a variable annuity has which of the following characteristics
A variable annuity is a long term investment issued by an insurance company that can help you grow your money, take income in retirement and pass on your wealth. a variable annuity does not guarantee an earnings rate of return. A registered person recommends the purchase of a variable annuity to one of his clients. He originally invested $29,000 4 years ago; it now has a value of $39,000. 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. For example, if the income is monthly, the first payment comes one month after the immediate annuity is bought. C)with guaranteed minimum withdrawal benefits (GMWBs) the periodic payments can be monthly, quarterly or annually 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. 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. A) Capital gains taxation on the earnings withdrawn in excess of the owner's basis. Which of the following statements is not true about the characteristics of a trend? A security is any investment for profit with management performed by a third party. A) I and IV. B) II and IV. A) The fact that the annuity payment may increase or decrease. A)unsuitable because the return on something as conservative as a variable annuity tends to be low. U.S. Securities and Exchange Commission. 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. All of the following statements regarding variable annuities are true EXCEPT: Random withdrawals do not guarantee how long the money will last because large withdrawals can deplete the funds before the annuitant dies. During the accumulation phase, the number of accumulation units will increase as additional money is invested. How does an indexed annuity differ from a fixed annuity? C. Question #38 of 48Question ID: 606798 Withdrawals from a nonqualified variable annuity are made on a LIFO basis, so the taxable earnings are considered taken out before principal. He wants to ensure that the client, in addition to meeting suitability requirements, is aware of certain variable annuity contract characteristics. LESSON 7: ANNUITIES - FIXED AND VARIABLE - course.uceusa.com C) insurance companies keep variable annuity funds in separate accounts from other insurance products. Reference: 12.1.2 in the License Exam. Policyholders . D) expense guarantee. Of the total payroll for the last week of the year, $30,000\$30,000$30,000 is subject to unemployment compensation taxes. The earnings are taxable but the cost basis is returned tax free. There are also immediate annuities, which begin paying income right away. \hspace{10pt} \text{Warehouse salaries} & 110,000 & \hspace{10pt} \text{Social security tax withheld} & 51,714\\ B)IRAs. When the contract is annuitized, the annuitant is credited with a fixed number of annuity units. Since the client is older than 59 at the time of distribution, the additional 10% penalty tax is not incurred. 6102..55.001) is being updated on an ongoing basis. The funds in an annuity are off-limits to creditors and other debt collectors. Owners of variable annuities, like owners of mutual fund shares, may vote on changes in investment policy and for an investment adviser. C) Mutual fund portfolio consisting of blue chip stocks d) What is the probability that a user is from the United States, given that he or she logs on every day? The remainder of the premium is invested in the separate account. 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 value of these units varies with the performance of the separate account. Reference: 12.2.1 in the License Exam, Question #48 of 48Question ID: 606835 A) Ordinary income tax on earnings exceeding basis. No Hibernation for Issuers of Index-Linked Variable Annuities and Index *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. D)variable annuities. Senior Customer Care Advocate Annuities ($22 per hour) in Warwick Your client owns a variable annuity contract with an AIR of 4%. 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. *Contributions to a nonqualified annuity are made with the owner's after-tax dollars. Annuities basics | III The creation of an estate. Variable annuities are designed to combat inflation risk. A the safety of the principal invested B the yield is always higher than bond yields. 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. The number of annuity units is fixed at the time of annuitization. CDs insured by the FDIC. Simple and general annuities problems with solutions Question: The following are characteristics of a public conglomerate: I) It is designed to operate various divisions for the long run. "Variable Annuities: What You Should Know," Page 3. C)Keogh plans. The original investment has grown to a value of $60,000. D) I and II. A prospectus for a variable annuity contract: 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. A) I and III. B) II and III A)II and III. B)I and IV. All of the following statements about variable annuities are true EXCEPT: She may choose to receive monthly payments for the rest of her life. Variable