D)Variable annuity contract with a discussion regarding legislative risk, A VA with its investments in the separate account subject to market risk would not align with the customer's objective. Are There Penalties for Withdrawing Money From Annuities? Spartan Technology Services and Solutions Private Limited is a subsidiary of IBM (International Business Machines) Corporation. d) What is the probability that a user is from the United States, given that he or she logs on every day? B) payment guarantee. Expert Answer. When a partial withdrawal is made from an annuity, the earnings are considered to be taken out first for tax purposes (or LIFO). An investor who has purchased a nonqualified variable annuity has the right to: A) I and IV. Reference: 12.2.1 in the License Exam. D) a variable annuity contract is subject to fluctuating values due to market fluctuations of the underlying separate accounts. The fixed annuities, indexed annuities, and variable annuities are some of the major types of annuities, of which one may find immediate annuities and deferred annuities. Sample problems from Chapter 9. . The value of the annuity units is fixed. In a variable annuity contract, the provision that guarantees the annuitant payments for life is called the: 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. A) There is no risk in a variable annuity. D)the state insurance department. variable annuity without paying tax at the time of the transfer. "Variable Annuities: What You Should Know," Pages 67. B)Fixed annuity contract with a discussion regarding timing risk B) Ordinary income taxation on the earnings withdrawn until reaching the owner's cost basis. 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. If an investor has purchased an immediate variable annuity, which of the following statements best describe the investment? Annuities: How to Find the Right One for You, How a Fixed Annuity Works After Retirement, Pros and Cons of Indexed Universal Life Insurance. D) the yield is always higher than mortgage yields. 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. B) Exchange traded Funds (ETFs) or Exchange traded Notes (ETNs) a variable annuity does not guarantee payments for life. Question #27 of 48Question ID: 606818 is required by the Securities Act of 1933. There are also immediate annuities, which begin paying income right away. Variable annuity salespeople must register with all of the following EXCEPT: A) FINRA. A 58-year-old individual near retirement who is in good health and anticipates a lengthy retirement D)money market funds. Variable annuities are designed to combat inflation risk. III) A hierarchy of corporate staff evaluates divisions' plans and performance. A)the state banking commission. B) The entire $10,000 is taxable as ordinary income. The amount taxed is the amount of the lump-sum payment minus the deceased's cost basis in the investment. In a joint-and-last-survivor option, the annuity payment is made jointly to both parties while both are alive. D) I and II. Investopedia requires writers to use primary sources to support their work. On an annual basis, the machine will produce 20,000 units with an expected selling price of $10, prime costs of$6 per unit, and a fixed cost allocation of $3 per unit. D) There is no guarantee regarding the investment results of the separate account. "Variable Annuities: What You Should Know," Page 3. A)I and IV. C)Corporate bonds. The number of variable annuity accumulation units can rise during the accumulation period when additional units are being purchased. Suggesting that loans or drawing equity from a home to fund VA contracts have also been targeted as abusive sales practices. A variable annuity is both an insurance and a securities product. Once the contract is annuitized, monthly payments to the customer are: If an investor has a fixed-annuity contract with an insurance company, which of the following risks is assumed by the investor? withdraw funds without any tax consequences. A)100% tax free. *The minimum guaranteed death benefit is provided by that portion of the payment invested in the insurance company's general account. D) The investment risk is shared between the insurance company and the policyowner. *Contributions to a nonqualified annuity are made with the owner's after-tax dollars. That can adversely affect your returns over the long term, compared with other types of investments. Question #15 of 48Question ID: 606804 D) III and IV. 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. He originally invested $29,000 4 years ago; it now has a value of $39,000. A) I and III. B)It will be lower. Your client owns a variable annuity contract with an AIR of 4%. A) be paid to a designated beneficiary. If your client, who is in the 28% tax bracket, makes a lump-sum withdrawal of $15,000, what tax liability results from the withdrawal? D) expense guarantee. *The customer, in the accumulation stage of the annuity, is holding accumulation units. D) Two-thirds of the withdrawal is taxable as ordinary income. Consequently, the client pays taxes only on the growth portion of the withdrawal ($10,000). 