A) II and IV. An investor owning which of the following variable annuity contracts would hold accumulation units? 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 No paper. D)Any tax due is deferred. Fixed annuities. A)each annuity unit's value and the number of annuity units vary with time. \hspace{7pt} b. January 444, to record the employers payroll taxes on the payroll to be paid on January 444. a variable annuity does not guarantee an earnings rate of return. The features of variable deferred annuities are many. VAs, blue chip mutual fund portfolios, ETFs and ETNs are all tied to market performance in some way and have risk characteristics that would not align in terms of suitability for this client. A joint life with last survivor contract covers multiple annuitants and ceases payments at the death of the last surviving annuitant. The growth portion is subject to a 10% penalty. II. B) Ordinary income taxation on the earnings withdrawn until reaching the owner's cost basis. Reference: 12.3.3 in the License Exam. C)II and III. Reference: 12.2.1 in the License Exam. . But again, the need to designate beneficiaries is not an issue for this annuitant. This compensation may impact how and where listings appear. C) 100% tax free. D) Age 27, saving for first home. C) II and III. Distributions from such an annuity are computed on a LIFO basis with the income taxed first. III) A hierarchy of corporate staff evaluates divisions' plans and performance. A) a variable annuity contract will provide a fluctuating monthly check upon the annuitization of the contract Question #47 of 48Question ID: 606813 The value of the annuity units is fixed. Ideally they should be funded with readily available cash rather than using funds liquidated from existing investments. covers more than one person. However, a discussion should occur regarding the risks that are associated with a fixed annuity; purchasing power risk. Only variable annuities have payout plans that provide the client income for life. D) I and III Spartan Technology Services and Solutions Private Limited is a subsidiary of IBM (International Business Machines) Corporation. IBM Noida, Uttar Pradesh, India4 weeks agoBe among the first 25 applicantsSee who IBM has hired for this roleNo longer accepting applications. Question #22 of 48Question ID: 606803 The tax on this amount is $3,000. Variable Annuity Advantages and Disadvantages, Guide to Annuities: What They Are, Types, and How They Work. Suggesting that loans or drawing equity from a home to fund VA contracts have also been targeted as abusive sales practices. B) contact the issuer of the clients existing VA contract to facilitate the clients surrender of the contract. This role is also eligible for annual short-term incentive compensation. However, the web version (cat. The most suitable option and one considered effective for married couples is a single joint and last survivor contract. \end{array} D)an accounting measure used to determine payments to the owner of the variable annuity. D)A variable annuity, Variable annuities offer tax-deferred growth and are suitable for achieving supplemental retirement income. Do homework Doing homework can help you learn and understand the material covered in class. Reference: 12.3.3 in the License Exam, Question #34 of 48Question ID: 606834 (The exception is the fixed income annuity, which has a moderate to high payout that rises as the annuitant ages). 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) Life-only annuity *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. B) value of annuity units. Sub accounts and mutual funds are conceptually. C) III and IV. Reference: 12.1.4.1 in the License Exam. The client's investment objectives, tax bracket, investment experience and risk tolerance all align well with a VA recommendation. He originally invested $29,000 4 years ago; it now has a value of $39,000. A universal variable life policy should be purchased primarily for its insurance features, not its investment features. A)exempt from taxes 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. Question #14 of 48Question ID: 606823 An individual retirement annuity is an investment vehiclesimilar to an individual retirement accountthat is offered by insurance companies. Reference: 12.3.2.4 in the License Exam. $63,000 b.$51,000 c. $18,000 d.$6,000. How to Rollover a Variable Annuity Into an IRA. 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. The number of annuity units becomes fixed when the contract is annuitized; it is the value of each unit that fluctuates. An accumulation unit in a variable annuity contract is: 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. A client has purchased a nonqualified variable annuity from a commercial insurance company. *Fixed income instruments, like bonds and fixed annuities, are subject to purchasing power risk. D)value of accumulation units. B) be paid to any legal heirs as recognized by the annuitant's state of domicile. D) variable annuities may only be sold by registered representatives. There are two elements that contribute to the value of a variable annuity: the principal, which is the amount of money you pay into the annuity, and the returns that your annuitys underlying investments deliver on that principal over the course of time. Question #24 of 48Question ID: 606806 A)variable annuities will protect an investor against capital loss. D) a minimum of 10 years of variable payments, followed by additional variable payments for life. B) Ordinary income taxation on the earnings withdrawn until reaching the owner's cost basis. Reference: 12.3.3 in the License Exam. For an investor, which of the following is the most important factor in determining the suitability of a variable annuity investment? *Mortality risk- If an annuitant lives longer than expected, the insurance company will have to continue payments longer than expected. D) Joint and last survivor annuity. An annuity may be purchased under all of the following methods EXCEPT: Question #26 of 48Question ID: 606811 For example, when paying rent, the rent payment (PMT) . A) I and II