*Under the mortality guarantee, the insurance company assumes mortality risk by guaranteeing payments for life, though the amount of each payment is not guaranteed. Classifying annuities There are many categories of annuities. B) fixed in value until the holder retires. How to Rollover a Variable Annuity Into an IRA. C) each annuity unit's value and the number of annuity units vary with time. In March, the actual net return to the separate account was 8%. The funds are not liquid due to the surrender fees, and there is also a 10% penalty on withdrawals before age 59-. *As contributions are made with after-tax dollars, only the earnings generated are taxed on withdrawal. He originally invested $29,000 4 years ago; it now has a value of $39,000. B)a minimum rate of return is guaranteed. C) I and III. At the end of the year your account has a value of 10750. a variable annuity guarantees an earnings rate of return. The number of annuity units rises once annuitization begins. Underlying equity investments T, age 70, withdraws cash from a profit-sharing plan and purchases a Straight Life Annuity. In the case of deferred annuities, this is often referred to as the accumulation phase. If the data is normally distributed with standard deviation$198, find the percent of vacationers who spent less than $1,200 per day. Of the answer choices given the best would be to reevaluate the recommendation based on the new information tendered by the client. Variable Annuities. Typically, they allow one withdrawal each year during the accumulation phase. Question #24 of 48Question ID: 606806 *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. D) 4200. A separate account will invest in a number of different securities. All of the following are characteristics of a variable annuity, except: a. The minimum guaranteed death benefit is provided by that portion of the payment invested in the insurance company's general account. D) I and IV Transcribed image text: 6. D) 4500. A) A variable annuity A) variable annuities offer the investor protection against capital loss. IBM is a global brand and has its presence in 170 countries and operates . D)variable annuities offer the investor protection against capital loss. We also reference original research from other reputable publishers where appropriate. U.S. Securities and Exchange Commission. Reference: 12.1.2 in the License Exam, Question #21 of 48Question ID: 606812 The owner of a variable annuity has all of the following rights EXCEPT the right to vote: a. for the board of trustees b. to change the separate account's investment objective c. for distributing income and capital gains d. for dissolution of the trust c. for distributing income and capital gains. D) tax free. *Variable annuity contracts were devised to help investors keep pace with inflation. D) Keogh plans. D)I and IV. B) Life annuity. C) II and III. The value of a variable annuity is based on the performance of an underlying portfolio of sub accounts selected by the annuity owner. Annuities: How to Find the Right One for You, How a Fixed Annuity Works After Retirement, Pros and Cons of Indexed Universal Life Insurance. \hspace{7pt} a. December 303030, to record the payroll. *A variable annuity may only be surrendered during the accumulation period. The growth portion is taxed as ordinary income. D) Life annuity with 10-year period certain. Refinancing a home to draw out equity has been identified by FINRA as an abusive sales tactic regarding the sales of VAs. must be filed with FINRA. D)I and III. Variable annuities involve underlying equity investments in a separate account. Universal variable life policies No software installation. must be filed with FINRA. 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: C)not suitable because a lifetime income rider is only for someone who is already retired C)none of these. Owners of variable annuities, like owners of mutual fund shares, may vote on changes in investment policy and for an investment adviser. The growth portion is subject to a 10% penalty. 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. Question #14 of 48Question ID: 606823 A)each annuity unit's value and the number of annuity units vary with time. Reference: 12.2.1 in the License Exam. D) The fact that periodic payments into the contract may increase or decrease. B)I and IV. B) suitable if she has enough equity in the home to fund the variable annuity without cashing out the other VA contract D) value of accumulation units. He wants to ensure that the client, in addition to meeting suitability requirements, is aware of certain variable annuity contract characteristics. But again, the need to designate beneficiaries is not an issue for this annuitant. Suggesting that loans or drawing equity from a home to fund VA contracts have also been targeted as abusive sales practices. The fixed payment that the annuitant receives loses purchasing power over time as a result of inflation. B)reevaluate whether the recommendation for the VA contract is still suitable based on the clients proposed funding of the investment. 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) Only during the payout period. A 45-year-old investor takes a lump-sum distribution from a nonqualified variable annuity. variable annuity without paying tax at the time of the transfer. C)II and IV. C)the invested money will be professionally managed according to the issuers' investment objectives. Question #36 of 48Question ID: 606805 The tax on this is $2,800 ($10,000 x 28%). A) the investment portfolio is managed professionally. Full-Time. A guaranteed death benefit guarantees that the beneficiary will receive a death benefit if the annuitant dies before the annuity begins paying benefits. \hspace{10pt} \text{Office salaries} & \underline{234,000} & \hspace{10pt} \text{Medicare tax withheld} & 15,210\\ 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. 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. 