a variable annuity has which of the following characteristics

(The exception is the fixed income annuity, which has a moderate to high payout that rises as the annuitant ages). The fixed annuities, indexed annuities, and variable annuities are some of the major types of annuities, of which one may find immediate annuities and deferred annuities. B) II and IV. 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. *Variable annuity contracts must be sold by prospectus due to the characterization of the separate accounts as securities, which must be registered under the Securities Act of 1933 and the Investment Company Act of 1940. A)II and IV. 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. Determine whether the following events are independent or dependent. B)I and III. A Variable Annuity Has Which of the Following Characteristics How Good of a Deal Is an Indexed Annuity? Nicks Enterprises has purchased a new machine tool that will allow the company to improve the efficiency of its operations. Based on this information the RR should: II. When may a variable annuity account be surrendered? Once annuitized, the number of annuity units does not vary. A 3 A)II and IV. Question #46 of 48Question ID: 606796 are purchased primarily for their insurance features A) There is no risk in a variable annuity. What are the characteristics of annuity? - Wise-Answers Variable annuity salespeople must be registered with FINRA and the state insurance department. C)3800. the agent must be licensed in both insurance and securities. 's dividend yield was % last year. A)an accounting measure used to determine the contract owner's interest in the separate account. An individual who purchases a Life annuity is given protection against: the risk of living longer than expected The type of annuity that can be purchased with one monetary deposit is called a (n) Immediate annuity N purchases an annuity by making payments in an amount no less than $100 quarterly. For a nonqualified variable annuity, cost basis for the annuitant would use the after-tax dollars contributed. When the first party dies, the annuity payment is made to the survivor. 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. Reference: 12.3.3 in the License Exam. B)4200. Designed to protect against inflation. B)mutual fund units. B) the safety of the principal invested. Generally, a life-only contract pays the most per month because payments cease at the annuitant's death. He makes the following four statements, all of which are true EXCEPT Your customer in his early 30s has received a modest inheritance from a relative. This recommendation is: D) unsuitable because her situation exposes her to surrender charges and early withdrawal penalties in exchange for insufficient benefits. Usually the term "annuity" relates to a contract between an individual and a life insurance company. Variable annuities provide protection from inflation because their monthly income can increase depending on the separate account's performance. B) taxed as ordinary income. A security is any investment for profit with management performed by a third party. Anthony Battle is a CERTIFIED FINANCIAL PLANNER professional. 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. B) the state insurance department. Annuity units are units of ownership when the contract is in the payout stage. C) III and IV The growth portion is taxed as ordinary income. A 45-year-old employed individual with no other retirement accounts in place savingsbondsGroupinsurance$198,74451,71415,21030,42045,630$341,718, Tax rates assumed: D) II and IV. Complete a blank sample electronically to save yourself time and money. D) the payout plans provide the client income for life. Therefore, ordinary income taxes will apply to the entire $10,000. Reference: 12.3.1 in the License Exam, Question #30 of 48Question ID: 606833 D) the payout plans provide the client income for life. D)I and III. guarantees payments for a certain period of time. A)II and IV. D)value of accumulation units. C) 10% penalty plus payment of ordinary income tax on all funds withdrawn exceeding basis. A) 4000. C)It will be higher. D)Joint and last survivor annuity. If an investor has a fixed-annuity contract with an insurance company, which of the following risks is assumed by the investor? In March, the actual net return to the separate account was 8%. A)the number of annuity units becomes fixed when the contract is annuitized. A)the state banking commission. No Hibernation for Issuers of Index-Linked Variable Annuities and Index Changes in payments on a variable annuity correspond most closely to fluctuations in the: As of March 03, 2023, had a relative dividend yield of % compared to the industry median of %. A)variable annuities may only be sold by registered representatives. \hspace{7pt} b. January 444, to record the employers payroll taxes on the payroll to be paid on January 444. 