B) IPO. B)Two-thirds of the withdrawal is taxable as ordinary income. Reference: 12.1.2 in the License Exam, Question #23 of 48Question ID: 901858 A rider or statement of condition that allows a variable life insured to maintain policy coverage after becoming disabled is a benefit known as As the name implies, the investment performance of a variable annuity's portfolio (separate account) can vary, and the investor bears the risk of any potential decline in its value. B) prime rate. Once the contract is annuitized, monthly payments to the customer are: 10.1 This chapter addresses a number of ABS statistics relating to the economically active population which were not discussed elsewhere. The upside was the possibility of higher returns during the accumulation phase and a larger income during the payout phase. Once the cost basis is reached, any further withdrawals are a nontaxable return of principal. Her agent recommended she choose a variable annuity as a safe haven for the funds. C) II and IV. Immediate annuities purchase annuity units directly. During the accumulation phase, you make purchase payments. The growth portion is taxed as ordinary income. 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 B) 0. A)unsuitable because the return on something as conservative as a variable annuity tends to be low. A) I and II Annuities due are a type of annuity where payments are made at the beginning of each payment period. The number of accumulation units can rise during the accumulation period. A registered representative's (RR) customer is speaking of a variable life insurance contract he owns. A) complete all paper work to purchase the annuity contract and obtain the clients signature immediately. C)III and IV C) 10 years of variable payments. FINRA. used for the investment of funds paid by contract holders. Changes in payments on a variable annuity correspond most closely to fluctuations in the: Periodic payments are not a consideration because normally the payments into an annuity are level or in a lump sum. \hspace{10pt} Federal unemployment (employer only), 0.8%0.8\%0.8%. 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 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. 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. the agent must be licensed in both insurance and securities. The tax on this is $2,800 ($10,000 x 28%). \hspace{10pt} Medicare, 1.5%1.5\%1.5% C) The insurance company. B) II and III A customer has a nonqualified variable annuity. c. The separate account provides for a guaranteed minimum return. A)II and III. D)II and III. B) payments continue until the death of the primary owner. If the contract holder dies before the period expires, the remaining payments are made to the beneficiary. Question #46 of 48Question ID: 606796 Question #32 of 48Question ID: 606815 D) be paid to the issuing company to complete the plan. The paper publication will not be rereleased. All of the following investment strategies offer either fully or partially tax-deductible contributions to individuals who meet eligibility requirements EXCEPT: Variable annuity salespeople must be registered with FINRA and the state insurance department. \text{Salaries:} && \text{Deductions:}\\ Annual depreciation on the machine is$12,000, and the tax rate of the company is 25%. Variable annuities are riskier than fixed annuities because the underlying investments may lose value. A) taxed at a reduced rate. *Only variable annuities have payout plans that provide the client income for life. D)Dow Jones Industrial Average. Reference: 12.3.3 in the License Exam. 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 fixed payment that the annuitant receives loses purchasing power over time as a result of inflation. C) II and IV. B) The entire $10,000 is taxable as ordinary income. Classifying annuities There are many categories of annuities. If the customer takes a withdrawal of $10,000, what are the tax consequences? A) Ordinary income tax on earnings exceeding basis. C) the client assumes the investment risk. An annuity is an insurance product that promises to pay out income at a future date based on invested funds. Because the client is older than age 59-, he does not pay 10% premature distribution penalty tax. D)suitable due to the relative safety of the investment. "Variable Annuities: What You Should Know," Page 3. *Contributions to a nonqualified annuity are made with the owner's after-tax dollars. Since , has paid out quarterly dividends ranging from $0.00 to $0.00 per share. None of the other investments listed here offer tax-deferred growth. Withdrawals from a nonqualified variable annuity are made on a LIFO basis, so the taxable earnings are considered taken out before principal. B)Value of each annuity unit each month. 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? An accumulation unit in a variable annuity contract is: IBM is a global brand and has its presence in 170 countries and operates . D) It cannot be determined until the April return is calculated. D) III and IV. 111. Your client owns a variable annuity contract with an AIR of 4%. *The return on a variable annuity is not guaranteed; it is determined by the underlying portfolio's value. Any withdrawals you make prior to the age of 59 may also be subject to a 10% tax penalty. B)a minimum rate of return is guaranteed. When the first party dies, the annuity payment is made to the survivor. This cloud model is composed of five essential characteristics, three service models, and four deployment models. A 45-year-old investor takes a lump-sum distribution from a nonqualified variable annuity. B) the client may vote for the board of directors or board of managers. Question #37 of 48Question ID: 606817 C) II and III. A) changes in common stock prices tend to be more closely related to changes in the cost of living than changes in bond prices. Her intent was to use the funds for the down payment on a house after graduation. D)I and III. B) II and IV. The entire amount is taxed as ordinary income. D) an accounting measure used to determine the contract owner's interest in the separate account. Contributions to an IRA may be tax deductible, depending on the individual's earnings and participation in a company-sponsored qualified retirement plan. A) There is no risk in a variable annuity. The payout compared to the initial payout upon annuitization. Which of the following statements regarding variable annuities are TRUE? D) II and III. D) Variable annuity. Based only on these facts, the variable annuity recommendation is This customer has no spouse or dependents, which negates the value of the death benefit. The annuity unit's value represents a guaranteed return. C)the number of annuity units is fixed, and their value remains fixed. 