a variable annuity has which of the following characteristics

B) Life annuity. CDs insured by the FDIC. Inflation-hedging, using both tax deferral combined with market growth potential, is made possible by variable annuities #. B) 0. C)Variable annuity contract with a discussion regarding interest rate risk the SEC. 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. C)I and IV. B)I and III. A) not suitable Contributions to a nonqualified variable annuity are not tax deductible. Question #15 of 48Question ID: 606804 A) Capital gains taxation on the earnings withdrawn in excess of the owner's basis. *During the payout period, payments are based on a fixed number of annuity units established when the contract was annuitized. \hspace{10pt} \text{Office salaries} & \underline{234,000} & \hspace{10pt} \text{Medicare tax withheld} & 15,210\\ While variable annuities have greater potential for earnings, since their interest rate rises and falls with their underlying investments, they can lose money. A 10% penalty applies only if distributions begin before age 59-. How is the distribution taxed? Try The growth portion is taxed as a capital gain. a variable annuity guarantees payments for life. This cloud model is composed of five essential characteristics, three service models, and four deployment models. Annuities: How to Find the Right One for You, How a Fixed Annuity Works After Retirement, Pros and Cons of Indexed Universal Life Insurance. FINRA. 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. 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 Designed to protect against inflation. Annual depreciation on the machine is$12,000, and the tax rate of the company is 25%. D) None, because it is the proceeds from a life insurance company. C) III and IV B) The entire $10,000 is taxable as ordinary income. However, they are protected by state guaranty associations in the event that the insurance company providing the product goes out of business. When a partial withdrawal is made from an annuity, the earnings are considered to be taken out first for tax purposes (or LIFO). B)a lifetime withdrawal benefit (LWB) or lifetime income benefit will make a periodic payment even if the account balance falls to zero C) The investor's concerns about taxes. When the second party dies, all payments cease. Only variable annuities have payout plans that provide the client income for life. D)the state insurance department. B)unsuitable because her situation exposes her to surrender charges and early withdrawal penalties in exchange for insufficient benefits. A variable annuity is a combination of 2 products: an insurance contract and a mutual fund. Can I Borrow from My Annuity for a House Down Payment? have investment risk that is assumed by the investor When may a variable annuity account be surrendered? D)an accounting measure used to determine payments to the owner of the variable annuity. IBM Noida, Uttar Pradesh, India4 weeks agoBe among the first 25 applicantsSee who IBM has hired for this roleNo longer accepting applications. D)Investment risk. C)prime rate. An immediate annuity is designed to pay an income one time-period after the immediate annuity is bought. The number of variable annuity accumulation units can rise during the accumulation period when additional units are being purchased. C)III and IV They are also not considered suitable for anyone who anticipates needing a lump sum within a short time frame to fund other endeavors. C)insurance companies keep variable annuity funds in separate accounts from other insurance products. A)II and IV. C) none of these. 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: 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. The separate account performance compared to last month's performance. 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. Question #32 of 48Question ID: 606815 If the annuitant dies during the accumulation period, his/her beneficiary will receive the promised annuity payments. B) The policyowner. A) waiver of premium B)Value of each annuity unit each month. II. Each of the remaining statements are true. C) II and III. C) the client assumes the investment risk. 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 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. At the end of the year, your account has a value of $10,750 ($5,500 in the stock fund and $5,250 in the bond fund), minus fees and charges. The separate account is NOT likely to invest in: B)I and IV. A) The entire amount is taxed as ordinary income, because it is not life insurance. B) II and IV. A) There is no risk in a variable annuity. Variable annuities provide protection from inflation because their monthly income can increase depending on the separate account's performance. B)II and III. Round to the nearest hundredth of a percentile. In a variable life annuity with 10-year period certain, a contract holder receives: D) the number of annuity units becomes fixed when the contract is annuitized. can be sold by someone with only an insurance license A) a minimum rate of return is guaranteed. D)I and III. 