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? D)Dow Jones Industrial Average. Reference: 12.2.1 in the License Exam. As of March 03, 2023, had a relative dividend yield of % compared to the industry median of %. Question #32 of 48Question ID: 606815 D) an accounting measure used to determine the contract owner's interest in the separate account. B)Tax-free municipal bonds Listing tax-deferred growth as an objective for retirement income, which of the following investments is most suitable? D) not suitable because a lifetime income rider is only for someone who is already retired. B)I and III. D) periodic payment deferred annuity. Fixed annuities. Who assumes the investment risk in a variable annuity contract? D) I and III. The investor has already paid tax on the contributions but the earnings have grown tax-deferred. Since , has paid out quarterly dividends ranging from $0.00 to $0.00 per share. All of the following are characteristics of a variable annuity, except: a. A) Money market fund. 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? Herpes Zoster has all of the following characteristics except: C)II and III. Based only on these facts, the variable annuity recommendation is This describes which of the following annuities? 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 A rider or statement of condition that allows a variable life insured to maintain policy coverage after becoming disabled is a benefit known as A 45-year-old investor takes a lump-sum distribution from a nonqualified variable annuity. Variable annuity Which of the following is characteristic of fixed annuities? Immediate annuities purchase annuity units directly. B)100% taxable. vote for the investment adviser. This role is also eligible for annual short-term incentive compensation. 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. B)fixed in value until the holder retires. B) variable annuities. One of the following would achieve that objective but a suitability discussion regarding it's risk should also occur. B) value of annuity units. Owners of variable annuities, like owners of mutual fund shares, may vote on changes in investment policy and for an investment adviser. have investment risk that is assumed by the investor PGIM Fixed Income, a division of PGIM Inc., an SEC-registered investment adviser and a business unit of Prudential Financial, Inc. is seeking a Portfolio Risk Surveillance Analyst. Life income riders are best suited for those who anticipate a lengthy retirement and are generally not yet retired when making the VA purchase. She will receive the annuity's entire value in a lump-sum payment. The amount taxed is the amount of the lump-sum payment minus the deceased's cost basis in the investment. \hspace{7pt} b. January 444, to record the employers payroll taxes on the payroll to be paid on January 444. B) fixed payments for 10 years, followed by variable payments for life. No Hibernation for Issuers of Index-Linked Variable Annuities and Index Variable Annuities | Investor.gov An annuity payment is the dollar amount of the equal periodic payment in an annuity environment. He makes the following four statements, all of which are true EXCEPT Payments from a variable annuity depend on the securities' value in the separate account's underlying investment portfolio. B) II and III. Reference: 12.3.3 in the License Exam, Question #34 of 48Question ID: 606834 D) a minimum of 10 years of variable payments, followed by additional variable payments for life. C)It will be higher. *As contributions are made with after-tax dollars, only the earnings generated are taxed on withdrawal. b) What probability is the 20%20 \%20% mentioned above? In March, the actual net return to the separate account was 8%. A 10% penalty applies only if distributions begin before age 59-. Your client owns a variable annuity contract with an AIR of 4%. This guideline has been prepared for use by Federal agencies. B) Age 78, retired for 20 years, lives comfortably and wants to leave all liquid assets to children Random withdrawals do not guarantee how long the money will last because large withdrawals can deplete the funds before the annuitant dies. In deciding whether to put money into a variable annuity versus some other type of investment, its worth weighing these pros and cons. The correct answer was: partially a tax-free return of capital and partially taxable. 