Question #31 of 48Question ID: 606836 withdraw funds without any tax consequences. This factor is used to establish the dollar amount of the first annuity payment. Options. B)100% taxable. This makes a total of $4,000 tax and penalty paid on the random withdrawal. The money paid in will be returned tax free, but the earnings portion will be taxed as ordinary income. C)II and IV. D)accumulation units. 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 . A)III and IV. A) a minimum rate of return is guaranteed. B)cost of living. In addition, if the customer is not at least 59-, there will be a tax penalty of an additional 10%. 222. Question #33 of 48Question ID: 606832 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. 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. a variable annuity does not guarantee payments for life. The tax on this amount is $3,000. Question #12 of 48Question ID: 606814 The $30,000 contract value represents $10,000 of contributions and $20,000 of earnings. Unit 12: Variable Annuities Flashcards | Chegg.com These include white papers, government data, original reporting, and interviews with industry experts. C)the number of annuity units is fixed, and their value remains fixed. Once annuitized, the number of annuity units does not vary. B) 10% penalty plus payment of ordinary income tax on all funds withdrawn. A)Ordinary income taxation on the earnings withdrawn until reaching the owner's cost basis. C)earnings only and taxable 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. During the accumulation phase, you make purchase payments. When may a variable annuity account be surrendered? d) What is the probability that a user is from the United States, given that he or she logs on every day? the state insurance commission. Reference: 12.1.2 in the License Exam. C) taxed as ordinary income only to the extent of earnings. If an insurance holder dies sooner than expected, the insurance company will have to pay the death benefit sooner. C) taxed as ordinary income only to the extent of earnings. A)equity funds. A)exempt from taxes Variable annuities provide protection from inflation because their monthly income can increase depending on the separate account's performance. IBM Noida, Uttar Pradesh, India1 month agoBe among the first 25 applicantsSee who IBM has hired for this roleNo longer accepting applications. Question #19 of 48Question ID: 606826 continues payments only as long as all annuitants are still alive. Reference: 12.1.4.1 in the License Exam. B) 100% taxable. Question: The following are characteristics of a public conglomerate: I) It is designed to operate various divisions for the long run. Variable Annuities Flashcards | Quizlet What Are the Biggest Disadvantages of Annuities? An annuity may be purchased under all of the following methods EXCEPT: The most popular type of variable annuity is a deferred annuity. A)accumulation shares. C) II and IV D) I and III. 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 Listing tax-deferred growth as an objective for retirement income, which of the following investments is most suitable? Though its stated return might not be as high as the other choices potential returns, only a fixed annuity fits the objective and risk averse traits of this client. In March, the actual net return to the separate account was 8%. D)II and III. C)II and IV. 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. 8 annuities provide a guaranteed rate of return, whereas annuities provide conservative to aggressive investments whose rates of return are not guaranteed. C)I and III. approve changes in the plan portfolio. *Contributions to a nonqualified annuity are made with the owner's after-tax dollars. Upon John's death during the accumulation period, Sue takes a lump-sum payment. Sub accounts and mutual funds are conceptually. a. A joint life with last survivor annuity: Reference: 12.1.2 in the License Exam. C)Life annuity. If the contract holder dies before the period expires, the remaining payments are made to the beneficiary. \hspace{10pt} \text{Sales salaries} & \$\hspace{5pt} 670,000 & \hspace{10pt} \text{Income tax withheld} & \$198,744\\ *Contributions to a nonqualified variable annuity are not tax deductible. Listing tax-deferred growth as an objective for retirement income, which of the following investments is most suitable? As of March 03, 2023, had a relative dividend yield of % compared to the industry median of %. D)suitable if she has enough equity in the home to fund the variable annuity without cashing out the other VA contract, Based on the information given in the question, the VA recommendation would not be suitable. The separate account is used for both variable life insurance and variable annuity investments. C) Age 40, currently unemployed C) Life annuity with period certain. B)value of annuity units. Variable Annuity Features | Annuity Guys A) number of annuity units. A) taxed at a reduced rate. These contracts come with high surrender charges. a variable annuity guarantees an earnings rate of return. Since , has paid out quarterly dividends ranging from $0.00 to $0.00 per share. This guideline has been prepared for use by Federal agencies. They are also riddled with fees, which can cut into profits. Though there is no beneficiary designation during the annuitization, this is not an issue for this annuitant. Travel Times Journal found that the average per person cost of a 10-day trip along the Pacific coast, per person, is $1,015. A) Joint tenants annuity. 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 order now. A) Money market fund. have investment risk that is assumed by the investor B) I and III. a variable annuity guarantees payments for life. An ordinary simple annuity has the following characteristics: For example, most car loans are ordinary simple annuities where payments are Get Started. Distributions from nonqualified variable annuities are: A) There is no risk in a variable annuity. The value of a variable annuity is based on the performance of an underlying portfolio of sub accounts selected by the annuity owner. A variable annuity is both an insurance and a securities product. Before the contract is annuitized, your client, currently age 60, withdraws some funds for personal purposes. A prospectus for a variable annuity contract: C) II and III. D)II and III. C) II and IV. \hspace{10pt} State unemployment (employer only), 3.8%3.8\%3.8% A) complete all paper work to purchase the annuity contract and obtain the clients signature immediately. *A periodic payment immediate annuity is a contradiction in terms. a. A 45-year-old investor takes a lump-sum distribution from a nonqualified variable annuity. 