annuities provide protection from inflation because their monthly income can increase depending on the separate account's performance. III. Reference: 12.1.2 in the License Exam. e) Are From the United States and Log on every day independently? IV. The number of accumulation units can rise during the accumulation period. PGIM Fixed Income has over $900 billion in assets under management across a broad array of fixed . The value of the customer's account is converted into annuity units if and when the customer decides to annuitize the contract. How is the distribution taxed? D) II and IV. A) The entire amount is taxed as ordinary income, because it is not life insurance. Lifetime vs. fixed period annuities C) each annuity unit's value and the number of annuity units vary with time. The growth portion is subject to a 10% penalty. Consequently, the client pays taxes only on the growth portion of the withdrawal ($10,000). \hspace{10pt} Social security, 6%6\%6% on first $100,000\$100,000$100,000 of employee annual earnings the agent must be licensed in both insurance and securities. In a joint-and-last-survivor option, the annuity payment is made jointly to both parties while both are alive. B) taxed as ordinary income. In March, the actual net return to the separate account was 8%. a variable annuity does not guarantee payments for life. The growth portion is taxed as a capital gain. For this potential advantage, the investor, rather than the insurance company, assumes the investment risk. Periodic payment deferred annuity. Ideally they should be funded with readily available cash rather than using funds liquidated from existing investments. A) There is no risk in a variable annuity. 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. 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 D)II and III. A)the yield is always higher than mortgage yields. D) The investment risk is shared between the insurance company and the policyowner. A variable annuity does not guarantee an earnings rate because earnings will depend on the performance of the separate account. If an investor has a fixed-annuity contract with an insurance company, which of the following risks is assumed by the investor? C) taxed as ordinary income only to the extent of earnings. Designed to protect against inflation. On withdrawals from a nonqualified annuity, taxes are paid only on the amount that exceeds cost basis (the amount paid into the annuity). Financial Sales Professional Job in Fort Worth, TX at New York Life Your 65-year-old client owns a nonqualified variable annuity. Fixed Annuity: A fixed annuity is a type of annuity contract that allows for the accumulation of capital on a tax-deferred basis. C) II and IV She may choose to receive monthly payments for the rest of her life. PDF Prudential IncomeFlex Target Vanguard Balanced Index Fund A) periodic payment immediate annuity. C)A 10% penalty plus the payment of ordinary income tax on all of the funds withdrawn. D) The fact that periodic payments into the contract may increase or decrease. B) II and III. Reference: 12.1.2.1.1 in the License Exam. *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) During the accumulation period. B) Life annuity. FINRA. an annuitant lives longer than expected. C)not suitable because a lifetime income rider is only for someone who is already retired Which of the following statements regarding variable annuities are TRUE? The owner of a life annuity with 10-year period certain will receive payments for life, subject to a minimum of 10 years. When the annuitization option is selected, each payment represents both capital and earnings. a variable annuity guarantees an earnings rate of return. A)variable annuities will protect an investor against capital loss. A registered representative recommends a variable annuity with an income rider to a client. D) III and IV. A)a lifetime withdrawal benefit (LWB) or lifetime income benefit is generally in the form of a rider attached to the contract which will come at a cost to the annuitant An annuity factor is taken from the annuity table, which considers, for example, the investor's sex and age. The following are the characteristics or the hierarchy of a trend except A. Gigatrends C. Megatrends B. Macrotrends D. Nanotrends _____11. B) Ordinary income taxation on the earnings withdrawn until reaching the owner's cost basis. C) During the annuity period. 