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. Question #26 of 48Question ID: 606811 Any withdrawals you make prior to the age of 59 may also be subject to a 10% tax penalty. U.S. Securities and Exchange Commission. used for the investment of funds paid by contract holders. Reference: 12.1.2.1.1 in the License Exam. In a joint-and-last-survivor option, the annuity payment is made jointly to both parties while both are alive. B) The policyowner. \hspace{10pt} \text{Warehouse salaries} & 110,000 & \hspace{10pt} \text{Social security tax withheld} & 51,714\\ Question #27 of 48Question ID: 606818 C)A 10% penalty plus the payment of ordinary income tax on all of the funds withdrawn. Question #43 of 48Question ID: 606809 C)III and IV. C) II and III. a variable annuity guarantees an earnings rate of return. A single lump-sum investment is made, and payments begin immediately, since the investor has purchased annuity units. C)Variable annuity contract with a discussion regarding interest rate risk must be filed with FINRA. D) I and II. C)the SEC. a life insurance holder dies sooner than expected. B) 10% penalty plus payment of ordinary income tax on all funds withdrawn. If this client is in the payout phase, how would his April payment compare to his March payment? 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. IV. D)It cannot be determined until the April return is calculated. C) suggest to the client that perhaps a loan or refinancing his vacation home might be a better way to fund the contract purchase. B) Life annuity. C) Corporate bonds. It was a lump-sum purchase. D)suitable due to the relative safety of the investment. Distributions from nonqualified variable annuities are: If this client is in the payout phase, how would his April payment compare to his March payment? D)each annuity unit's value is fixed, but the number of annuity units varies with time. A) Life-only annuity C)II and III. Which of the following is not a characteristic of a program module? Once a customer annuitizes a variable annuity, which of the following statements are TRUE? A) number of annuity units. Solved The following are characteristics of a public | Chegg.com Variable Annuities Flashcards | Quizlet All of the following statements about variable annuities are true EXCEPT: B) be paid to any legal heirs as recognized by the annuitant's state of domicile. Shortening the Securities Transaction Settlement Cycle A)each annuity unit's value and the number of annuity units vary with time. B) The proceeds minus John's cost basis taxed as ordinary income at Sue's tax rate. What is her total tax liability? The investor has already paid tax on the contributions but the earnings have grown tax-deferred. A) II and III. The investor has already paid tax on the contributions but the earnings have grown tax-deferred. B) The death benefit cannot ever be more than the guaranteed benefit. B) Corporate debt securities This guideline has been prepared for use by Federal agencies. Reference: 12.1.1 in the License Exam. B) The policyowner. D) III and IV. Which 2 of the 4 client profiles would a VA be LEAST suitable for? an annuitant dies sooner than expected. C) taxed as ordinary income only to the extent of earnings. Question #22 of 48Question ID: 606803 C)complete all paper work to purchase the annuity contract and obtain the clients signature immediately. No software installation. EEO IS THE LAW . There is a guaranteed minimum interest rate, normally amounting to between 1 and 3 percent. These include white papers, government data, original reporting, and interviews with industry experts. None of the other investments listed here offer tax-deferred growth. 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. Each of the remaining statements are true. The upside was the possibility of higher returns during the accumulation phase and a larger income during the payout phase. D) variable annuities may only be sold by registered representatives. III. The tax on this is $2,800 ($10,000 x 28%). must precede every sales presentation. The remainder of the premium is invested in the separate account. C) value of underlying securities held in the separate account. Portfolio Compliance Risk Analyst Job in Newark, NJ at Prudential Annuities due are a type of annuity where payments are made at the beginning of each payment period. Fixed annuities, on the other hand, provide a guaranteed return. In a variable life annuity with 10-year period certain, a contract holder receives: *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. e) Are From the United States and Log on every day independently? An accumulation unit in a variable annuity contract is: \hspace{10pt} State unemployment (employer only), 3.8%3.8\%3.8% must be filed with FINRA. Trends Networks and Critical Thinking Module 2 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. D) It cannot be determined until the April return is calculated. B)IRAs. Reference: 12.3.3 in the License Exam. Annuities are similar to other forms of investing in that the owner invests money with the hope that it will gain in value, but annuities also come with higher fees than most mutual funds. 