U.S. Securities and Exchange Commission. B) Life annuity with period certain Therefore only a fixed annuity could be considered as suitable. C) II and III. D) reevaluate whether the recommendation for the VA contract is still suitable based on the clients proposed funding of the investment. D) I and III. Changes in payments on a variable annuity correspond most closely to fluctuations in the: The number of annuity units becomes fixed when the contract is annuitized; it is the value of each unit that fluctuates. A registered representative recommends a variable annuity with an income rider to a client. D) Age 27, saving for first home. Distributions from such an annuity are computed on a LIFO basis with the income taxed first. vote for the investment adviser. This recommendation is: D) unsuitable because her situation exposes her to surrender charges and early withdrawal penalties in exchange for insufficient benefits. C) I and IV. D) minimum guaranteed death benefit. Question #16 of 48Question ID: 606807 D) Capital gains tax on earnings exceeding basis. These contracts cover both lives and will continue to make payments until the last spouse dies. Complete a blank sample electronically to save yourself time and money. Question #33 of 48Question ID: 606832 a) What percentage of Facebook's users are from the United States? If you die before the payout phase, your beneficiaries may receive a. B)II and III. C) III and IV. D)partially a tax-free return of capital and partially taxable. The value of accumulation and annuity units varies with the investment performance of the separate account. D)separate account may consist of mutual funds. C) The insurance company. D)A variable annuity, Variable annuities offer tax-deferred growth and are suitable for achieving supplemental retirement income. C) III and IV. C)II and IV. When the first party dies, the annuity payment is made to the survivor. have investment risk that is assumed by the investor D) 4500. In addition, an element of risk must be present. Which of the following statements regarding variable annuities are TRUE? 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. D) value of accumulation units. Variable annuities must be registered with: Question #11 of 48Question ID: 606816 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. A 45-year-old investor takes a lump-sum distribution from a nonqualified variable annuity. The time period depends on how often the income is to be paid. a variable annuity does not guarantee an earnings rate of return. A variable annuity is a contract between you and an insurance company, under which the insurer agrees to make periodic pay- ments to you, beginning either immediately or at some future date. Options. D)an accounting measure used to determine payments to the owner of the variable annuity. Round to the nearest hundredth of a percent. Which is it? 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. When the second party dies, all payments cease. As of March 03, 2023, had a relative dividend yield of % compared to the industry median of %. IV. *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. B) The proceeds minus John's cost basis taxed as ordinary income at Sue's tax rate. Payments from a variable annuity depend on the securities' value in the separate account's underlying investment portfolio. B)value of annuity units. A) changes in common stock prices tend to be more closely related to changes in the cost of living than changes in bond prices. B)II and III. His objective is monthly income that he can receive after he retires to supplement his small pension and social security benefits. D) II and IV. An investor who has purchased a nonqualified variable annuity has the right to: a variable annuity guarantees payments for life. C)the SEC. A) There is no risk in a variable annuity. Reference: 12.3.3 in the License Exam. How to Navigate Market Volatility While Saving for Retirement, Variable Annuity: Definition and How It Works, Vs. \hspace{7pt} a. December 303030, to record the payroll. A the safety of the principal invested B the yield is always higher than bond yields. A)Purchasing power risk. 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. D)Any tax due is deferred. Drives - are hardwired characteristics of the brain that correct deficiencies or maintain an internal equilibrium by producing emotions to energize individuals. A) The entire amount is taxed as ordinary income, because it is not life insurance. An annuity payment is the dollar amount of the equal periodic payment in an annuity environment. In March, the actual net return to the separate account was 8%. 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. A)exempt from taxes However, a discussion should occur regarding the risks that are associated with a fixed annuity; purchasing power risk. III) A hierarchy of corporate staff evaluates divisions' plans and performance. Each of the remaining statements are true. B) the state insurance department. The value of the customer's account is converted into annuity units if and when the customer decides to annuitize the contract. *Mortality risk- If an annuitant lives longer than expected, the insurance company will have to continue payments longer than expected. Which of the following recommendations would best meet the customer profile? D) be paid to the issuing company to complete the plan. D) accumulation shares. 