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. Based on this information the RR should: D) II and III. c) Construct a contingency table showing all the joint and marginal probabilities. D)Variable annuity. For a nonqualified variable annuity, cost basis for the annuitant would use the after-tax dollars contributed. In a variable life annuity with 10-year period certain, a contract holder receives: Variable annuities were introduced in the 1950s as an alternative to fixed annuities, which offer a guaranteedbut often lowpayout during the annuitization phase. Investopedia does not include all offers available in the marketplace. \text{Salaries:} && \text{Deductions:}\\ \hspace{10pt} \text{Office salaries} & \underline{234,000} & \hspace{10pt} \text{Medicare tax withheld} & 15,210\\ Which is it? Distributions from such an annuity are computed on a LIFO basis with the income taxed first. *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. C)earnings only and taxable Francisco R. - Financial Professional - Prudential Financial | LinkedIn This would not align with the couple's criteria for coverage as long as they both live. D) There is no guarantee regarding the investment results of the separate account. A customer has contributed $1,000 a year for 10 years to his tax-deferred nonqualified variable annuity. When a variable annuity contract is annuitized, the number of annuity units is fixed. D) II and IV. & \underline{\underline{\$1,014,000}} & \hspace{10pt} \text{U.S. savings bonds} & 30,420\\ Based only on these facts, the variable annuity recommendation is *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. What will this transaction provide? Question #27 of 48Question ID: 606818 II. B)I and III. Question #29 of 48Question ID: 606831 Trends Networks and Critical Thinking Module 2 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 C) II and III. A)accumulation shares. Solved 6. Which of the following is not a characteristic of | Chegg.com Variable Annuity: Definition and How It Works, Vs. Fixed Annuity C)Mortality risk. D)I and IV. C) Age 40, currently unemployed Reference: 12.3.2.1 in the License Exam. B) variable annuities are classified as insurance products. D)A 10% penalty plus the payment of ordinary income tax on funds withdrawn in excess of the owner's basis. Her intent was to use the funds for the down payment on a house after graduation. A)not suitable B)Variable annuities. *The owner of a life annuity with 10-year period certain will receive payments for life, subject to a minimum of 10 years. Upon John's death during the accumulation period, Sue takes a lump-sum payment. A Variable Annuity Has Which of the Following Characteristics *Universal variable life policies are insurance company products that should be purchased primarily for the insurance features they offer rather than as an investment. It is innate and universal. D) It cannot be determined until the April return is calculated. D) Variable annuities. The correct answer was: partially a tax-free return of capital and partially taxable. View full document. A registered representative's (RR) customer is speaking of a variable life insurance contract he owns. 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. Premiums made into the annuity purchase accumulation units. *Accumulation units represent units of ownership in a life insurance company's separate account when the contract is in the accumulation stage. C) II and III. A) III and IV. 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. All of the following are characteristics of variable annuity contracts However, it does guarantee payments for life (mortality). covers more than one person. If an investor has a fixed-annuity contract with an insurance company, which of the following risks is assumed by the investor? Each of the remaining statements are true. A trend makes considerable influence or impact. D) Variable annuity. An accumulation unit in a variable annuity contract is: &&& \underline{\underline{\$341,718}} A) taxed at a reduced rate. Is F&G Annuities & Life Inc (FG) a Good Dividend Stock? | AAII A)I and IV. The client's investment objectives, tax bracket, investment experience and risk tolerance all align well with a VA recommendation. C)I and IV. A) be paid to a designated beneficiary. Simple and general annuities problems with solutions D) not suitable because a lifetime income rider is only for someone who is already retired. Ideally they should be funded with readily available cash rather than using funds liquidated from existing investments. The trial of the assassins commenced on the following day; and the evidence being so clear, they were both found guilty, and condemned, to be broken alive on the wheel. Annuities | FINRA.org They are also riddled with fees, which can cut into profits. A) I and II. Are Variable Annuities Subject to Required Minimum Distributions? C) Corporate bonds. C)such an annuity is designed to combat inflation risk. D) Capital gains tax on earnings exceeding basis. A)IPO. Reference: 12.3.3 in the License Exam. \hspace{7pt} a. December 303030, to record the payroll. B)changes in common stock prices tend to be more closely related to changes in the cost of living than changes in bond prices. A) The policy provides a minimum guaranteed death benefit. C)II and IV. Variable Annuities. This compensation may impact how and where listings appear. Reference: 12.1.4.2 in the License Exam. What Are the Risks of Annuities in a Recession? 