's the Difference? 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 amount taxed is the amount of the lump-sum payment minus the deceased's cost basis in the investment. A customer has a nonqualified variable annuity. Ted's Bio; Fact Sheet; Hoja Informativa Del Ted Fund; Ted Fund Board 2021-22; 2021 Ted Fund Donors; Ted Fund Donors Over the Years. The investor has already paid tax on the contributions but the earnings have grown tax-deferred. C)none of these. Needs - are goal-directed forces that people experience. Skylar Clarine is a fact-checker and expert in personal finance with a range of experience including veterinary technology and film studies. do not have a separate account All of the following statements regarding variable annuities are true EXCEPT: A)number of annuity units. For a retired person, which of the following investments would provide the greatest protection against inflation? IBM is a global brand and has its presence in 170 countries and operates . Which of the following recommendations would best meet the customer profile? An investor who purchases a fixed annuity contract assumes purchasing-power risk. The return on a variable annuity is not guaranteed; it is determined by the underlying portfolio's value. A variable annuity is a type of annuity contract in which the value can vary based on the performance of an u . Reasonable accommodations may be made to enable individuals with disabilities to perform the essential functions. An annuity factor is taken from the annuity table, which considers, for example, the investor's sex and age. A) 4000. 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) I and III. It may be used by nongovernmental . 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. What is the taxable consequence of this withdrawal to your client? Vaccine has decreased the incidence. D) II and III. A)II and IV. B)a majority vote from the shareholders is required to change the investment objectives. Reference: 12.3.2.1 in the License Exam. You have 4 clients each expressing interest in a variable annuity contract. The growth portion is subject to a 10% penalty. C)I and IV. *A variable annuity payout is determined by comparing account performance with AIR, and this month's payout with last month's payout. B) the safety of the principal invested. However, they are protected by state guaranty associations in the event that the insurance company providing the product goes out of business. B)I and III. Reference: 12.1.4 in the License Exam. C) 3000. 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. The number of annuity units rises once annuitization begins. D) Two-thirds of the withdrawal is taxable as ordinary income. Accumulation Period of Fixed Annuities During this period, premiums are credited with interest which accumulates on a yearly basis. Hire Velocity hiring Customer Escalation Agent in Tampa, Florida D) I and II. **Because common stocks are not fixed dollar investments, they have the opportunity to keep pace with inflation. order now. Investopedia does not include all offers available in the marketplace. variable An immediate annuity consists of a Single Premium T has an annuity that guarantees an income payment for the rest of his life. Round to the nearest hundredth of a percentile. In a variable life annuity with 10-year period certain, a contract holder receives: I. If the owner of a variable annuity dies during the accumulation period, any death benefit will: Immediate life annuity with 10-year period certain. An accumulation unit in a variable annuity contract is: C)Mortality risk. A)IPO. Chapter 4: Annuities Flashcards | Chegg.com The number of annuity units is fixed at the time of annuitization. Since the client is older than 59 at the time of distribution, the additional 10% penalty tax is not incurred. 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. This customer has no spouse or dependents, which negates the value of the death benefit. C) such an annuity is designed to combat inflation risk. An individual retirement annuity is an investment vehiclesimilar to an individual retirement accountthat is offered by insurance companies. A)value of underlying securities held in the separate account. D)I and IV. A 32-year-old with a company-sponsored 401k plan who will need a lump sum soon to finance graduate school tuition Periodic payment deferred annuity. *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. Deal with mathematic Math is all about solving equations and finding the right answer. Annuity death benefits are generally paid in a lump sum. B) taxed as ordinary income. 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 . 8 annuities provide a guaranteed rate of return, whereas annuities provide conservative to aggressive investments whose rates of return are not guaranteed. Which 2 of the 4 client profiles would a VA be LEAST suitable for? Question #31 of 48Question ID: 606836 A 58-year-old individual near retirement who is in good health and anticipates a lengthy retirement The value of accumulation and annuity units varies with the investment performance of the separate account. C) with guaranteed minimum withdrawal benefits (GMWBs) a lifetime of periodic payments is guaranteed D)Investment risk. The LATF-adopted ILVA Actuarial Guideline has an effective date of July 1, 2024 for contracts, riders or endorsements issued on or after that date. Question #36 of 48Question ID: 606805 B) variable annuities. Distributed along a dermatome. Classifying annuities There are many categories of annuities. Variable Annuities Flashcards - Cram.com D) be paid to the issuing company to complete the plan. If the client, who is in a 30% tax bracket, makes a random withdrawal of $15,000, what will the tax liability to the IRS be? C)Keogh plans. In addition, if the customer is not at least 59-, there will be a tax penalty of an additional 10%. guarantees payments for a certain period of time. 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. must be filed with FINRA. A)not suitable B) 0. How to Rollover a Variable Annuity Into an IRA. IBM Noida, Uttar Pradesh, India4 weeks agoBe among the first 25 applicantsSee who IBM has hired for this roleNo longer accepting applications. Listing tax-deferred growth as an objective for retirement income, which of the following investments is most suitable? A)contact the issuer of the clients existing VA contract to facilitate the clients surrender of the contract.