*A joint life with last survivor contract covers multiple annuitants and ceases payments at the death of the last surviving annuitant. When the contract is annuitized, the annuitant is credited with a fixed number of annuity units. None of the other investments listed here offer tax-deferred growth. In addition, an element of risk must be present. a life insurance holder dies sooner than expected. B) Municipal bonds. 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. C) number of accumulation units. 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. What are the different types of annuities? | III The most popular type of variable annuity is a deferred annuity. Diagnosis is made by punch biopsy. A prospectus for a variable annuity contract: During the accumulation phase, you make purchase payments. 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. B)IRAs. Variable annuity salespeople must register with all of the following EXCEPT: A) Joint tenants annuity. Is F&G Annuities & Life Inc (FG) a Good Dividend Stock? | AAII D)Variable annuity. must provide full and fair disclosure. "Variable Annuities: What You Should Know," Pages 67. If at all you go deeper, then you will find a wide range of annuity products from a variety of companies. B) single payment deferred annuity. Travel Times Journal found that the average per person cost of a 10-day trip along the Pacific coast, per person, is $1,015. B) II and IV. Question #13 of 48Question ID: 606822 The amount taxed is the amount of the lump-sum payment minus the deceased's cost basis in the investment. Question #37 of 48Question ID: 606817 On any device & OS. Needs - are goal-directed forces that people experience. The value of the annuity units varies. PDF The NIST definition of cloud computing B)corporate stock. a variable annuity guarantees an earnings rate of return. 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. Paraplanner / Marketing Support Specialist Job in Austin, TX If the annuitant dies during the accumulation period, his/her beneficiary will receive the promised annuity payments. D) not suitable because a lifetime income rider is only for someone who is already retired. D)I and IV, Universal variable life policies are insurance company products that should be purchased primarily for the insurance features they offer rather than as an investment. You can buy an annuity with either a lump sum or a series of payments, and the accounts value will grow accordingly. C) There is no tax as the withdrawal is considered return of capital. All of the following investment strategies offer either fully or partially tax-deductible contributions to individuals who meet eligibility requirements EXCEPT: Withdrawals from a nonqualified variable annuity are made on a LIFO basis, so the taxable earnings are considered taken out before principal. Question #41 of 48Question ID: 606801 Variable Annuities Flashcards | Quizlet used for the investment of funds paid by contract holders. do not have a separate account C)insurance companies keep variable annuity funds in separate accounts from other insurance products. Fixed annuities. C)the SEC. Over the past five years, 's dividend yield has averaged % per year. *Accumulation units represent units of ownership in a life insurance company's separate account when the contract is in the accumulation stage. Question #46 of 48Question ID: 606796 Once the contract is annuitized, monthly payments to the customer are: No software installation. *A periodic payment immediate annuity is a contradiction in terms. He makes the following four statements, all of which are true EXCEPT Reference: 12.2.1 in the License Exam, Question #48 of 48Question ID: 606835 Distributions from nonqualified variable annuities are: B)I and III. Solved 6. Which of the following is not a characteristic of | Chegg.com The value of the separate account is now $30,000. No paper. Reference: 12.1.2.1.1 in the License Exam. It's somewhat similar to a variable life insurance policy in that: You can choose how the product's value is invested. Frequently Asked Questions Anti-Money Laundering Program and Suspicious When a variable annuity contract is annuitized, the number of annuity units is fixed. Which of the following is not characteristic of a fixed annuity? B)100% taxable. B) Life annuity. The value of accumulation and annuity units varies with the investment performance of the separate account. D)the safety of the principal invested. Your client owns a variable annuity contract with an AIR of 4%. 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? C) Universal variable life policy. "Variable Annuities: What You Should Know," Page 10. IV. In addition, if the customer is not at least 59-, there will be a tax penalty of an additional 10%. Herpes Zoster has all of the following characteristics except: All of the following investment strategies offer either fully or partially tax-deductible contributions to individuals who meet eligibility requirements EXCEPT: \hspace{7pt} a. December 303030, to record the payroll. About Us The remainder of the premium is invested in the separate account. A)unsuitable because the return on something as conservative as a variable annuity tends to be low. Which of the following statements is not true about the characteristics of a trend? Chapter 6-Classification Annuities Flashcards | Quizlet The annuity unit's value represents a guaranteed return. There are two interest rates under fixed annuities. *The number of variable annuity accumulation units can rise during the accumulation period when additional units are being purchased. U.S. Securities and Exchange Commission. The number of annuity units varies. However, it does guarantee payments for life (mortality). c. The separate account provides for a guaranteed minimum return. Skylar Clarine is a fact-checker and expert in personal finance with a range of experience including veterinary technology and film studies. A) I and III. For example, when paying rent, the rent payment (PMT) Which of the following recommendations would best meet the customer profile? Reference: 12.1.2 in the License Exam. 