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. A variable annuity's separate account is: What is the taxable consequence of this withdrawal to your client? must be filed with FINRA. Generally, a life-only contract pays the most per month because payments cease at the annuitant's death. B)fixed in value until the holder retires. D)suitable due to the relative safety of the investment. A) complete all paper work to purchase the annuity contract and obtain the clients signature immediately. *The minimum guaranteed death benefit is provided by that portion of the payment invested in the insurance company's general account. Reference: 12.3.3 in the License Exam. D) Keogh plans. 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. b. B) A 30 year old construction worker recently unemployed who wants to invest his severance pay amounting to 9 months salary. variable annuity without paying tax at the time of the transfer. *As contributions are made with after-tax dollars, only the earnings generated are taxed on withdrawal. D)separate account may consist of mutual funds. This guideline has been prepared for use by Federal agencies. B) The death benefit cannot ever be more than the guaranteed benefit. B) 100% taxable. 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)the number of annuity units becomes fixed when the contract is annuitized. The tax on this is $2,800 ($10,000 x 28%). C) suggest to the client that perhaps a loan or refinancing his vacation home might be a better way to fund the contract purchase. A) be paid to a designated beneficiary. Can I Borrow from My Annuity for a House Down Payment? A)Purchasing power risk. Which of the following is not characteristic of a fixed annuity? C) a variable annuity contract does not guarantee any type of return B) be paid to any legal heirs as recognized by the annuitant's state of domicile. A) Age 56, available cash to invest, makes the maximum retirement plan contributions to an existing IRA and 401(k) plan Variable annuity salespeople must register with all of the following EXCEPT: A) FINRA. With variable annuities policyholders can choose from a number of investment opportunities. During the payout period, payments are based on a fixed number of annuity units established when the contract was annuitized. 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. The tax on this amount is $3,000. B)I and IV. . C)Growth mutual funds 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. 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 dissolutions of the trust for distributing income and capital gains. D)0. *Only variable annuities have payout plans that provide the client income for life. A) an accounting measure used to determine payments to the owner of the variable annuity. order now. C)prime rate. && \hspace{10pt}\text{Group insurance} & \underline{45,630}\\ When the contract is annuitized, the annuitant is credited with a fixed number of annuity units. Question #36 of 48Question ID: 606805 A) a minimum rate of return is guaranteed. The separate account is NOT likely to invest in: Of the answer choices given the best would be to reevaluate the recommendation based on the new information tendered by the client. When the annuitization option is selected, each payment represents both capital and earnings. If an insurance holder dies sooner than expected, the insurance company will have to pay the death benefit sooner. For an investor, which of the following is the most important factor in determining the suitability of a variable annuity investment? Do homework Doing homework can help you learn and understand the material covered in class. The anti-money laundering rules for insurance companies highlight that each insurance company - like other financial institutions subject to anti-money laundering program requirements - must develop a risk-based anti-money laundering program that identifies, assesses, and mitigates any risks of money laundering, terrorist financing, and other *Once a variable annuity is annuitized, the accumulation units are converted into a fixed number of annuity units. Since , has paid out quarterly dividends ranging from $0.00 to $0.00 per share. D)II and IV. B) variable annuities. As of March 03, 2023, had a relative dividend yield of % compared to the industry median of %. The accumulation unit's value is used to calculate the total value of the account. \hspace{10pt} Medicare, 1.5%1.5\%1.5% must precede every sales presentation. Which of the following are defined as securities? D)II and III. A joint-and-last-survivor annuity is a payout option where: Reference: 12.1.4.1 in the License Exam. 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. A) I and III. If your customer invests in a variable annuity and chooses to annuitize at age 65, which of the following statements are TRUE? A) Any tax due is deferred. A) 2800. III. Question #22 of 48Question ID: 606803 Though there is no beneficiary designation during the annuitization, this is not an issue for this annuitant. B) The entire $10,000 is taxable as ordinary income. 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. "Variable Annuities: What You Should Know," Page 10. Fixed annuities. If you die before the payout phase, your beneficiaries may receive a.