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. During the accumulation phase, the number of accumulation units will increase as additional money is invested. Your client has a large sum of money to invest from the proceeds of the sale of his home. The client's investment objectives, tax bracket, investment experience and risk tolerance all align well with a VA recommendation. Question #40 of 48Question ID: 606800 An annuity may be purchased under all of the following methods EXCEPT: The payout compared to the initial payout upon annuitization. The LATF-adopted ILVA Actuarial Guideline has an effective date of July 1, 2024 for contracts, riders or endorsements issued on or after that date. A) Capital gains taxation on the earnings withdrawn in excess of the owner's basis. An annuity payment is the dollar amount of the equal periodic payment in an annuity environment. B) be paid to any legal heirs as recognized by the annuitant's state of domicile. is required by the Securities Act of 1933. *Contributions to a nonqualified annuity are made with the owner's after-tax dollars. . Sub accounts and mutual funds are conceptually. Immediate annuities purchase annuity units directly. A registered representative's (RR) customer is speaking of a variable life insurance contract he owns. Question #19 of 48Question ID: 606826 B)It will be lower. A 45-year-old investor takes a lump-sum distribution from a nonqualified variable annuity. A 32-year-old with a company-sponsored 401k plan who will need a lump sum soon to finance graduate school tuition continues payments as long as one annuitant is alive. 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. C)the number of annuity units is fixed, and their value remains fixed. Surrender fees and penalties for early withdrawal. Ideally they should be funded with readily available cash rather than using funds liquidated from existing investments. His objective is monthly income that he can receive after he retires to supplement his small pension and social security benefits. During the payout period, payments are based on a fixed number of annuity units established when the contract was annuitized. A) Ordinary income tax on earnings exceeding basis. the state insurance commission. However, a discussion should occur regarding the risks that are associated with a fixed annuity; purchasing power risk. In addition, if the customer is not at least 59-, there will be a tax penalty of an additional 10%. A) waiver of premium Reference: 12.2.1 in the License Exam. Expert Answer. Spartan Technology Services and Solutions Private Limited is a subsidiary of IBM (International Business Machines) Corporation. Since , has paid out quarterly dividends ranging from $0.00 to $0.00 per share. 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. Your client owns a variable annuity contract with an AIR of 4%. Future annuity payments will vary according to the separate account's performance. 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? *The owner of a life annuity with 10-year period certain will receive payments for life, subject to a minimum of 10 years. *Only variable annuities have payout plans that provide the client income for life. Options. The number of annuity units becomes fixed when the contract is annuitized; it is the value of each unit that fluctuates. A single lump-sum investment is made, and payments begin immediately, since the investor has purchased annuity units. This role is also eligible for annual short-term incentive compensation. The most popular type of variable annuity is a deferred annuity. The value of the annuity units varies. While variable annuities have greater potential for earnings, since their interest rate rises and falls with their underlying investments, they can lose money. 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. Your 65-year-old client owns a nonqualified variable annuity. B) the rate of return is determined by the underlying portfolio's value. 's dividend yield was % last year. B) I and III. A) Dow Jones Industrial Average. C)II and IV. D) the payout plans provide the client income for life. EEO IS THE LAW . 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. B) fixed payments for 10 years, followed by variable payments for life. The number of annuity units becomes fixed when the contract is annuitized; it is the value of each unit that fluctuates. If the account is annuitized, the investor has chosen a payout option. All of the following characteristics are shared by both a mutual fund and a variable annuity's separate account EXCEPT: Determine whether the following events are independent or dependent. Listing tax-deferred growth as an objective for retirement income, which of the following investments is most suitable? B) life income During the . B)I and III. A) number of annuity units. 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: A) There is no risk in a variable annuity. Question #33 of 48Question ID: 606832 *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. The annuitant may not contribute and withdraw simultaneously. B)a majority vote from the shareholders is required to change the investment objectives. If a customer is about to buy a variable annuity contract and wants to select an annuity with a payout option providing the largest possible monthly payment, which of the following payout options would be most suitable? U.S. Securities and Exchange Commission. It is the starting point of motivation because they generate emotions. Post navigation A) 2800. D)Variable annuity. *Contributions to a nonqualified variable annuity are not tax deductible. B) variable annuities are classified as insurance products. If at all you go deeper, then you will find a wide range of annuity products from a variety of companies. vote for the investment adviser. Diagnosis is made by punch biopsy. 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. Question #46 of 48Question ID: 606796 A) 2800. An annuity is an agreement for one person or organization to pay another a series of payments. Question #22 of 48Question ID: 606803 A) II and III. A) complete all paper work to purchase the annuity contract and obtain the clients signature immediately. All of the following statements regarding variable annuities are true EXCEPT: A) variable annuities offer the investor protection against capital loss. Deferred Annuity Definition, Types, How They Work, What Is a Fixed Annuity? I. Once the contract is annuitized, monthly payments to the customer are: 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. An annuity factor is taken from the annuity table, which considers, for example, the investor's sex and age. A)the state banking commission. There are also immediate annuities, which begin paying income right away. D) Variable annuity. Question #37 of 48Question ID: 606817 A) a minimum rate of return is guaranteed. Suppose that 20%20 \%20% of their users are United States users who log on daily. C) insurance companies keep variable annuity funds in separate accounts from other insurance products. 