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

the state insurance commission. A) It will be higher. Your 55-year-old client invested $50,000 four years ago in a nonqualified variable annuity. Herpes Zoster has all of the following characteristics except: Group of answer choices. Once a variable annuity has been annuitized: No paper. It may be used by nongovernmental . 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. Reference: 12.1.2.1.1 in the License Exam. B)Tax-free municipal bonds What is her total tax liability? Based on this information the RR should: Anthony Battle is a CERTIFIED FINANCIAL PLANNER professional. 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. 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. A customer has an investment objective of keeping pace with inflation while assuming moderate risk. A)II and III. D)variable annuities. *The accumulation period of a variable annuity may continue for many years. A) mortality guarantee. If your customer invests in a variable annuity and chooses to annuitize at age 65, which of the following statements are TRUE? Reference: 12.3.4 in the License Exam. C) Mutual fund portfolio consisting of blue chip stocks *When money is deposited into the annuity, it is purchasing accumulation units. This customer has no spouse or dependents, which negates the value of the death benefit. C)I and IV. B) a variable annuity contract is not required to be sold by prospectus because it is an insurance contract The annuity unit's value represents a guaranteed return. Investopedia does not include all offers available in the marketplace. The figure below illustrates a six-month annuity with monthly payments. *Variable annuities offer tax-deferred growth and are suitable for achieving supplemental retirement income. The offers that appear in this table are from partnerships from which Investopedia receives compensation. B) II and IV. A) Dow Jones Industrial Average. ($5,000) to a stock fund. D)A variable annuity, Variable annuities offer tax-deferred growth and are suitable for achieving supplemental retirement income. D) 100% tax deferred. Variable annuities provide protection from inflation because their monthly income can increase depending on the separate account's performance. A)variable annuities may only be sold by registered representatives. Universal variable life policies During payout, distributions will fluctuate due to performance in the separate account. An 18-year-old, unmarried high school student sought a safe investment for a $30,000 bequest until after she graduated from college. a variable annuity guarantees payments for life. Spartan Technology Services and Solutions Private Limited is a subsidiary of IBM (International Business Machines) Corporation. "Variable Annuities: What You Should Know," Page 3. Reference: 12.1.1 in the License Exam. Securely download your document with other editable templates, any time, with PDFfiller. 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. A)equity funds. D)an accounting measure used to determine payments to the owner of the variable annuity. The number of accumulation units is always fixed throughout the accumulation period. 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. Round to the nearest hundredth of a percentile. 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. If the account is annuitized, the investor has chosen a payout option. When the first party dies, the annuity payment is made to the survivor. Reference: 12.2.1 in the License Exam, Question #48 of 48Question ID: 606835 D) I and IV 10.1 This chapter addresses a number of ABS statistics relating to the economically active population which were not discussed elsewhere. Reference: 12.1.4.1 in the License Exam. Reference: 12.2.1 in the License Exam. *Variable annuity contracts were devised to help investors keep pace with inflation. must be filed with FINRA. A)100% tax free. B) fixed in value until the holder retires. A variable annuity is both an insurance and a securities product. Question #41 of 48Question ID: 606801 C)insurance companies keep variable annuity funds in separate accounts from other insurance products. D) I and IV. C) value of underlying securities held in the separate account. Question #46 of 48Question ID: 606796 The $30,000 contract value represents $10,000 of contributions and $20,000 of earnings. If the owner of a variable annuity dies during the accumulation period, any death benefit will: If an investor has a fixed-annuity contract with an insurance company, which of the following risks is assumed by the investor? The separate account performance compared to an assumed interest rate. A registered representative recommends a variable annuity with an income rider to a client. Which of the following statements regarding variable annuities are TRUE? can be sold by someone with only an insurance license D) The fact that periodic payments into the contract may increase or decrease. B)100% taxable. . Reference: 12.1.2 in the License Exam. Immediate life annuity with 10-year period certain. This compensation may impact how and where listings appear. A) II 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. Question #12 of 48Question ID: 606814 Immediate annuities purchase annuity units directly. For a retired person, which of the following investments would provide the greatest protection against inflation? D)0. This factor is used to establish the dollar amount of the first annuity payment. *The number of variable annuity accumulation units can rise during the accumulation period when additional units are being purchased. B) Municipal bonds. Can I Borrow from My Annuity for a House Down Payment? Reference: 12.3.3 in the License Exam. 