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. A) variable payments for 10 years, followed by fixed payments for life. Are Variable Annuities Subject to Required Minimum Distributions? While variable annuities have greater potential for earnings, since their interest rate rises and falls with their underlying investments, they can lose money. A) Ordinary income tax on earnings exceeding basis. There is a guaranteed minimum interest rate, normally amounting to between 1 and 3 percent. IV. Financial Sales Professional Job in Fort Worth, TX at New York Life B) variable annuities. Annuities due are a type of annuity where payments are made at the beginning of each payment period. B)IRAs. A) I and II Flashcards - Securities and Tax - FreezingBlue A joint-and-last-survivor annuity is a payout option where: The growth portion is subject to a 10% penalty. A guaranteed death benefit guarantees that the beneficiary will receive a death benefit if the annuitant dies before the annuity begins paying benefits. But again, the need to designate beneficiaries is not an issue for this annuitant. The value of the customer's account is converted into annuity units if and when the customer decides to annuitize the contract. 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. A customer has an investment objective of keeping pace with inflation while assuming moderate risk. The growth portion is subject to a 10% penalty. For an investor, which of the following is the most important factor in determining the suitability of a variable annuity investment? 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. No paper. The Three Main Types of Annuity Insurance - Fixed, Variable, and Equity B) 10% penalty plus payment of ordinary income tax on all funds withdrawn. D)II and III. I. A)not suitable C) suitable regardless of funding sources Which 2 of the 4 client profiles would a VA be LEAST suitable for? Based on the clients profile which of the following would be the best recommendation? The number of annuity units varies. Her agent recommended she choose a variable annuity as a safe haven for the funds. An annuity factor is taken from the annuity table, which considers, for example, the investor's sex and age. *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. C) with guaranteed minimum withdrawal benefits (GMWBs) a lifetime of periodic payments is guaranteed Variable annuities were introduced in the 1950s as an alternative to fixed annuities, which offer a guaranteedbut often lowpayout during the annuitization phase. It's somewhat similar to a variable life insurance policy in that: You can choose how the product's value is invested. required to be located off of the company's premises. The value of the customer's account is converted into annuity units if and when the customer decides to annuitize the contract. Reference: 12.3.2.1 in the License Exam. D) The fact that periodic payments into the contract may increase or decrease. Question #18 of 48Question ID: 606827 Question #28 of 48Question ID: 606821 C) Tax-free municipal bonds C)annuity units. An annuitant assumes the investment risk of a variable annuity and is not protected byt he insurance company from capital losses. *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. C) 10 years of variable payments. The separate account is NOT likely to invest in: *Universal variable life policies are insurance company products that should be purchased primarily for the insurance features they offer rather than as an investment. U.S. Securities and Exchange Commission. 6102.0.55.001 - Labour Statistics: Concepts, Sources and Methods, Dec 2005 C) the yield is always higher than bond yields. A)Ordinary income taxation on the earnings withdrawn until reaching the owner's cost basis. CH 7 Annuities Flashcards | Quizlet 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. Variable Annuities Flashcards | Quizlet A) It will be higher. Which of the following is NOT associated with characteristics of shares A)II and III A Variable Annuity Has Which of the Following Characteristics \hspace{10pt} Social security, 6%6\%6% on first $100,000\$100,000$100,000 of employee annual earnings Universal variable life policies Simple and general annuities problems with solutions D) II and IV. However, they are protected by state guaranty associations in the event that the insurance company providing the product goes out of business. a. C)Growth mutual funds C) III and IV Licensed to sell Variable Annuities in the following state(s): FL, TX . 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)partially a tax-free return of capital and partially taxable. You can buy an annuity with either a lump sum or a series of payments, and the accounts value will grow accordingly. B) The investor's marital status. Changes in payments on a variable annuity correspond most closely to fluctuations in the: Question #35 of 48Question ID: 606810 D) Life annuity with 10-year period certain. C. A client has purchased a nonqualified variable annuity from a commercial insurance company. For an insurance company, mortality risk turns out unfavorably if: The remainder of the premium is invested in the separate account. B)II and III. 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. For a nonqualified variable annuity, cost basis for the annuitant would use the after-tax dollars contributed.
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