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. guarantees payments for a certain period of time. 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. B) taxed as ordinary income. Universal variable life policies Once the cost basis is reached, any further withdrawals are a nontaxable return of principal. B) The death benefit cannot ever be more than the guaranteed benefit. B) II and IV. Home; About. 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. All of the following statements regarding variable annuities are true EXCEPT: Question #27 of 48Question ID: 606818 You can buy an annuity with either a lump sum or a series of payments, and the accounts value will grow accordingly. A) a lifetime withdrawal benefit (LWB) or lifetime income benefit will make a periodic payment even if the account balance falls to zero The number of annuity units varies. Once a variable annuity has been annuitized: have investment risk that is assumed by the investor no. This compensation may impact how and where listings appear. C)prime rate. A) variable payments for 10 years, followed by fixed payments for life. B)changes in common stock prices tend to be more closely related to changes in the cost of living than changes in bond prices. What Are the Risks of Annuities in a Recession? There is no clear answer to this. 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)II and IV. This recommendation is: D) unsuitable because her situation exposes her to surrender charges and early withdrawal penalties in exchange for insufficient benefits. a. IV. an annuitant lives longer than expected. D) I and IV. *When money is deposited into the annuity, it is purchasing accumulation units. c) Construct a contingency table showing all the joint and marginal probabilities. B) 100% taxable. Reference: 12.2.1 in the License Exam. Question #17 of 48Question ID: 606802 The return on a variable annuity is not guaranteed; it is determined by the underlying portfolio's value. D)It cannot be determined until the April return is calculated. 222. A) II and III. *Variable annuities offer tax-deferred growth and are suitable for achieving supplemental retirement income. How to Navigate Market Volatility While Saving for Retirement, Variable Annuity: Definition and How It Works, Vs. A) Any tax due is deferred. For this potential advantage, the investor, rather than the insurance company, assumes the investment risk. C) III and IV A)not suitable C)3800. Therefore, variable annuities must be registered with the state insurance commission and the Securities and Exchange Commission. b. B)II and III. For a retired person, which of the following investments would provide the greatest protection against inflation? Variable annuities provide protection from inflation because their monthly income can increase depending on the separate account's performance. Spartan Technology Services and Solutions Private Limited is a subsidiary of IBM (International Business Machines) Corporation. \hspace{10pt} Medicare, 1.5%1.5\%1.5% What is the taxable consequence of this withdrawal to your client? An ordinary simple annuity has the following characteristics: For example, most car loans are ordinary simple annuities where payments are Get Started. When the annuitization option is selected, each payment represents both capital and earnings. B)fixed in value until the holder retires. C)III and IV. regulated under both securities and insurance laws. A customer has contributed $1,000 a year for 10 years to his tax-deferred nonqualified variable annuity. C)I and III. Reference: 12.3.3 in the License Exam. A) The fact that the annuity payment may increase or decrease. Outgoing personality with the ability to develop relationships (i.e., "People Person") and a sincere desire to help others Fearless, positive attitude, and willingness to be accountable for results Organized, detail-oriented, and excellent time-management skills A desire for continuous learning \text{Salaries:} && \text{Deductions:}\\ D) II and III. B) Age 78, retired for 20 years, lives comfortably and wants to leave all liquid assets to children A) number of annuity units. All of the following are accurate statements to make to the client EXCEPT D)II and III. She will receive the annuity's entire value in a lump-sum payment. is required by the Securities Act of 1933. A) Money market fund. D) a minimum of 10 years of variable payments, followed by additional variable payments for life D) I and II. The paper publication will not be rereleased. Each of the remaining statements are true. If an investor has purchased an immediate variable annuity, which of the following statements best describe the investment? covers more than one person. 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. 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. 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 Insurance companies introduced the variable annuity as an opportunity to keep pace with inflation. A universal variable life policy should be purchased primarily for its insurance features, not its investment features. B)Two-thirds of the withdrawal is taxable as ordinary income. C) 10 years of variable payments. D) I and II. 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) payment guarantee. B) II and III 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. Life income riders are best suited for those who anticipate a lengthy retirement and are generally not yet retired when making the VA purchase. C) taxed as ordinary income only to the extent of earnings. B) a variable annuity contract is not required to be sold by prospectus because it is an insurance contract must provide full and fair disclosure. IBM Noida, Uttar Pradesh, India1 month agoBe among the first 25 applicantsSee who IBM has hired for this roleNo longer accepting applications. Because the client is older than age 59-, he does not pay 10% premature distribution penalty tax. D) A 10% penalty plus the payment of ordinary income tax on funds withdrawn in excess of the owner's basis. Life Insurance vs. Annuity: What's the Difference? C) early annuity phase-in 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. The figure below illustrates a six-month annuity with monthly payments.
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a variable annuity has which of the following characteristics
