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

How is the distribution taxed? A separate account will invest in a number of different securities. Diagnosis is made by punch biopsy. 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. Reference: 12.1.2.1.1. in the License Exam. These include white papers, government data, original reporting, and interviews with industry experts. B)4200. None of the other investments listed here offer tax-deferred growth. Before the contract is annuitized, your client, currently age 60, withdraws some funds for personal purposes. A) It will be higher. A) mortality guarantee. A) be paid to a designated beneficiary. The number of annuity units varies. Life income riders are best suited for those who anticipate a lengthy retirement and are generally not yet retired when making the VA purchase. A) two people are covered and payments continue until the second death. If you die before the payout phase, your beneficiaries may receive a. A prospectus for a variable annuity contract: If the owner of a variable annuity dies during the accumulation period, any death benefit will: On withdrawals from a nonqualified annuity, taxes are paid only on the amount that exceeds cost basis (the amount paid into the annuity). C) Mutual fund portfolio consisting of blue chip stocks are purchased primarily for their insurance features A)not suitable III) A hierarchy of corporate staff evaluates divisions' plans and performance. Immediate life annuity with 10-year period certain. a variable annuity guarantees an earnings rate of return. 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. B)Value of each annuity unit each month. Premiums made into the annuity purchase accumulation units. 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. You can tailor the income stream to suit your needs. Deal with mathematic Math is all about solving equations and finding the right answer. 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. The investor has already paid tax on the contributions but the earnings have grown tax-deferred. Distribution of dividends occurs during the accumulation period. Based only on these facts, the variable annuity recommendation is Based on the information given in the question, the VA recommendation would not be suitable. Lifetime vs. fixed period annuities What is the taxable consequence of this withdrawal to your client? B) A 30 year old construction worker recently unemployed who wants to invest his severance pay amounting to 9 months salary. B) I and III. In addition, an element of risk must be present. An annuity factor is taken from the annuity table, which considers, for example, the investor's sex and age. The number of accumulation units can rise during the accumulation period. A) periodic payment immediate annuity. B) variable annuities. B) II and III. B) suitable if she has enough equity in the home to fund the variable annuity without cashing out the other VA contract Of the answer choices given the best would be to reevaluate the recommendation based on the new information tendered by the client. A)Ordinary income taxation on the earnings withdrawn until reaching the owner's cost basis. 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. EEO IS THE LAW . B) The investor's marital status. 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. B)II and III. Determine whether the following events are independent or dependent. The value of the annuity units varies. D) Variable annuities. The number of annuity units rises once annuitization begins. D)an accounting measure used to determine payments to the owner of the variable annuity. D)money market funds. variable An immediate annuity consists of a Single Premium T has an annuity that guarantees an income payment for the rest of his life. Nicks Enterprises has purchased a new machine tool that will allow the company to improve the efficiency of its operations. Variable annuities must be registered with: An important basic characteristic of common stocks that makes them a suitable type of investment for the separate account of variable annuities is: The annuitized payments are viewed for tax purposes as With regard to a variable annuity, all of the following may vary EXCEPT: A) I and IV. D) There is no guarantee regarding the investment results of the separate account. Question #37 of 48Question ID: 606817 Variable annuity salespeople must register with all of the following EXCEPT: The payout compared to the initial payout upon annuitization. variable annuity without paying tax at the time of the transfer. Reference: 12.1.1 in the License Exam. If you need to withdraw money from the account because of a financial emergency, you may face surrender fees. C) III and IV Which is it? d. Each month the payment will increase, decrease, or remain the same as the previous month's payment . 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. 