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. Lifetime vs. fixed period annuities The annuitant may not contribute and withdraw simultaneously. *Distributions from a nonqualified plan represent both a return of the original investment made in the plan with after-tax dollars (a nontaxable return of capital) and the income from that investment. Suggesting that loans or drawing equity from a home to fund VA contracts have also been targeted as abusive sales practices. All of the following investment strategies offer either fully or partially tax-deductible contributions to individuals who meet eligibility requirements EXCEPT: must precede every sales presentation. You purchase a variable annuity contract by making either a single purchase payment or a series of purchase payments. A) I and II. The fees on variable annuities can be quite hefty. Dividing the funds available so as to fund 2 separate contracts, whether they be joint with last survivor or life income, would not be cost efficient for spouses. B) The death benefit cannot ever be more than the guaranteed benefit. B)Life annuity with period certain. D) Two-thirds of the withdrawal is taxable as ordinary income. Distributed along a dermatome. Your customer in his early 30s has received a modest inheritance from a relative. Determine whether the following events are independent or dependent. & \underline{\underline{\$1,014,000}} & \hspace{10pt} \text{U.S. savings bonds} & 30,420\\ A) mortality guarantee. The beneficiary is taxed at ordinary income rates during the year the lump sum is received. Reference: 12.3.1 in the License Exam, Question #30 of 48Question ID: 606833 must be filed with FINRA. How is the distribution taxed? Consequently, the client pays taxes only on the growth portion of the withdrawal ($10,000). D) reevaluate whether the recommendation for the VA contract is still suitable based on the clients proposed funding of the investment. If you die before the payout phase, your beneficiaries may receive a. A)There is no tax as the withdrawal is considered return of capital. A registered representative recommends a variable annuity with an income rider to a client. When the annuitization option is selected, each payment represents both capital and earnings. Deferred Annuity Definition, Types, How They Work, What Is a Fixed Annuity? A variable annuity is a contract between you and an insurance company, under which the insurer agrees to make periodic pay- ments to you, beginning either immediately or at some future date. 2019 Ted Fund Donors Question #38 of 48Question ID: 606798 For a retired person, which of the following investments would provide the greatest protection against inflation? Variable annuity Which of the following is characteristic of fixed annuities? B) During the accumulation period. A) two people are covered and payments continue until the second death. EEO IS THE LAW . C) IRAs. The value of the customer's account is converted into annuity units if and when the customer decides to annuitize the contract. They are more suitable for individuals who can fund the annuity with cash, want to supplement existing retirement benefits they have already funded, are comfortable with the market risk associated with a VA separate account portfolio and anticipate a long retirement. C) III and IV D)money market funds. II. An annuitant assumes the investment risk of a variable annuity and is not protected by the insurance company from capital losses. What type of annuity has a cash value that is based upon the performance of it's underlying investment funds? As with most retirement account options, withdrawals before the age of 59 will result in a 10% tax penalty. 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? For a nonqualified variable annuity, cost basis for the annuitant would use the after-tax dollars contributed. 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. A registered representative explaining variable annuities to a customer would be CORRECT in stating that: && \hspace{10pt}\text{Group insurance} & \underline{45,630}\\ Which of the following statements is not true about the characteristics of a trend? 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. Many variable annuities invest the separate account in mutual funds. B) 100% taxable. (Check all that apply.) Contributions to an IRA may be tax deductible, depending on the individual's earnings and participation in a company-sponsored qualified retirement plan. Once the cost basis is reached, any further withdrawals are a nontaxable return of principal. 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. a. A) I and II B) 0. A) Fixed Annuity What is her total tax liability? If at all you go deeper, then you will find a wide range of annuity products from a variety of companies. B)I and III. A) I and III. 