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. *The customer, in the accumulation stage of the annuity, is holding accumulation units. 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. Periodic payments are not a consideration because normally the payments into an annuity are level or in a lump sum. 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. A)It will stay the same. When the annuitization option is selected, each payment represents both capital and earnings. Of the answer choices given the best would be to reevaluate the recommendation based on the new information tendered by the client. a variable annuity guarantees payments for life. Question #47 of 48Question ID: 606813 All of the following are characteristics of a variable annuity, except 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. C)A 10% penalty plus the payment of ordinary income tax on all of the funds withdrawn. Suggesting that loans or drawing equity from a home to fund VA contracts have also been targeted as abusive sales practices. D) Two-thirds of the withdrawal is taxable as ordinary income. C)Money market fund. I. D) I and III. C)the number of annuity units is fixed, and their value remains fixed. And, unlike a fixed annuity, variable annuities do not provide any guarantee that you will earn a return on your investment. B)mutual fund units. There is no clear answer to this. 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. The accumulation unit's value is used to calculate the total value of the account. C) insurance companies keep variable annuity funds in separate accounts from other insurance products. C) Corporate bonds. These contracts cover both lives and will continue to make payments until the last spouse dies. During the accumulation phase, the number of accumulation units will increase as additional money is invested. B) the client may vote for the board of directors or board of managers. A 45-year-old investor takes a lump-sum distribution from a nonqualified variable annuity. 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. A)variable annuities will protect an investor against capital loss. Full-Time. C)with guaranteed minimum withdrawal benefits (GMWBs) the periodic payments can be monthly, quarterly or annually D)Dow Jones Industrial Average. A) a variable annuity contract will provide a fluctuating monthly check upon the annuitization of the contract Consequently, the client pays taxes only on the growth portion of the withdrawal ($10,000). Question #32 of 48Question ID: 606815 The wage for applicants for this position is $45,979.00 per year. Home; About. 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: \hspace{10pt} State unemployment (employer only), 3.8%3.8\%3.8% If the customer takes a withdrawal of $10,000, what are the tax consequences? 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 . Variable Annuity Features | Annuity Guys What percentile is represented by $710? View full document. D) reevaluate whether the recommendation for the VA contract is still suitable based on the clients proposed funding of the investment. A) Fixed annuities. D)A variable annuity, Variable annuities offer tax-deferred growth and are suitable for achieving supplemental retirement income. The number of accumulation units is always fixed throughout the accumulation period. Reference: 12.1.2 in the License Exam. While a variable annuity has the benefit of tax-deferred growth, its annual expenses are likely to be much higher than the expenses of a typical mutual fund. Annuities due are a type of annuity where payments are made at the beginning of each payment period. When a partial withdrawal is made from an annuity, the earnings are considered to be taken out first for tax purposes (or LIFO). For a retired person, which of the following investments would provide the greatest protection against inflation? 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. A) It will be higher. A) II and III. All of the following are accurate statements to make to the client EXCEPT *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. What is the annual cash flow generated from the new machine? C) II and IV. With regard to a variable annuity, all of the following may vary EXCEPT: *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. D)an accounting measure used to determine payments to the owner of the variable annuity. Annuities | FINRA.org B) I and III. 222. 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. *Contributions to a nonqualified variable annuity are not tax deductible. 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. &&& \underline{\underline{\$341,718}} II. C)III and IV A customer is receiving annuitized payments from a variable annuity. Reference: 12.1.1 in the License Exam. C) payments continue for a pre-determined period of time. We also reference original research from other reputable publishers where appropriate. A)Fixed annuity contract with a discussion regarding purchasing power risk The value of accumulation and annuity units varies with the investment performance of the separate account. 