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. A 58-year-old individual near retirement who is in good health and anticipates a lengthy retirement Which of the following recommendations would best meet the customer profile? B)Universal variable life policy. A) mutual fund units. Since the client is older than 59 at the time of distribution, the additional 10% penalty tax is not incurred. Life annuity has the largest payout because less risk is assumed by the insurance company; there is no beneficiary in the event the annuitant dies. It is innate and universal. Once the contract is annuitized, monthly payments to the customer are: 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. Each of the remaining statements are true. I. The AG49-A Revisions B) The proceeds minus John's cost basis taxed as ordinary income at Sue's tax rate. B)fixed in value until the holder retires. A) defined contribution plans. A registered representative recommends a variable annuity with an income rider to a client. B) taxed as ordinary income. Question #24 of 48Question ID: 606806 The following are the characteristics or the hierarchy of a trend except A. Gigatrends C. Megatrends B. Macrotrends D. Nanotrends _____11. A) Life-only annuity MetLife offers a comprehensive benefits program, including healthcare benefits, life insurance, retirement benefits, parental leave, legal plan services and paid time off. You purchase a variable annuity contract by making either a single purchase payment or a series of purchase payments. View full document. All of the following statements about variable annuities are true EXCEPT: The income was deferred from tax over the plan's life, so it is taxable as ordinary income once distributed. A 45-year-old investor takes a lump-sum distribution from a nonqualified variable annuity. C)Mortality risk. Reference: 12.3.2.4 in the License Exam. The funds in an annuity are off-limits to creditors and other debt collectors. Variable annuity salespeople must register with all of the following EXCEPT: A) FINRA. Reference: 12.1.2 in the License Exam. A)Fixed annuity contract with a discussion regarding purchasing power risk 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: A) number of annuity units. A guaranteed death benefit guarantees that the beneficiary will receive a death benefit if the annuitant dies before the annuity begins paying benefits. Variable annuity salespeople must register with all of the following EXCEPT: Which of the following are defined as securities? By clicking Accept All Cookies, you agree to the storing of cookies on your device to enhance site navigation, analyze site usage, and assist in our marketing efforts. A) I and III. C)none of these. a) What percentage of Facebook's users are from the United States? D) III and IV. D) a variable annuity contract is subject to fluctuating values due to market fluctuations of the underlying separate accounts. Science Health Science Nursing. A) waiver of premium Reference: 12.3.3 in the License Exam. B) II and III. Distribution can take place before or during any solicitation for sale. The growth portion is taxed as a capital gain. Which of the following statements regarding variable annuities are TRUE? Variable Annuities. Essential Characteristics: Periodic payment deferred annuity. B) Life annuity. For a nonqualified variable annuity, cost basis for the annuitant would use the after-tax dollars contributed. Income that cannot be outlived by the owner *The investor has already paid tax on the contributions but the earnings have grown tax-deferred. a variable annuity guarantees payments for life. You have 4 clients each expressing interest in a variable annuity contract. What is her total tax liability? D) A 10% penalty plus the payment of ordinary income tax on funds withdrawn in excess of the owner's basis. The return on a variable annuity is not guaranteed; it is determined by the underlying portfolio's value. B) the number of annuity units is fixed, and their value remains fixed. &&& \underline{\underline{\$341,718}} *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. B) Corporate debt securities Reference: 12.3.1 in the License Exam, Question #30 of 48Question ID: 606833 A 3 *Once a variable annuity is annuitized, the accumulation units are converted into a fixed number of annuity units. C) III and IV. The correct answer was: partially a tax-free return of capital and partially taxable. A) Ordinary income tax on earnings exceeding basis. Question: The following are characteristics of a public conglomerate: I) It is designed to operate various divisions for the long run. C) Universal variable life policy. Which of the following is NOT an accurate statement concerning a variable life insurance contract? When the second party dies, all payments cease. An annuity is a continuous stream of equal periodic payments from one party to another for a specified period of time to fulfill a financial obligation. The entire amount is taxed as ordinary income. The tax on this is $2,800 ($10,000 x 28%). Licensed to sell Variable Annuities in the following state(s): FL, TX . The growth portion is taxed as ordinary income. D) Any time before the accumulation period. A customer has a nonqualified variable annuity. C)Life annuity. 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. *Payments from a variable annuity depend on the securities' value in the separate account's underlying investment portfolio. 