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. However, the web version (cat. The annuity unit's value represents a guaranteed return. D)suitable due to the relative safety of the investment. Your customer in his early 30s has received a modest inheritance from a relative. A guaranteed lifetime annuity promises to pay the owner an income for the rest of their life. (Check all that apply.) At the end of the year your account has a value of 10750. must precede every sales presentation. A)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%. A) I and III. The annuitized payments are viewed for tax purposes as The owner of a life annuity with 10-year period certain will receive payments for life, subject to a minimum of 10 years. If your 60-year-old customer purchases a nonqualified variable annuity and withdraws some of her funds before the contract is annuitized, what are the consequences of this action? A) Money market fund. Question #33 of 48Question ID: 606832 During the accumulation phase, the number of accumulation units will increase as additional money is invested. B) payments continue until the death of the primary owner. D)an accounting measure used to determine payments to the owner of the variable annuity. A single lump-sum investment is made, and payments begin immediately, since the investor has purchased annuity units. Reference: 12.1.2 in the License Exam. It's somewhat similar to a variable life insurance policy in that: You can choose how the product's value is invested. B) a variable annuity contract is not required to be sold by prospectus because it is an insurance contract B) the state insurance department. Reference: 12.3.2.1 in the License Exam. A)2800. This recommendation is: D) unsuitable because her situation exposes her to surrender charges and early withdrawal penalties in exchange for insufficient benefits. D) minimum guaranteed death benefit. The number of annuity units rises once annuitization begins. C)the yield is always higher than bond yields. As part of the registration requirements, a prospectus must be filed and distributed to prospective investors. C) There is no tax as the withdrawal is considered return of capital. \hspace{7pt} a. December 303030, to record the payroll. 6102..55.001) is being updated on an ongoing basis. A) It will be higher. Therefore, variable annuities must be registered with the state insurance commission and the Securities and Exchange Commission. The customer, in the accumulation stage of the annuity, is holding accumulation units. For a nonqualified variable annuity, cost basis for the annuitant would use the after-tax dollars contributed. With variable annuities policyholders can choose from a number of investment opportunities. A) Any tax due is deferred. B) Age 78, retired for 20 years, lives comfortably and wants to leave all liquid assets to children B)changes in common stock prices tend to be more closely related to changes in the cost of living than changes in bond prices. (primary needs). Question #31 of 48Question ID: 606836 A) A variable annuity D) I and III. If an investor has a fixed-annuity contract with an insurance company, which of the following risks is assumed by the investor? D) II and IV. A client has purchased a nonqualified variable annuity from a commercial insurance company. The tax on this amount is $3,000. Because this is not guaranteed, the policyowner bears the investment risk. ($5,000) to a stock fund. required to be located off of the company's premises. The value of the separate account is now $30,000. These contracts come with high surrender charges. Annuities due are a type of annuity where payments are made at the beginning of each payment period. *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. C)I and III. 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. C)not suitable because a lifetime income rider is only for someone who is already retired A 45-year-old investor takes a lump-sum distribution from a nonqualified variable annuity. The $30,000 contract value represents $10,000 of contributions and $20,000 of earnings. B)I and IV. A variable annuity is a security and must be registered with the SEC, not FINRA. A) Only during the payout period. Your client has $50,000 to invest. D)I and III. With regard to a variable annuity, all of the following may vary EXCEPT: B)suitable regardless of funding sources c) Construct a contingency table showing all the joint and marginal probabilities. A) A variable annuity national origin, genetics, disability, age, veteran status, or any other characteristic protected by law. A)Fixed annuities. C) II and III. C)Keogh plans. C) each annuity unit's value and the number of annuity units vary with time. Your client has a large sum of money to invest from the proceeds of the sale of his home. Fixed annuities pay a fixed monthly benefit which loses purchasing power if there is inflation. You can buy an annuity with either a lump sum or a series of payments, and the accounts value will grow accordingly. B) I and IV. All of the following statements regarding variable annuities are true EXCEPT: A) variable annuities offer the investor protection against capital loss. The work environment characteristics are normal office conditions. Immediate annuities purchase annuity units directly. Reference: 12.2.1 in the License Exam. The number of annuity units varies. Reference: 12.1.2 in the License Exam. A) I and II The value of these units varies with the performance of the separate account. A variable annuity is a type of annuity contract in which the value can vary based on the performance of an u . B) I and IV. D) periodic payment deferred annuity. C) The insurance company. Her intent was to use the funds for the down payment on a house after graduation. \hspace{10pt} Federal unemployment (employer only), 0.8%0.8\%0.8%. D) A 50 year old individual with $50,000 cash to invest who has already made the maximum contributions to an IRA and the 401(k) plan at his place of employment and would like to minimize some of the tax consequences of his currently high tax bracket. All of the following statements about variable annuities are true EXCEPT: D) Life annuity with 10-year period certain. C) IRAs. B) Municipal bonds. Reference: 12.1.4.1 in the License Exam. A)IPO. B) Ordinary income taxation on the earnings withdrawn until reaching the owner's cost basis. A variable annuity is both an insurance and a securities product. 