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. Guaranteed Lifetime Annuity: How They Work, When They Pay You, This is also generally true of retirement plans. PGIM Fixed Income has over $900 billion in assets under management across a broad array of fixed . Once a variable annuity has been annuitized: Reference: 12.1.4.2 in the License Exam. Reference: 12.3.3 in the License Exam. C)Keogh plans. B) I and II. is required by the Securities Act of 1933. (primary needs). Reasonable accommodations may be made to enable individuals with disabilities to perform the essential functions. What type of annuity has a cash value that is based upon the performance of it's underlying investment funds? Chapter 4: Annuities Flashcards | Chegg.com C) such an annuity is designed to combat inflation risk. Underlying equity investments T, age 70, withdraws cash from a profit-sharing plan and purchases a Straight Life Annuity. In this case, the investor is taking a lump-sum distribution before reaching age 59- and must pay an additional 10% penalty on the taxable amount. 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. Cashing out life insurance policies or VAs where steep surrender charges are likely to exist, particularly in the earlier years of those contracts, is also considered abusive. Of the four client profiles below which might be the best suited for a variable annuity recommendation? The income was deferred from tax over the plan's life, so it is taxable as ordinary income once distributed. 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. 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. *Mortality risk- If an annuitant lives longer than expected, the insurance company will have to continue payments longer than expected. D)the rate of return is determined by the underlying portfolio's value. Herpes Zoster has all of the following characteristics except: Group of answer choices. In a variable annuity contract, the provision that guarantees the annuitant payments for life is called the: *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)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. C) suitable regardless of funding sources A) 4000. If the contract holder dies before the period expires, the remaining payments are made to the beneficiary. A single lump-sum investment is made, and payments begin immediately, since the investor has purchased annuity units. Your customer in his early 30s has received a modest inheritance from a relative. 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. Variable Annuities. Once a variable annuity has been annuitized: Reference: 12.2.1 in the License Exam. The payout compared to last month's payout. When the second party dies, all payments cease. No Hibernation for Issuers of Index-Linked Variable Annuities and Index An investor who purchases a fixed annuity contract assumes purchasing-power risk. C)Growth mutual funds C) II and IV. C)Mortality risk. A Variable Annuity has which of the following characteristics? The value of the customer's account is converted into annuity units if and when the customer decides to annuitize the contract. Because the client is older than age 59-, he does not pay 10% premature distribution penalty tax. (Check all that apply.) C)such an annuity is designed to combat inflation risk. Simple and general annuities problems with solutions Variable Annuity: Definition and How It Works, Vs. Fixed Annuity can be sold by someone with only an insurance license The growth portion is taxed as a capital gain. C) IRAs. When the first party dies, the annuity payment is made to the survivor. B) The death benefit cannot ever be more than the guaranteed benefit. B) II and III. continues payments only as long as all annuitants are still alive. b. There are also immediate annuities, which begin paying income right away. He originally invested $29,000 4 years ago; it now has a value of $39,000. A)Fixed annuities. B)II and III. A) I and IV. A) I and II C) each annuity unit's value and the number of annuity units vary with time. All of the following are characteristics of Variable Annuity contracts EXCEPT The possibility of higher returns and greater income than fixed annuities, but there's also a risk that the account will fall in value A There are no surrender fees B Guaranteed death benefit C Tax deferred growth D Training Explanations Securely download your document with other editable templates, any time, with PDFfiller. With variable annuities policyholders can choose from a number of investment opportunities. Your 65-year-old client owns a nonqualified variable annuity. A registered representative recommends a variable annuity with an income rider to a client. The number of annuity units is fixed at the time of annuitization. C)Life annuity. A) partially a tax-free return of capital and partially taxable. Your customer in his early 30s has received a modest inheritance from a relative. Listing tax-deferred growth as an objective for retirement income, which of the following investments is most suitable? C) Unit refund life option An immediate annuity is designed to pay an income one time-period after the immediate annuity is bought. D)suggest to the client that perhaps a loan or refinancing his vacation home might be a better way to fund the contract purchase. Registration with FINRA is de facto registration with the SEC; no registration is required by the state banking commission. A)Purchasing power risk. In March, the actual net return to the separate account was 8%. What are the characteristics of annuity? - Wise-Answers Any withdrawals you make prior to the age of 59 may also be subject to a 10% tax penalty. A 3 That can adversely affect your returns over the long term, compared with other types of investments. D)Municipal bonds. Her agent recommended she choose a variable annuity as a safe haven for the funds. They offer broad diversification in