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? During the accumulation phase, the number of accumulation units will increase as additional money is invested. B)a minimum rate of return is guaranteed. An 18-year-old, unmarried high school student sought a safe investment for a $30,000 bequest until after she graduated from college. A registered representative explaining variable annuities to a customer would be CORRECT in stating that: Are There Penalties for Withdrawing Money From Annuities? Variable annuity salespeople must be registered with FINRA and the state insurance department. What percentile is represented by $710? 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? 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. These contracts come with high surrender charges. C) The insurance company. IBM Noida, Uttar Pradesh, India1 month agoBe among the first 25 applicantsSee who IBM has hired for this roleNo longer accepting applications. C) III and IV. *The accumulation period of a variable annuity may continue for many years. B)a majority vote from the shareholders is required to change the investment objectives. B) I and IV. A)the state banking commission. The following changes have been incorporated into Special Publication 800145, as of the date indicated - . Question #20 of 48Question ID: 606808 A) I and IV. When the contract is annuitized, the annuitant is credited with a fixed number of annuity units. Insurance companies introduced the variable annuity as an opportunity to keep pace with inflation. D) the number of annuity units becomes fixed when the contract is annuitized. An 18-year-old, unmarried high school student sought a safe investment for a $30,000 bequest until after she graduated from college. II. IBM is a global brand and has its presence in 170 countries and operates . \hspace{7pt} b. December 303030, to record the employers payroll taxes on the payroll to be paid on December 313131. The value of an annuity unit varies from month to month according to the performance of the separate account in comparison to the assumed interest rate. Because the client is older than age 59-, he does not pay 10% premature distribution penalty tax. can be sold by someone with only an insurance license However, the web version (cat. . The minimum guaranteed death benefit is provided by that portion of the payment invested in the insurance company's general account. The value of these units varies with the performance of the separate account. B) the safety of the principal invested. a life insurance holder lives longer than expected. 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. Suggesting that loans or drawing equity from a home to fund VA contracts have also been targeted as abusive sales practices. Reference: 12.3.3 in the License Exam. A) each annuity unit's value is fixed, but the number of annuity units varies with time. Ted's Bio; Fact Sheet; Hoja Informativa Del Ted Fund; Ted Fund Board 2021-22; 2021 Ted Fund Donors; Ted Fund Donors Over the Years. regulated under both securities and insurance laws. When the annuitization option is selected, each payment represents both capital and earnings. Investopedia does not include all offers available in the marketplace. A) Joint tenants annuity. This includes transportation, food, lodging, and entertainment. The separate account performance compared to an assumed interest rate. Which of the following statements is not true about the characteristics of a trend? Question #41 of 48Question ID: 606801 no. The payout compared to last month's payout. And, unlike a fixed annuity, variable annuities do not provide any guarantee that you will earn a return on your investment. C)municipal bonds. 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 . All of the following are characteristics of a variable annuity, except: a. A) Only during the payout period. In March, the actual net return to the separate account was 8%. What Are the Distribution Options for an Inherited Annuity? A) Fixed Annuity D) Growth mutual funds. 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 The original investment has grown to a value of $60,000. approve changes in the plan portfolio. A) Dow Jones Industrial Average. 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. Round to the nearest hundredth of a percent. How to Navigate Market Volatility While Saving for Retirement, Variable Annuity: Definition and How It Works, Vs. a variable annuity guarantees an earnings rate of return. C)It will be higher. The growth portion is taxed as a capital gain. Any withdrawals you make prior to the age of 59 may also be subject to a 10% tax penalty. Question #36 of 48Question ID: 606805 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. C)the SEC. *The owner of a life annuity with 10-year period certain will receive payments for life, subject to a minimum of 10 years. *During the payout period, payments are based on a fixed number of annuity units established when the contract was annuitized. U.S. Securities and Exchange Commission. A variable annuity's separate account is: A separate account will invest in a number of different securities. C) suitable regardless of funding sources He makes several statements regarding the contract. This recommendation is: D) unsuitable because her situation exposes her to surrender charges and early withdrawal penalties in exchange for insufficient benefits. Listing tax-deferred growth as an objective for retirement income, which of the following investments is most suitable? 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. These contracts come with high surrender charges. 