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. If in the following year, the S&P 500 declined by 5%, the annuities value would remain at $107,000 because gains are locked in each year. The earnings on dollars invested into a variable annuity accumulate tax deferred, which is why variable annuities are popular products for retirement accumulation. D) the payout plans provide the client income for life. *The number of variable annuity accumulation units can rise during the accumulation period when additional units are being purchased. B)Variable annuities. The payout of an annuitized variable annuity account changes from month to month in a manner determined by which of the following? A) The policy provides a minimum guaranteed death benefit. Travel Times Journal found that the average per person cost of a 10-day trip along the Pacific coast, per person, is $1,015. Variable annuity salespeople must register with all of the following EXCEPT: Which of the following are defined as securities? B) The proceeds minus John's cost basis taxed as ordinary income at Sue's tax rate. MetLife offers a comprehensive benefits program, including healthcare benefits, life insurance, retirement benefits, parental leave, legal plan services and paid time off. Consequently, the client pays taxes only on the growth portion of the withdrawal ($10,000). U.S. Securities and Exchange Commission. An annuitant assumes the investment risk of a variable annuity and is not protected byt he insurance company from capital losses. Which of the following statements is not true about the characteristics of a trend? If the annuitant dies during the accumulation period, his/her beneficiary will receive the promised annuity payments. However, at the end of the period certain the payments to the named beneficiary (the spouse) will stop. A)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. Consequently, the client pays taxes only on the growth portion of the withdrawal ($10,000). *A joint life with last survivor contract covers multiple annuitants and ceases payments at the death of the last surviving annuitant. A) mutual fund units. 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. Question #20 of 48Question ID: 606808 *Once a variable annuity is annuitized, the accumulation units are converted into a fixed number of annuity units. Based on the clients profile which of the following would be the best recommendation? Variable annuity salespeople must register with all of the following EXCEPT: A) FINRA. continues payments only as long as all annuitants are still alive. All of the following are true about annuities EXCEPT: they have all the same characteristics as life insurance. IBM Noida, Uttar Pradesh, India4 weeks agoBe among the first 25 applicantsSee who IBM has hired for this roleNo longer accepting applications. D)I and III. The payout compared to last month's payout. C) IRAs. \hspace{10pt} State unemployment (employer only), 3.8%3.8\%3.8% D)0. Which 2 of the 4 client profiles would a VA be LEAST suitable for? D)accumulation units. All of the following are characteristics of a variable annuity, except: a. A)an accounting measure used to determine the contract owner's interest in the separate account. A) variable payments for 10 years, followed by fixed payments for life. Question #14 of 48Question ID: 606823 A) The fact that the annuity payment may increase or decrease. IV. Question #45 of 48Question ID: 606795 As with all tax-deferred accounts, municipal bonds are not appropriate investments because interest earned on municipals is already tax exempt at the federal level. C)prime rate. Instructions\textsf{\textcolor{#4257b2}{Instructions}}Instructions B)corporate stock. A. C) II and IV. The accumulation period of a variable annuity may continue for many years. B) II and III. The value of the separate account is now $30,000. The client's investment objectives, tax bracket, investment experience and risk tolerance all align well with a VA recommendation. A variable annuity is a type of annuity contract in which the value can vary based on the performance of an u . C) II and IV. C) 10% penalty plus payment of ordinary income tax on all funds withdrawn exceeding basis. C) Life annuity with period certain. During payout, distributions will fluctuate due to performance in the separate account. No, annuities are not FDIC-insured as they are not bank products. One of the following would achieve that objective but a suitability discussion regarding it's risk should also occur. \hspace{10pt} Federal unemployment (employer only), 0.8%0.8\%0.8%. \hspace{10pt} \text{Sales salaries} & \$\hspace{5pt} 670,000 & \hspace{10pt} \text{Income tax withheld} & \$198,744\\ 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. 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. U.S. Securities and Exchange Commission. As part of the registration requirements, a prospectus must be filed and distributed to prospective investors. The fees on variable annuities can be quite hefty. who needs access to the sum invested at later time. The growth portion is taxed as a capital gain. Once the cost basis is reached, any further withdrawals are a nontaxable return of principal. However, they are protected by state guaranty associations in the event that the insurance company providing the product goes out of business. A guaranteed lifetime annuity promises to pay the owner an income for the rest of their life. D)the rate of return is determined by the underlying portfolio's value. However, the web version (cat. 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 . It is innate and universal. What percentile is represented by $710? If an insurance holder dies sooner than expected, the insurance company will have to pay the death benefit sooner. A)not suitable A universal variable life policy should be purchased primarily for its insurance features, not its investment features. 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. No software installation. D) Any time before the accumulation period. A customer is receiving annuitized payments from a variable annuity. This would not align with the couple's criteria for coverage as long as they both live. 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. Bear in mind that between the numerous feessuch as investment management fees,mortality fees, and administrative feesand charges for any additional riders, a variable annuitysexpenses can quickly add up. \hspace{10pt} Social security, 6%6\%6% on first $100,000\$100,000$100,000 of employee annual earnings Of the total payroll for the last week of the year, $30,000\$30,000$30,000 is subject to unemployment compensation taxes. If you need to withdraw money from the account because of a financial emergency, you may face surrender fees. 