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. \hspace{10pt} State unemployment (employer only), 3.8%3.8\%3.8% Reference: 12.1.2 in the License Exam. B)It will be lower. A joint life with last survivor contract covers multiple annuitants and ceases payments at the death of the last surviving annuitant. Every annuity has some characteristics in common. B) taxed as ordinary income. D)accumulation units. There is a guaranteed minimum interest rate, normally amounting to between 1 and 3 percent. B)Value of each annuity unit each month. A) The fact that the annuity payment may increase or decrease. All of the following investment strategies offer either fully or partially tax-deductible contributions to individuals who meet eligibility requirements EXCEPT: A)II and IV. The $30,000 contract value represents $10,000 of contributions and $20,000 of earnings. Sub accounts and mutual funds are conceptually. D)II and III. C) the yield is always higher than bond yields. variable An immediate annuity consists of a Single Premium T has an annuity that guarantees an income payment for the rest of his life. Because common stocks are not fixed dollar investments, they have the opportunity to keep pace with inflation. Question #40 of 48Question ID: 606800 B) I and II. Life income riders are best suited for those who anticipate a lengthy retirement and are generally not yet retired when making the VA purchase. Question #20 of 48Question ID: 606808 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. During the payout period, payments are based on a fixed number of annuity units established when the contract was annuitized. The number of annuity units varies. A) number of annuity units. B) I and IV. It is innate and universal. The return on a variable annuity is not guaranteed; it is determined by the underlying portfolio's value. A) II and III. The trial of the assassins commenced on the following day; and the evidence being so clear, they were both found guilty, and condemned, to be broken alive on the wheel. The beneficiary is taxed at ordinary income rates during the year the lump sum is received. Are Variable Annuities Subject to Required Minimum Distributions? A variable annuity is a combination of 2 products: an insurance contract and a mutual fund. C)such an annuity is designed to combat inflation risk. The number of accumulation units is always fixed throughout the accumulation period. Variable annuities were introduced in the 1950s as an alternative to fixed annuities, which offer a guaranteedbut often lowpayout during the annuitization phase. \hspace{7pt} b. January 444, to record the employers payroll taxes on the payroll to be paid on January 444. With regard to a variable annuity, all of the following may vary EXCEPT: Reference: 12.3.3 in the License Exam. 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. D)II and III. An individual retirement annuity is an investment vehiclesimilar to an individual retirement accountthat is offered by insurance companies. In a variable annuity contract, the provision that guarantees the annuitant payments for life is called the: 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. covers more than one person. B) The proceeds minus John's cost basis taxed as ordinary income at Sue's tax rate. As part of his profile he stresses that he has had uncomfortable experiences in the past with the stock market and is not inclined to invest in anything that is based on stock market performance and would opt for principal protection instead. The number of annuity units is fixed. A variable annuity is both an insurance and a securities product. The company's well-known Rock symbol is an icon of strength, stability, expertise and innovation that has stood the test of time. A) number of annuity units. B) prime rate. is required by the Securities Act of 1933. D) I and IV. A) I and II. D) Capital gains tax on earnings exceeding basis. 8 annuities provide a guaranteed rate of return, whereas annuities provide conservative to aggressive investments whose rates of return are not guaranteed. A) II and IV. Annuities due are a type of annuity where payments are made at the beginning of each payment period. She may choose to receive monthly payments for the rest of her life. How does an indexed annuity differ from a fixed annuity? Practice all cards. 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. D) II and IV. B) Age 78, retired for 20 years, lives comfortably and wants to leave all liquid assets to children The fees on variable annuities can be quite hefty. D) I and II. What Are the Risks of Annuities in a Recession? B)II and III. All of the following statements regarding variable annuities are true EXCEPT: A) variable annuities offer the investor protection against capital loss. The value of the separate account is now $30,000. Consequently, the client pays taxes only on the growth portion of the withdrawal ($10,000). The features of variable deferred annuities are many. B) Ordinary income taxation on the earnings withdrawn until reaching the owner's cost basis. A prospectus for a variable annuity contract: Refinancing a home to draw out equity has been identified by FINRA as an abusive