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. B) value of annuity units. Try Post navigation Once a variable annuity has been annuitized: We also reference original research from other reputable publishers where appropriate. D) a variable annuity contract is subject to fluctuating values due to market fluctuations of the underlying separate accounts. A)II and IV. B)I and II It is innate and universal. GuranteedExamLife Flashcards by Gabriel Martinez | Brainscape Reference: 12.1.2 in the License Exam. c. The separate account provides for a guaranteed minimum return. Variable annuity Which of the following is characteristic of fixed annuities? B)II and III. D) Two-thirds of the withdrawal is taxable as ordinary income. \end{array} Based on this information the RR should: If an investor has a fixed-annuity contract with an insurance company, which of the following risks is assumed by the investor? Variable Annuity: Definition and How It Works, Vs. Fixed Annuity can be sold by someone with only an insurance license C) IRAs. A) The policy provides a minimum guaranteed death benefit. 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. D)Variable annuity. have investment risk that is assumed by the investor If the data is normally distributed with standard deviation$198, find the percent of vacationers who spent less than $1,200 per day. D)Municipal bonds. Her agent recommended she choose a variable annuity as a safe haven for the funds. B) Life annuity. Question #38 of 48Question ID: 606798 C)3800. Reference: 12.3.3 in the License Exam. A) two people are covered and payments continue until the second death. With regard to a variable annuity, all of the following may vary EXCEPT: Periodic payments are not a consideration because normally the payments into an annuity are level or in a lump sum. When a variable annuity contract is annuitized, the number of annuity units is fixed. A) changes in common stock prices tend to be more closely related to changes in the cost of living than changes in bond prices. Funding a VA contract by cashing out either life insurance policies or existing VA contracts, especially those held for a short period of time is not suitable. B) variable annuities. Reference: 12.3.4 in the License Exam, Chapter 16: U.S. Government and State Rules a, Chapter 17: Other SEC and SRO Rules and Regul, Chapter 15: Ethics, Recommendations, and Taxa, Chapter 13: Direct Participation Programs, Fundamentals of Financial Management, Concise Edition, Joe B. Hoyle, Thomas F. Schaefer, Timothy S. Doupnik, Carl Warren, James M Reeve, Jonathan E. Duchac. Question #26 of 48Question ID: 606811 D) II and IV. A) each annuity unit's value is fixed, but the number of annuity units varies with time. C)Mortality risk. 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 10.1 This chapter addresses a number of ABS statistics relating to the economically active population which were not discussed elsewhere. *The most important consideration in purchasing a variable annuity is to be aware that benefit payments will fluctuate with the investment performance of the separate account. B) payment guarantee. Question #37 of 48Question ID: 606817 B) Age 78, retired for 20 years, lives comfortably and wants to leave all liquid assets to children A single lump-sum investment is made, and payments begin immediately, since the investor has purchased annuity units. Question #11 of 48Question ID: 606816 No software installation. A) I and III. B) II and IV. Over the following year, the stock fund has a 10% return, and the bond fund has a 5% return. Therefore only a fixed annuity could be considered as suitable. What are the characteristics of annuity? - Wise-Answers A prospectus for a variable annuity contract: A) changes in common stock prices tend to be more closely related to changes in the cost of living than changes in bond prices. *Only variable annuities have payout plans that provide the client income for life. the state banking commission. B) I and IV. *Fixed income instruments, like bonds and fixed annuities, are subject to purchasing power risk. D) tax free. However, because the client is not yet age 59- when making the withdrawal, he also pays a 10% penalty, or $1,000. Reference: 12.3.2.1 in the License Exam. Are Variable Annuities Subject to Required Minimum Distributions? The features of variable deferred annuities are many. A)I and IV. B) be paid to any legal heirs as recognized by the annuitant's state of domicile. Since the client is older than 59 at the time of distribution, the additional 10% penalty tax is not incurred. 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. The annuity unit's value represents a guaranteed return. D)I and IV. Reference: 12.1.4.1 in the License Exam. If the account is annuitized, the investor has chosen a payout option. B)Life annuity with period certain. B)Capital gains taxation on the earnings withdrawn in excess of the owner's basis. How is the distribution taxed? The number of annuity units is fixed. Annuities are complicated products, so that may be easier said than done. 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. Reference: 12.2.1 in the License Exam. A customer is receiving annuitized payments from a variable annuity. 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. In a joint-and-last-survivor option, the annuity payment is made jointly to both parties while both are alive. D) Growth mutual funds. Of the 4 client profiles below, which might be the best suited for a variable annuity recommendation? The most suitable option and one considered effective for married couples is a single joint and last survivor contract. D) A 10% penalty plus the payment of ordinary income tax on funds withdrawn in excess of the owner's basis. A) Dow Jones Industrial Average. If the customer takes a withdrawal of $10,000, what are the tax consequences? C) value of underlying securities held in the separate account. If this client is in the payout phase, how would his April payment compare to his March payment? D)A 10% penalty plus the payment of ordinary income tax on funds withdrawn in excess of the owner's basis. 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. A variable annuity's separate account is: A separate account will invest in a number of different securities. C) The portion of the premium invested in the insurance company's general account is used to provide for the minimum guaranteed amount of the death benefit. B) fixed in value until the holder retires. C)prime rate. Future annuity payments will vary according to the separate account's performance. 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. B)II and III. The time period depends on how often the income is to be paid. Reference: 12.1.1 in the License Exam. Complete a blank sample electronically to save yourself time and money. A customer has contributed $1,000 a year for 10 years to his tax-deferred nonqualified variable annuity. Your 65-year-old client owns a nonqualified variable annuity. Variable annuities are designed to combat inflation risk. The number of annuity units is fixed at the time of annuitization. U.S. Securities and Exchange Commission. A customer has a nonqualified variable annuity.

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