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) The entire amount is taxed as ordinary income, because it is not life insurance. C)not suitable because a lifetime income rider is only for someone who is already retired C) suggest to the client that perhaps a loan or refinancing his vacation home might be a better way to fund the contract purchase. Future annuity payments will vary according to the separate account's performance. C)I and IV. You have 4 clients each expressing interest in a variable annuity contract. C)suitable due to the death benefit features of a variable annuity. IBM Noida, Uttar Pradesh, India1 month agoBe among the first 25 applicantsSee who IBM has hired for this roleNo longer accepting applications. C) Tax-free municipal bonds 's dividend yield was % last year. These include white papers, government data, original reporting, and interviews with industry experts. Reference: 12.1.2 in the License Exam. C) insurance companies keep variable annuity funds in separate accounts from other insurance products. Distribution of dividends occurs during the accumulation period. A) Money market fund. If the account is annuitized, the investor has chosen a payout option. The correct answer was: partially a tax-free return of capital and partially taxable. Reasonable accommodations may be made to enable individuals with disabilities to perform the essential functions. D) The fact that periodic payments into the contract may increase or decrease. A)an accounting measure used to determine the contract owner's interest in the separate account. C)earnings only and taxable Question #12 of 48Question ID: 606814 III. Therefore only a fixed annuity could be considered as suitable. B) a variable annuity contract is not required to be sold by prospectus because it is an insurance contract a. it performs a single task b. it is self-contained and independent of other modules c. it is relatively short d. all of the above are chamcleristics of a program module 7. He makes the following four statements, all of which are true EXCEPT Once a variable annuity has been annuitized: A registered representative explaining variable annuities to a customer would be CORRECT in stating that: Contributions to a nonqualified variable annuity are not tax deductible. *The owner of a life annuity with 10-year period certain will receive payments for life, subject to a minimum of 10 years. 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. A) A variable annuity 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. View full document. \hspace{7pt} a. December 303030, to record the payroll. C. B) II and IV. B) fixed payments for 10 years, followed by variable payments for life. At the end of the year your account has a value of 10750. A) 4000. A separate account will invest in a number of different securities. 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. C)II and IV. Based on this information the RR should: In March, the actual net return to the separate account was 8%. When the annuitization option is selected, each payment represents both capital and earnings. D) None, because it is the proceeds from a life insurance company. 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)the number of annuity units becomes fixed when the contract is annuitized. When the second party dies, all payments cease. Fixed annuities are not considered securities as return is guaranteed by the insurance company issuer. Variable annuities were introduced in the 1950s as an alternative to fixed annuities, which offer a guaranteedbut often lowpayout during the annuitization phase. What Are the Risks of Annuities in a Recession? 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. 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. Reference: 12.1.4 in the License Exam. 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. C)A 10% penalty plus the payment of ordinary income tax on all of the funds withdrawn. A)Joint tenants annuity. Travel Times Journal found that the average per person cost of a 10-day trip along the Pacific coast, per person, is $1,015. A) II and III. She will receive the annuity's entire value in a lump-sum payment. An investor who has purchased a nonqualified variable annuity has the right to: Variable annuities must be registered with: All of the following statements concerning a variable annuity are correct EXCEPT: D) variable annuities will protect an investor against capital loss. national origin, genetics, disability, age, veteran status, or any other characteristic protected by law. B) the safety of the principal invested. The earnings on dollars invested into a variable annuity accumulate tax deferred, which is why variable annuities are popular products for retirement accumulation. B)I and III. C) II and III. Fixed annuities, on the other hand, provide a guaranteed return. Spartan Technology Services and Solutions Private Limited is a subsidiary of IBM (International Business Machines) Corporation. D)Joint and last survivor annuity. A prospectus for a variable annuity contract: 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. Reference: 12.1.4.1 in the License Exam. This describes which of the following annuities? 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. B)IRAs. C) I and III. The holder of a variable annuity receives the largest monthly payments under which of the following payout options? In this case, the investor is taking a lump-sum distribution before reaching age 59- and must pay an additional 10% penalty on the taxable amount. Immediate life annuity. D) payments continue until age 70-. who needs access to the sum invested at later time. Question #17 of 48Question ID: 606802 B)reevaluate whether the recommendation for the VA contract is still suitable based on the clients proposed funding of the investment. However, because the client is not yet age 59- when making the withdrawal, he also pays a 10% penalty, or $1,000. The accumulation unit's value is used to calculate the total value of the account. If the customer takes a withdrawal of $10,000, what are the tax consequences? Instructions\textsf{\textcolor{#4257b2}{Instructions}}Instructions Options. is required by the Securities Act of 1933. Question #36 of 48Question ID: 606805 B) II and IV. Variable annuities involve underlying equity investments in a separate account. There is no clear answer to this. A) Age 56, available cash to invest, makes the maximum retirement plan contributions to an existing IRA and 401(k) plan a variable annuity does not guarantee payments for life. Reference: 12.1.2 in the License Exam. The number of annuity units becomes fixed when the contract is annuitized; it is the value of each unit that fluctuates.
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