sales tactic regarding the sales of VAs. All of the following investment strategies offer either fully or partially tax-deductible contributions to individuals who meet eligibility requirements EXCEPT: Of the answer choices given the best would be to reevaluate the recommendation based on the new information tendered by the client. Table1. the state banking commission. Variable annuities provide protection from inflation because their monthly income can increase depending on the separate account's performance. Reference: 12.1.2.1.2 in the License Exam. C) Unit refund life option *Contributions to a nonqualified variable annuity are not tax deductible. D)Investment risk. Generally, a life-only contract pays the most per month because payments cease at the annuitant's death. An investor owning which of the following variable annuity contracts would hold accumulation units? The accumulation period of a variable annuity may continue for many years. A) be paid to a designated beneficiary. Annuities: How to Find the Right One for You, How a Fixed Annuity Works After Retirement, Pros and Cons of Indexed Universal Life Insurance. A single lump-sum investment is made, and payments begin immediately, since the investor has purchased annuity units. A) I and III. About Us *Fixed income instruments, like bonds and fixed annuities, are subject to purchasing power risk. d) What is the probability that a user is from the United States, given that he or she logs on every day? In addition, if the customer is not at least 59-, there will be a tax penalty of an additional 10%. Question #26 of 48Question ID: 606811 A) Age 56, available cash to invest, makes the maximum retirement plan contributions to an existing IRA and 401(k) plan You can learn more about the standards we follow in producing accurate, unbiased content in our. Contributions to an IRA may be tax deductible, depending on the individual's earnings and participation in a company-sponsored qualified retirement plan. A) defined contribution plans. A) I and IV. Future annuity payments will vary according to the separate account's performance. The growth portion is taxed as ordinary income. Often used for retirement planning purposes, it is meant to provide a regular (monthly, quarterly, annual) income stream, starting at some point in the future. *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) I and II. C) payments continue for a pre-determined period of time. The growth portion is taxed as ordinary income. *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. Question #33 of 48Question ID: 606832 Fixed annuities pay a fixed monthly benefit which loses purchasing power if there is inflation. An immediate annuity is designed to pay an income one time-period after the immediate annuity is bought. Therefore, ordinary income taxes will apply to the entire $10,000. A) a variable annuity contract will provide a fluctuating monthly check upon the annuitization of the contract A)II and IV. D) I and III. Similarly, CDs are insured, thereby eliminating risk and guaranteeing a return. She will receive the annuity's entire value in a lump-sum payment. 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. A) A 75 year old women, who is a former executive retired for over ten years who wants to preserve as much capital as she can to leave to her two grandchildren. A) Fixed Annuity Reference: 12.2.1 in the License Exam. B) The policyowner. D) I and III The income was deferred from tax over the plan's life, so it is taxable as ordinary income once distributed. Upon John's death during the accumulation period, Sue takes a lump-sum payment. 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. If the contract holder dies before the period expires, the remaining payments are made to the beneficiary. D)Variable annuity. The number of accumulation units can rise during the accumulation period. A) The policy provides a minimum guaranteed death benefit. A)each annuity unit's value and the number of annuity units vary with time. The remainder of the premium is invested in the separate account. A) I and II B) A 30 year old construction worker recently unemployed who wants to invest his severance pay amounting to 9 months salary. B) Life annuity. Reference: 12.3.3 in the License Exam. If the data is normally distributed with standard deviation$198, find the percent of vacationers who spent less than $1,200 per day. D) not suitable because a lifetime income rider is only for someone who is already retired. *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. 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 Question #32 of 48Question ID: 606815 There is no clear answer to this. C) II and IV. IBM Noida, Uttar Pradesh, India1 month agoBe among the first 25 applicantsSee who IBM has hired for this roleNo longer accepting applications. P=525p2+65,326p185,000E=326p+185,000P=-525 p^{2}+65,326 p-185,000 \quad E=-326 p+185,000P=525p2+65,326p185,000E=326p+185,000. The correct answer was: partially a tax-free return of capital and partially taxable. Once a customer annuitizes a variable annuity, which of the following statements are TRUE? C)the number of annuity units is fixed, and their value remains fixed. With regard to a variable annuity, all of the following may vary EXCEPT: Periodic payment deferred annuity. The value of a variable annuity is based on the performance of an underlying portfolio of sub accounts selected by the annuity owner. 