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. An 18-year-old, unmarried high school student sought a safe investment for a $30,000 bequest until after she graduated from college. What is the taxable consequence of this withdrawal to your client? She will receive the annuity's entire value in a lump-sum payment. The number of annuity units becomes fixed when the contract is annuitized; it is the value of each unit that fluctuates. A) Ordinary income tax on earnings exceeding basis. This makes a total of $4,000 tax and penalty paid on the random withdrawal. D) Life annuity with 10-year period certain. With regard to a variable annuity, all of the following may vary EXCEPT: 111. D) a variable annuity contract is subject to fluctuating values due to market fluctuations of the underlying separate accounts. Chapter 12 - Variable Annuities Flashcards | Chegg.com During the accumulation phase, you make purchase payments. "Variable Annuities: What You Should Know," Page 3. a variable annuity does not guarantee an earnings rate of return. They offer broad diversification in the securities market and potential growth, all while using the power of tax deferral. D) 4500. B)I and II During the accumulation phase, the number of accumulation units will increase as additional money is invested. Variable annuities offer the possibility of higher returns and greater income than fixed annuities, but theres also a risk that the account will fall in value. D) 4200. MetLife, Inc. Senior Customer Care Advocate Annuities ($22 per hour B) fixed in value until the holder retires. C) Mutual fund portfolio consisting of blue chip stocks A) be paid to a designated beneficiary. Given that all of the current retirement investments are subject to market risk, the customer wants these new funds to have no market risk exposure. 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 joint life with last survivor annuity: Your 65-year-old client owns a nonqualified variable annuity. Suggesting that loans or drawing equity from a home to fund VA contracts have also been targeted as abusive sales practices. A) an accounting measure used to determine payments to the owner of the variable annuity. A) not suitable With a fixed annuity, by contrast, the insurance company assumes the risk of delivering whatever return it has promised. B)cost of living. The number of accumulation units can rise during the accumulation 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. Underlying equity investments T, age 70, withdraws cash from a profit-sharing plan and purchases a Straight Life Annuity. Reference: 12.1.2 in the License Exam. *Once a variable annuity is annuitized, the accumulation units are converted into a fixed number of annuity units. D) Variable annuity. A) II and III. 7 - Annuities Flashcards | Quizlet Transcribed image text: 6. The value of the customer's account is converted into annuity units if and when the customer decides to annuitize the contract. C)Growth mutual funds C) the yield is always higher than bond yields. A) It will be higher. A joint life with last survivor contract covers multiple annuitants and ceases payments at the death of the last surviving annuitant. Future annuity payments will vary according to the separate account's performance. A) variable payments for 10 years, followed by fixed payments for life. An annuity payment is the dollar amount of the equal periodic payment in an annuity environment. Question #40 of 48Question ID: 606800 C)number of accumulation units. Supplemental income stream for retirement, not preservation of capital should be the catalyst to consider a VA and for anyone who may need access to the sum invested for any reason a VA would not be considered a suitable recommendation. The Project Gutenberg eBook of Memoirs of Extraordinary Popular A)Purchasing power risk. Chapter 12: Variable Annuities Flashcards | Quizlet A client has purchased a nonqualified variable annuity from a commercial insurance company. A) periodic payment immediate annuity. What Are the Biggest Disadvantages of Annuities? approve changes in the plan portfolio. A the safety of the principal invested B the yield is always higher than bond yields. is required by the Securities Act of 1933. *Variable annuity contracts were devised to help investors keep pace with inflation. You can buy an annuity with either a lump sum or a series of payments, and the accounts value will grow accordingly. D)I and II. A. D) I and III. A separate account will invest in a number of different securities. B)variable annuities are classified as insurance products. the state banking commission. D)A 10% penalty plus the payment of ordinary income tax on funds withdrawn in excess of the owner's basis. IBM is a global brand and has its presence in 170 countries and operates . Based on the clients profile which of the following would be the best recommendation? 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. IV. 