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. Her agent recommended she choose a variable annuity as a safe haven for the funds. A) periodic payment immediate annuity. They are also not considered suitable for anyone who anticipates needing a lump sum within a short time frame to fund other endeavors. C) insurance guarantee. Variable annuities grow tax-deferred, so you dont have to pay taxes on any investment gains until you begin receiving income or make a withdrawal. C)It will be higher. Variable annuities provide protection from inflation because their monthly income can increase depending on the separate account's performance. national origin, genetics, disability, age, veteran status, or any other characteristic protected by law. Then find the probability of the event. an annuitant lives longer than expected. With variable annuities policyholders can choose from a number of investment opportunities. The growth portion is subject to a 10% penalty. For example, when paying rent, the rent payment (PMT) . 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 . 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. He wants to ensure that the client, in addition to meeting suitability requirements, is aware of certain variable annuity contract characteristics. a. it performs a single task b. it is self-contained and independent of other modules c. it is relatively short d. all of the above are chamcleristics of a program module 7. Deal with mathematic Math is all about solving equations and finding the right answer. A) I and III. D) It cannot be determined until the April return is calculated. a variable annuity does not guarantee payments for life. A) a variable annuity contract will provide a fluctuating monthly check upon the annuitization of the contract D) The fact that periodic payments into the contract may increase or decrease. If at all you go deeper, then you will find a wide range of annuity products from a variety of companies. He makes several statements regarding the contract. I. Sub accounts and mutual funds are conceptually. Once annuitized, the number of annuity units does not vary. A)the number of annuity units becomes fixed when the contract is annuitized. Post navigation 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? Question #26 of 48Question ID: 606811 A 32-year-old with a company-sponsored 401k plan who will need a lump sum soon to finance graduate school tuition B) variable annuities are classified as insurance products. B) The policyowner. savingsbonds30,420Groupinsurance45,630$341,718\begin{array}{lrlr} They can be classified by: Nature of the underlying investment - fixed or variable Science Health Science Nursing. About Us Annuities: How to Find the Right One for You, How a Fixed Annuity Works After Retirement, Pros and Cons of Indexed Universal Life Insurance. C) II and IV. A 45-year-old investor takes a lump-sum distribution from a nonqualified variable annuity. In a joint-and-last-survivor option, the annuity payment is made jointly to both parties while both are alive. The largest monthly check an annuitant can receive for the rest of his life is generated by a straight life (life income or life only) payout option. I. Guaranteed Lifetime Annuity: How They Work, When They Pay You, This is also generally true of retirement plans. A passion for serving customers and a personal commitment to following through in a dynamic, fast-paced environment. A)II and III II. 5 Q All of the following are characteristics of variable whole life EXCEPT the premium is level there is no guaranteed cash value there is no guaranteed minimum death benefit. B) with guaranteed minimum withdrawal benefits (GMWBs) the periodic payments can be monthly, quarterly or annually C)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. The offers that appear in this table are from partnerships from which Investopedia receives compensation. At the end of the year, your account has a value of $10,750 ($5,500 in the stock fund and $5,250 in the bond fund), minus fees and charges. 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: You purchase a variable annuity contract by making either a single purchase payment or a series of purchase payments. Nicks Enterprises has purchased a new machine tool that will allow the company to improve the efficiency of its operations. D) the yield is always higher than mortgage yields. A separate account will invest in a number of different securities. The funds are not liquid due to the surrender fees, and there is also a 10% penalty on withdrawals before age 59-. This compensation may impact how and where listings appear. d) What is the probability that a user is from the United States, given that he or she logs on every day? The most popular type of variable annuity is a deferred annuity. This factor is used to establish the dollar amount of the first annuity payment. C)municipal bonds. A)Corporate debt securities B) 10% penalty plus payment of ordinary income tax on all funds withdrawn. Variable annuity Which of the following is characteristic of fixed annuities? Question #17 of 48Question ID: 606802 C) payments continue for a pre-determined period of time. Life Insurance vs. Annuity: What's the Difference? A) It will be higher. She will receive the annuity's entire value in a lump-sum payment. Transcribed image text: 6. C) none of these. Which of the following is characteristic of variable annuities? C)III and IV. If an investor has a fixed-annuity contract with an insurance company, which of the following risks is assumed by the investor? D) variable annuities may only be sold by registered representatives. The paper publication will not be rereleased. B)I and III. 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. A)defined contribution plans. D) II and III. A)II and IV. All of the following statements regarding variable annuities are true EXCEPT: B) It will be lower. 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. D) Variable Annuity. A) defined contribution plans. B)Capital gains taxation on the earnings withdrawn in excess of the owner's basis. A) II and III. A registered representative recommends a variable annuity with an income rider to a client. I. regulated under both securities and insurance laws. This includes transportation, food, lodging, and entertainment. D)II and III. When the annuitization option is selected, each payment represents both capital and earnings. Investopedia requires writers to use primary sources to support their work. Prudential's businesses offer a variety of products and services, including life insurance, annuities, retirement-related services, mutual funds, asset management, and real estate services.
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a variable annuity has which of the following characteristics