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. *Universal variable life policies are insurance company products that should be purchased primarily for the insurance features they offer rather than as an investment. Reference: 12.1.4.1 in the License Exam. B) the state insurance department. C) II and III. D)I and III. national origin, genetics, disability, age, veteran status, or any other characteristic protected by law. 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. 's dividend yield was % last year. C)the SEC. What Are the Biggest Disadvantages of Annuities? Reference: 12.1.2.1.1 in the License Exam. The annuity unit's value represents a guaranteed return. do not have a separate account This guideline has been prepared for use by Federal agencies. Variable annuity Which of the following is characteristic of fixed annuities? B) the number of annuity units is fixed, and their value remains fixed. A customer has a nonqualified variable annuity. An accumulation unit in a variable annuity contract is: C) suitable regardless of funding sources An investor who purchases a fixed annuity contract assumes purchasing-power risk. A variable annuity does not guarantee an earnings rate because earnings will depend on the performance of the separate account. D) Keogh plans. IV. On withdrawals from a nonqualified annuity, taxes are paid only on the amount that exceeds cost basis (the amount paid into the annuity). D) expense guarantee. Annuity units are units of ownership when the contract is in the payout stage. The remainder of the premium is invested in the separate account. must precede every sales presentation. a variable annuity does not guarantee an earnings rate of return. 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 . That can adversely affect your returns over the long term, compared with other types of investments. C)II and IV. The tax on this amount is $3,000. The investor purchased accumulation units. Question #14 of 48Question ID: 606823 Job Classification: Corporate - Legal and Compliance. D) I and IV. 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. U.S. Securities and Exchange Commission. B) contact the issuer of the clients existing VA contract to facilitate the clients surrender of the contract. 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? A. For a nonqualified variable annuity, cost basis for the annuitant would use the after-tax dollars contributed. Reasonable accommodations may be made to enable individuals with disabilities to perform the essential functions. C) It will stay the same. The noble relatives of the Count d'Horn absolutely blocked up the ante-chambers of the regent, praying for mercy on the misguided youth, and alleging that he was insane . \hspace{10pt} Federal unemployment (employer only), 0.8%0.8\%0.8%. Qualified Longevity Annuity Contract (QLAC): Definition, Taxes, and Example, Present Value of an Annuity: Meaning, Formula, and Example, Future Value of an Annuity: What Is It, Formula, and Calculation, Calculating Present and Future Value of Annuities, Present Value Interest Factor of Annuity (PVIFA) Formula, Tables. A 45-year-old investor takes a lump-sum distribution from a nonqualified variable annuity. C)Corporate bonds. *An immediate annuity has no accumulation period. The money paid in will be returned tax free, but the earnings portion will be taxed as ordinary income. Fixed annuities. B)fixed in value until the holder retires. Fixed annuities typically earn at a lower, stable rate. B)I and II *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. At the end of the year your account has a value of 10750. Distributions to the annuitant will fluctuate during the payout period. IBM is a global brand and has its presence in 170 countries and operates . I. Designed to protect against inflation. B) II and III. If this client is in the payout phase, how would his April payment compare to his March payment? A registered person recommends the purchase of a variable annuity to one of his clients. A 58-year-old individual near retirement who is in good health and anticipates a lengthy retirement Question #37 of 48Question ID: 606817 A) The fact that the annuity payment may increase or decrease. In addition, if the customer is not at least 59-, there will be a tax penalty of an additional 10%. C) II and IV. If the separate account of a variable annuity with an AIR of 4% had actual net earnings of 8% in March, the April payment will be higher than the March payment. Your customer is interested in a variable annuity but is unclear on some of the details regarding different specifications and riders that can be attached to the contract. 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. What is the annual cash flow generated from the new machine? Ideally they should be funded with readily available cash rather than using funds liquidated from existing investments. The anti-money laundering rules for insurance companies highlight that each insurance company - like other financial institutions subject to anti-money laundering program requirements - must develop a risk-based anti-money laundering program that identifies, assesses, and mitigates any risks of money laundering, terrorist financing, and other 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. B) The entire $10,000 is taxable as ordinary income. A) mortality guarantee. The growth portion is subject to a 10% penalty. 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: