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A)II and IV. These contracts cover both lives and will continue to make payments until the last spouse dies. Chapter 12: Variable Annuities Flashcards | Quizlet A prospectus for a variable annuity contract: b) What probability is the 20%20 \%20% mentioned above? D) 4500. D)I and III. These contracts come with high surrender charges. 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. used for the investment of funds paid by contract holders. *Universal variable life policies are insurance company products that should be purchased primarily for the insurance features they offer rather than as an investment. Once annuitized, the number of annuity units does not vary. If this client is in the payout phase, how would his April payment compare to his March payment? Question #26 of 48Question ID: 606811 Based on the clients profile which of the following would be the best recommendation? Determine whether the following events are independent or dependent. He wants to ensure that the client, in addition to meeting suitability requirements, is aware of certain variable annuity contract characteristics. D) payments continue until age 70-. Do whatever you want with a Learn About Annuities and Their Myths - F&G: fill, sign, print and send online instantly. C)complete all paper work to purchase the annuity contract and obtain the clients signature immediately. A) two people are covered and payments continue until the second death. When the contract is annuitized, the annuitant is credited with a fixed number of annuity units. 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. Indexed annuity owners receive credited interest tied to the fluctuations of the linked index An immediate annuity consists of a single premium An immediate annuity has a single premium. Question #20 of 48Question ID: 606808 a variable annuity has which of the following characteristics Early withdrawal is either removal of funds from a fixed-term investment before the maturity date, or the removal of funds from a tax-deferred investment account or retirement savings account before a prescribed time. Question #40 of 48Question ID: 606800 When the second party dies, all payments cease. A) The entire amount is taxed as ordinary income, because it is not life insurance. Question #35 of 48Question ID: 606810 Question #41 of 48Question ID: 606801 D)A variable annuity, Variable annuities offer tax-deferred growth and are suitable for achieving supplemental retirement income. A) defined contribution plans. When the annuitization option is selected, each payment represents both capital and earnings. **Because common stocks are not fixed dollar investments, they have the opportunity to keep pace with inflation. D) variable annuities may only be sold by registered representatives. *A variable annuity may only be surrendered during the accumulation period. Variable Annuities Flashcards | Quizlet B) The proceeds minus John's cost basis taxed as ordinary income at Sue's tax rate. C) Universal variable life policy. Variable Annuities Flashcards - Cram.com 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. The payout of an annuitized variable annuity account changes from month to month in a manner determined by which of the following? Owners of variable annuities, like owners of mutual fund shares, may vote on changes in investment policy and for an investment adviser. Of the answer choices given the best would be to reevaluate the recommendation based on the new information tendered by the client. The distribution of questions by topic is not intended to represent the 39) A variable annuity has the following guarantees: [PDF] Understanding your variable annuity UBS Variable annuities are long-term investment vehicles that with these securities as well insurance company and do not apply to the investment C) III and IV. C) value of underlying securities held in the separate account. A) periodic payment immediate annuity. D) the payout plans provide the client income for life. When the first party dies, the annuity payment is made to the survivor. All of the following statements regarding variable annuities are true EXCEPT: Question #42 of 48Question ID: 606830 Of the answer choices given the best would be to reevaluate the recommendation based on the new information tendered by the client. PDF Prudential IncomeFlex Target Vanguard Balanced Index Fund C)It will be higher. *The investor has already paid tax on the contributions but the earnings have grown tax-deferred. Distributions to the annuitant will fluctuate during the payout period. Variable annuities are riskier than fixed annuities because the underlying investments may lose value. C)Corporate bonds. Financial Sales Professional Job in Fort Worth, TX at New York Life Fixed annuities are not considered securities as return is guaranteed by the insurance company issuer. This role is also eligible for annual short-term incentive compensation. In a joint-and-last-survivor option, the annuity payment is made jointly to both parties while both are alive. If the data is normally distributed with standard deviation$198, find the percent of vacationers who spent less than $1,200 per day. I. The downside was that the buyer was exposed to market risk, which could result in losses. Therefore, variable annuities must be registered with the state insurance commission and the Securities and Exchange Commission. is required by the Securities Act of 1933. 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. must provide full and fair disclosure. Immediate life annuity. A) waiver of premium The fixed payment that the annuitant receives loses purchasing power over time as a result of inflation. C) Life annuity with period certain. A joint-and-last-survivor annuity is a payout option where: Lifetime vs. fixed period annuities *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) the number of annuity units becomes fixed when the contract is annuitized. The growth portion is taxed as ordinary income. *Only variable annuities have payout plans that provide the client income for life. Senior Customer Care Advocate Annuities ($22 per hour) in Warwick Reference: 12.1.2 in the License Exam. Reference: 12.3.3 in the License Exam, Question #34 of 48Question ID: 606834 D) expense guarantee. The number of annuity units becomes fixed when the contract is annuitized; it is the value of each unit that fluctuates. A) an accounting measure used to determine payments to the owner of the variable annuity. The annuity unit's value represents a guaranteed return. Variable annuities are designed to combat inflation risk. A)variable annuities will protect an investor against capital loss. Reference: 12.2.1 in the License Exam. Registration with FINRA is de facto registration with the SEC; no registration is required by the state banking commission. The Three Main Types of Annuity Insurance - Fixed, Variable, and Equity $63,000 b.