the securities market and potential growth, all while using the power of tax deferral. An ordinary simple annuity has the following characteristics: For example, most car loans are ordinary simple annuities where payments are Get Started. D) Joint and last survivor annuity. Life income riders are best suited for those who anticipate a lengthy retirement and are generally not yet retired when making the VA purchase. CDs insured by the FDIC. A variable annuity does not guarantee an earnings rate because earnings will depend on the performance of the separate account. C)none of these. A variable annuity's separate account is: When the second party dies, all payments cease. A customer has contributed $1,000 a year for 10 years to his tax-deferred nonqualified variable annuity. III. A) mortality guarantee. Do whatever you want with a Learn About Annuities and Their Myths - F&G: fill, sign, print and send online instantly. B)It will be lower. the agent must be licensed in both insurance and securities. II. The original investment has grown to a value of $60,000. Typically, they allow one withdrawal each year during the accumulation phase. A customer has an investment objective of keeping pace with inflation while assuming moderate risk. Question #36 of 48Question ID: 606805 A) be paid to a designated beneficiary. Sample problems from Chapter 9. . B) variable annuities. D)an accounting measure used to determine payments to the owner of the variable annuity. How is the distribution taxed? Chapter 12: Variable Annuities Flashcards | Quizlet A)II and IV. B) The entire $10,000 is taxable as ordinary income. B) Life annuity. When the contract is annuitized, the annuitant is credited with a fixed number of annuity units. A security is any investment for profit with management performed by a third party. Universal variable life policies If the data is normally distributed with standard deviation$198, find the percent of vacationers who spent less than $1,200 per day. 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. He makes the following four statements, all of which are true EXCEPT Variable annuity salespeople must register with all of the following EXCEPT: Which of the following are defined as securities? A registered representative explaining variable annuities to a customer would be CORRECT in stating that: This compensation may impact how and where listings appear. Then find the probability of the event. Single payment deferred annuity. Once the contract is annuitized, monthly payments to the customer are: The number of accumulation units can rise during the accumulation period. Deferred Annuity Definition, Types, How They Work, What Is a Fixed Annuity? B) II and IV. C) III and IV. A registered representative recommends a variable annuity with an income rider to a client. Based only on these facts, the variable annuity recommendation is Variable annuities involve underlying equity investments in a separate account. approve changes in the plan portfolio. D) the payout plans provide the client income for life. \text{Salaries:} && \text{Deductions:}\\ D)separate account may consist of mutual funds. 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 Variable Annuities Flashcards | Quizlet Reference: 12.3.4 in the License Exam. A passion for serving customers and a personal commitment to following through in a dynamic, fast-paced environment. A) number of annuity units. 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. C) II and III. A 45-year-old employed individual with no other retirement accounts in place C)II and IV. The growth portion is taxed as a capital gain. The payout of an annuitized variable annuity account changes from month to month in a manner determined by which of the following? \hspace{7pt} a. December 303030, to record the payroll. Transcribed image text: 6. A) The policy provides a minimum guaranteed death benefit. B) variable annuities are classified as insurance products. a variable annuity does not guarantee an earnings rate of return. Simple and general annuities problems with solutions For an investor, which of the following is the most important factor in determining the suitability of a variable annuity investment? In a variable life annuity with 10-year period certain, a contract holder receives: continues payments as long as one annuitant is alive. C) suggest to the client that perhaps a loan or refinancing his vacation home might be a better way to fund the contract purchase. Options. This customer has no spouse or dependents, which negates the value of the death benefit. Question #35 of 48Question ID: 606810 D) variable annuities may only be sold by registered representatives. D) Growth mutual funds. A joint life with last survivor contract covers multiple annuitants and ceases payments at the death of the last surviving annuitant. D) minimum guaranteed death benefit. For a retired person, which of the following investments would provide the greatest protection against inflation? The fixed payment that the annuitant receives loses purchasing power over time as a result of inflation. D)I and III. B)I and IV. All of the following statements about variable annuities are true EXCEPT: B)Value of each annuity unit each month. In a joint-and-last-survivor option, the annuity payment is made jointly to both parties while both are alive. A) a lifetime withdrawal benefit (LWB) or lifetime income benefit will make a periodic payment even if the account balance falls to zero Because this is not guaranteed, the policyowner bears the investment risk. *Under the mortality guarantee, the insurance company assumes mortality risk by guaranteeing payments for life, though the amount of each payment is not guaranteed.