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 state banking commission. Immediate life annuity. Which of the following statements is not true about the characteristics of a trend? Reference: 12.1.1 in the License Exam. C)II and IV. A) mortality guarantee. *A variable annuity payout is determined by comparing account performance with AIR, and this month's payout with last month's payout. C)number of accumulation units. b. On withdrawals from a nonqualified annuity, taxes are paid only on the amount that exceeds cost basis (the amount paid into the annuity). Describe. The value of accumulation and annuity units varies with the investment performance of the separate account. The number of annuity units becomes fixed when the contract is annuitized; it is the value of each unit that fluctuates. The number of accumulation units can rise during the accumulation period. A customer has contributed $1,000 a year for 10 years to his tax-deferred nonqualified variable annuity. For a retired person, which of the following investments would provide the greatest protection against inflation? B)II and III. B) II and III. A) periodic payment immediate annuity. For a retired person, which of the following investments would provide the greatest protection against inflation? When a partial withdrawal is made from an annuity, the earnings are considered to be taken out first for tax purposes (or LIFO). When the contract is annuitized, the annuitant is credited with a fixed number of annuity units. D) an accounting measure used to determine the contract owner's interest in the separate account. A) partially a tax-free return of capital and partially taxable. 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 A) be paid to a designated beneficiary. C) III and IV. When the second party dies, all payments cease. B) Corporate debt securities B) During the accumulation period. Listing tax-deferred growth as an objective for retirement income, which of the following investments is most suitable? *The number of variable annuity accumulation units can rise during the accumulation period when additional units are being purchased. 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. For example, if the income is monthly, the first payment comes one month after the immediate annuity is bought. The features of variable deferred annuities are many. This customer has no spouse or dependents, which negates the value of the death benefit. Question #43 of 48Question ID: 606809 Based on this information the RR should: *Contributions to a nonqualified annuity are made with the owner's after-tax dollars. Question #19 of 48Question ID: 606826 A 32-year-old with a company-sponsored 401k plan who will need a lump sum soon to finance graduate school tuition B)4200. A)III and IV. B) II and III A) The fact that the annuity payment may increase or decrease. Question #45 of 48Question ID: 606795 \hspace{7pt} a. December 303030, to record the payroll. If your customer invests in a variable annuity and chooses to annuitize at age 65, which of the following statements are TRUE? D) the payout plans provide the client income for life. B) allow customers to opt out of sharing of financial information with certain nonaffiliated firms. D) cost of living. Therefore, ordinary income taxes will apply to the entire $10,000. \hspace{7pt} b. December 303030, to record the employers payroll taxes on the payroll to be paid on December 313131. A) I and IV. In a joint-and-last-survivor option, the annuity payment is made jointly to both parties while both are alive. The value of the annuity units varies. D)II and III. A universal variable life policy should be purchased primarily for its insurance features, not its investment features. B) Life annuity. Are Variable Annuities Subject to Required Minimum Distributions? Your 65-year-old client owns a nonqualified variable annuity. He originally invested $29,000 4 years ago; it now has a value of $39,000. The remainder of the premium is invested in the separate account. "Variable Annuities: What You Should Know," Page 10. Question #44 of 48Question ID: 606797 D) Keogh plans. C) It will stay the same. During the accumulation phase, you make purchase payments. A)value of underlying securities held in the separate account. D)variable annuities offer the investor protection against capital loss. Question #41 of 48Question ID: 606801 Distributions from such an annuity are computed on a LIFO basis with the income taxed first. C)3800. One of the following would achieve that objective but a suitability discussion regarding it's risk should also occur. When the first party dies, the annuity payment is made to the survivor. B) During the accumulation period. Reference: 12.3.3 in the License Exam. 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. A prospectus for a variable annuity contract: What is the taxable consequence of this withdrawal to your client? D) 100% tax deferred. However, it does guarantee payments for life (mortality). *Once a variable annuity is annuitized, the accumulation units are converted into a fixed number of annuity units. 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. A) Age 56, available cash to invest, makes the maximum retirement plan contributions to an existing IRA and 401(k) plan Question #20 of 48Question ID: 606808 Variable annuities operate in similar ways to . B)I and III. However, at the end of the period certain the payments to the named beneficiary (the spouse) will stop.

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