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. Transcribed image text: 6. A registered representative recommends a variable annuity with an income rider to a client. Are Variable Annuities Subject to Required Minimum Distributions? The most popular type of variable annuity is a deferred annuity. But again, the need to designate beneficiaries is not an issue for this annuitant. A)value of underlying securities held in the separate account. Question #12 of 48Question ID: 606814 When the annuitization option is selected, each payment represents both capital and earnings. A)accumulation shares. B)II and III. What is the taxable consequence of this withdrawal to your client? If the account is annuitized, the investor has chosen a payout option. No paper. D) I and IV B) I and IV. who needs access to the sum invested at later time. D) 4500. Reference: 12.1.2 in the License Exam. There is no clear answer to this. **Because common stocks are not fixed dollar investments, they have the opportunity to keep pace with inflation. A)II and IV. B) The death benefit cannot ever be more than the guaranteed benefit. D)accumulation units. D) I and III. The beneficiary is taxed at ordinary income rates during the year the lump sum is received. The beneficiary is taxed at ordinary income rates during the year the lump sum is received. B)100% taxable. Then find the probability of the event. The growth portion is taxed as ordinary income. The nature of the securities invested in-bonds and growth stocks-makes it necessary that sales representatives and their principals be licensed in securities as well as insurance. She will receive the annuity's entire value in a lump-sum payment. Accumulation Period of Fixed Annuities During this period, premiums are credited with interest which accumulates on a yearly basis. C) II and III. B)Capital gains taxation on the earnings withdrawn in excess of the owner's basis. D)suggest to the client that perhaps a loan or refinancing his vacation home might be a better way to fund the contract purchase. B) I and III. Which Earns More: Variable or Fixed Annuities? A) an accounting measure used to determine payments to the owner of the variable annuity. C) 10% penalty plus payment of ordinary income tax on all funds withdrawn exceeding basis. Once the contract is annuitized, monthly payments to the customer are: (Check all that apply.) This compensation may impact how and where listings appear. ($5,000) to a stock fund. The company's well-known Rock symbol is an icon of strength, stability, expertise and innovation that has stood the test of time. A) Life-only annuity A)Fixed annuities. B) the rate of return is determined by the underlying portfolio's value. \hspace{7pt} a. December 303030, to record the payroll. Because this is not guaranteed, the policyowner bears the investment risk. A)Corporate debt securities II) It has an internal capital market wherein each division competes for funds. a. A customer, who has contributed to an IRA and to an employer matching 401(k) plan continuously for many years, wants to purchase an annuity contract to add additional monthly income once retired. \hspace{10pt} \text{Sales salaries} & \$\hspace{5pt} 670,000 & \hspace{10pt} \text{Income tax withheld} & \$198,744\\ 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. Periodic payments are not a consideration because normally the payments into an annuity are level or in a lump sum. \hspace{10pt} \text{Warehouse salaries} & 110,000 & \hspace{10pt} \text{Social security tax withheld} & 51,714\\ D)II and III. The value of the customer's account is converted into annuity units if and when the customer decides to annuitize the contract. He makes the following four statements, all of which are true EXCEPT Question #26 of 48Question ID: 606811 Question #33 of 48Question ID: 606832 C) II and III. Consequently, the client pays taxes only on the growth portion of the withdrawal ($10,000). An ordinary simple annuity has the following characteristics: For example, most car loans are ordinary simple annuities where payments are. An annuity is an agreement for one person or organization to pay another a series of payments. When a partial withdrawal is made from an annuity, the earnings are considered to be taken out first for tax purposes (or LIFO). B) II and IV. Complete a blank sample electronically to save yourself time and money. Question #35 of 48Question ID: 606810 B) single payment deferred annuity. Reference: 12.1.2 in the License Exam, Question #23 of 48Question ID: 901858 D) Age 27, saving for first home. Once a variable annuity has been annuitized: The value of accumulation and annuity units varies with the investment performance of the separate account. He earned the Chartered Financial Consultant designation for advanced financial planning, the Chartered Life Underwriter designation for advanced insurance specialization, the Accredited Financial Counselor for Financial Counseling and both the Retirement Income Certified Professional, and Certified Retirement Counselor designations for advance retirement planning. B) I and II. Each of the remaining statements are true. 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. A single lump-sum investment is made, and payments begin immediately, since the investor has purchased annuity units. 111. Question #40 of 48Question ID: 606800