$51,000 c. $18,000 d.$6,000. Variable annuity salespeople must register with all of the following EXCEPT: Which of the following are defined as securities? 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. C) II and III. 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. Investopedia requires writers to use primary sources to support their work. D) each annuity unit's value varies with time, but the number of annuity units is fixed. A 45-year-old investor takes a lump-sum distribution from a nonqualified variable annuity. When a variable annuity contract is annuitized, the number of annuity units is fixed. This recommendation is: Of the 4 client profiles below, which might be the best suited for a variable annuity recommendation? Consequently, the client pays taxes only on the growth portion of the withdrawal ($10,000). A) a minimum rate of return is guaranteed. The funds in an annuity are off-limits to creditors and other debt collectors. A)value of underlying securities held in the separate account. 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. c) Construct a contingency table showing all the joint and marginal probabilities. Get the free Learn About Annuities and Their Myths - F&G The following are the characteristics or the hierarchy of a trend except A. Gigatrends C. Megatrends B. Macrotrends D. Nanotrends _____11. B. III. Ideally they should be funded with readily available cash rather than using funds liquidated from existing investments. A)contact the issuer of the clients existing VA contract to facilitate the clients surrender of the contract. Her agent recommended she choose a variable annuity as a safe haven for the funds. A) II and III. Reference: 12.3.3 in the License Exam. C)annuity units. IV. IBM hiring Practitioner- Policy Admin in Noida, Uttar Pradesh, India An 18-year-old, unmarried high school student sought a safe investment for a $30,000 bequest until after she graduated from college. C) the yield is always higher than bond yields. C)II and IV. Which Earns More: Variable or Fixed Annuities? A) I and II. An investor owning which of the following variable annuity contracts would hold accumulation units? continues payments only as long as all annuitants are still alive. Of the four client profiles below which might be the best suited for a variable annuity recommendation? *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. Consequently, the client pays taxes only on the growth portion of the withdrawal ($10,000). Reference: 12.1.1 in the License Exam. 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. D) 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. How Are Nonqualified Variable Annuities Taxed? During the accumulation phase, you make purchase payments. Reference: 12.1.1 in the License Exam. A registered person recommends the purchase of a variable annuity to one of his clients. Question #24 of 48Question ID: 606806 \hspace{10pt} Social security, 6%6\%6% on first $100,000\$100,000$100,000 of employee annual earnings 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: An immediate annuity is designed to pay an income one time-period after the immediate annuity is bought. (Check all that apply.) Herpes Zoster has all of the following characteristics except: A) I and IV. Annuity units are units of ownership when the contract is in the payout stage. The upside was the possibility of higher returns during the accumulation phase and a larger income during the payout phase. 111. B) suitable if she has enough equity in the home to fund the variable annuity without cashing out the other VA contract A separate account will invest in a number of different securities. A) I and II. . do not have a separate account D) II and IV. A 32-year-old with a company-sponsored 401k plan who will need a lump sum soon to finance graduate school tuition Changes in payments on a variable annuity correspond most closely to fluctuations in the: The entire amount is taxed as ordinary income. Distributions from nonqualified variable annuities are: Question #19 of 48Question ID: 606826 B) II and III. Who assumes the investment risk in a variable annuity contract? Every annuity has some characteristics in common. Are There Penalties for Withdrawing Money From Annuities? B) The policyowner. Which of the following statements is not true about the characteristics of a trend? What type of annuity has a cash value that is based upon the performance of it's underlying investment funds? C) The insurance company. C) 3800. A security is any investment for profit with management performed by a third party. This recommendation is: D) unsuitable because her situation exposes her to surrender charges and early withdrawal penalties in exchange for insufficient benefits. A)not suitable Once the cost basis is reached, any further withdrawals are a nontaxable return of principal. A) taxed at a reduced rate. She will receive the annuity's entire value in a lump-sum payment. ($5,000) to a stock fund. An annuitant assumes the investment risk of a variable annuity and is not protected by the insurance company from capital losses. 222. 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. . Question #43 of 48Question ID: 606809 II. When the first party dies, the annuity payment is made to the survivor. the agent must be licensed in both insurance and securities. B)variable annuities are classified as insurance products. 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. A) changes in common stock prices tend to be more closely related to changes in the cost of living than changes in bond prices. \hspace{10pt} Federal unemployment (employer only), 0.8%0.8\%0.8%. A)Joint tenants annuity. You have 4 clients each expressing interest in a variable annuity contract. Annuities are complicated products, so that may be easier said than done. An annuity factor is taken from the annuity table, which considers, for example, the investor's sex and age. As part of the registration requirements, a prospectus must be filed and distributed to prospective investors. B) II and IV. With regard to a variable annuity, all of the following may vary EXCEPT: I. If the customer takes a withdrawal of $10,000, what are the tax consequences? 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. 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. B) Life annuity. Reference: 12.1.2 in the License Exam. The number of accumulation units can rise during the accumulation period. Classifying annuities There are many categories of annuities. The number of accumulation units is always fixed throughout the accumulation period. There is a guaranteed minimum interest rate, normally amounting to between 1 and 3 percent. A guaranteed death benefit guarantees that the beneficiary will receive a death benefit if the annuitant dies before the annuity begins paying benefits. C)II and IV. Carefully look at your options when choosing an annuity. 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. The minimum guaranteed death benefit is provided by that portion of the payment invested in the insurance company's general account. A) be paid to a designated beneficiary. C) II and IV. *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. A) I and III. None of the other investments listed here offer tax-deferred growth. A)equity funds. 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. B) The entire $10,000 is taxable as ordinary income. a variable annuity has which of the following characteristics A customer has an investment objective of keeping pace with inflation while assuming moderate risk. What is the taxable consequence of this withdrawal to your client? order now. The funds are not liquid due to the surrender fees, and there is also a 10% penalty on withdrawals before age 59-. For this potential advantage, the investor, rather than the insurance company, assumes the investment risk. C) the client assumes the investment risk. Policyholders . B) II and III \hspace{7pt} b. December 303030, to record the employers payroll taxes on the payroll to be paid on December 313131. A)II and IV. B) 0. C)Life annuity. The paper publication will not be rereleased. C)Keogh plans. Frequently Asked Questions Anti-Money Laundering Program and Suspicious Immediate annuities purchase annuity units directly. D)II and III. D) an accounting measure used to determine the contract owner's interest in the separate account. 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. 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. A 45-year-old employed individual with no other retirement accounts in place The holder of a variable annuity receives the largest monthly payments under which of the following payout options? Variable annuity salespeople must register with all of the following EXCEPT: A) FINRA. D) Life annuity with 10-year period certain. A)100% tax free. 2019 Ted Fund Donors This would not align with the couple's criteria for coverage as long as they both live. a variable annuity guarantees payments for life. Many variable annuities invest the separate account in mutual funds. D)money market funds. C)such an annuity is designed to combat inflation risk. B)I and III. It may be used by nongovernmental . A) mortality guarantee. A the safety of the principal invested B the yield is always higher than bond yields. C) II and III. B)value of annuity units. 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. An annuity is an insurance product that promises to pay out income at a future date based on invested funds. Your customer in his early 30s has received a modest inheritance from a relative. MetLife offers a comprehensive benefits program, including healthcare benefits, life insurance, retirement benefits, parental leave, legal plan services and paid time off. The $30,000 contract value represents $10,000 of contributions and $20,000 of earnings. D) I and IV. A) It will be higher. Securely download your document with other editable templates, any time, with PDFfiller. D) Growth mutual funds. Periodic payment deferred annuity. C) The portion of the premium invested in the insurance company's general account is used to provide for the minimum guaranteed amount of the death benefit. C) I and III. B)Value of each annuity unit each month. Future annuity payments will vary according to the separate account's performance. II. What Are the Distribution Options for an Inherited Annuity? *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)cost of living. C)100% tax deferred. The accumulation unit's value is used to calculate the total value of the account. C) It will stay the same. Portfolio Compliance Risk Analyst Job in Newark, NJ at Prudential D) tax free. Life income riders are best suited for those who anticipate a lengthy retirement and are generally not yet retired when making the VA purchase. That can adversely affect your returns over the long term, compared with other types of investments. B) payments continue until the death of the primary owner. Which of the following recommendations would best meet the customer profile? Your 65-year-old client owns a nonqualified variable annuity. Following the transition to T+1 in the U.S. markets, Commission staff will continue to work with industry leaders, public interest advocates, investors and other regulators to assess the future feasibility of a T+0 settlement standard cycle, and seek to identify ways to overcome the challenges associated with such a move, as articulated in the . 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. What are the characteristics of fixed annuities? - InsuranceQnA If the contract holder dies before the period expires, the remaining payments are made to the beneficiary. Reference: 12.1.2 in the License Exam, Question #21 of 48Question ID: 606812