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 A life with period certain contract guarantees payments for a specified number of years to a named beneficiary if the annuitant dies during that time. B)a lifetime withdrawal benefit (LWB) or lifetime income benefit will make a periodic payment even if the account balance falls to zero B) It will be lower. C) a variable annuity contract does not guarantee any type of return Variable Annuities | Investor.gov Variable Annuity: Definition and How It Works, Vs. Fixed Annuity b. B) II and IV. covers more than one person. Question #47 of 48Question ID: 606813 A)value of underlying securities held in the separate account. Question #32 of 48Question ID: 606815 B)Capital gains taxation on the earnings withdrawn in excess of the owner's basis. C) The ordinary income on the proceeds over the cost basis plus 10% of the net gain (if any) if Sue is younger than 59- years old. A) I and II. This factor is used to establish the dollar amount of the first annuity payment. &&& \underline{\underline{\$341,718}} D) Capital gains tax on earnings exceeding basis. D) each annuity unit's value varies with time, but the number of annuity units is fixed. Her agent recommended she choose a variable annuity as a safe haven for the funds. D) Growth mutual funds. Reference: 12.3.3 in the License Exam. A) a variable annuity contract will provide a fluctuating monthly check upon the annuitization of the contract B) Ordinary income taxation on the earnings withdrawn until reaching the owner's cost basis. Question #20 of 48Question ID: 606808 Her intent was to use the funds for the down payment on a house after graduation. D) Age 27, saving for first home. who needs access to the sum invested at later time. D) I and IV A) mortality guarantee. If the customer takes a withdrawal of $10,000, what are the tax consequences? These contracts cover both lives and will continue to make payments until the last spouse dies. B) Life annuity. savingsbonds30,420Groupinsurance45,630$341,718\begin{array}{lrlr} C)Mortality risk. *VAs are less suitable for individuals who have not yet made maximum contributions to other retirement accounts such as IRAs and 401ks. However, it does guarantee payments for life (mortality). The number of annuity units is fixed at the time of annuitization. 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. Though its stated return might not be as high as the other choices potential returns, only a fixed annuity fits the objective and risk averse traits of this client. C) II and III. the state insurance commission. 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. How is the distribution taxed? Typically, they allow one withdrawal each year during the accumulation phase. For example, when paying rent, the rent payment (PMT) . can be sold by someone with only an insurance license B) with guaranteed minimum withdrawal benefits (GMWBs) the periodic payments can be monthly, quarterly or annually B)II and III. When the first party dies, the annuity payment is made to the survivor. The separate account performance compared to an assumed interest rate. 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. D)0. Variable annuities are designed to combat inflation risk. \hspace{10pt} Social security, 6%6\%6% on first $100,000\$100,000$100,000 of employee annual earnings A registered representative recommends a variable annuity with an income rider to a client. On withdrawals from a nonqualified annuity, taxes are paid only on the amount that exceeds cost basis (the amount paid into the annuity). Practice all cards. Prudential Retirement Security Annuity VI is a group variable annuity (GVA) issued by Prudential Retirement Insurance and Annuity Company (PRIAC) which utilizes a Separate Account offered A universal variable life policy should be purchased primarily for its insurance features, not its investment features. A variable annuity is just a tax-deferred annuity in which you get to choose how the value of the annuity is invested. *The return on a variable annuity is not guaranteed; it is determined by the underlying portfolio's value. B)a minimum rate of return is guaranteed. 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. Question #15 of 48Question ID: 606804 The annuitized payments are viewed for tax purposes as A variable annuity is both an insurance and a securities product. What type of annuity has a cash value that is based upon the performance of it's underlying investment funds? While variable annuities have greater potential for earnings, since their interest rate rises and falls with their underlying investments, they can lose money. However, at the end of the period certain the payments to the named beneficiary (the spouse) will stop. Question #24 of 48Question ID: 606806 \hspace{10pt} \text{Office salaries} & \underline{234,000} & \hspace{10pt} \text{Medicare tax withheld} & 15,210\\ A registered representative recommends a variable annuity with an income rider to a client. This includes transportation, food, lodging, and entertainment. C) I and III. D) the yield is always higher than mortgage yields. D) tax free. The value of accumulation and annuity units varies with the investment performance of the separate account. A) The fact that the annuity payment may increase or decrease. The number of accumulation units is always fixed throughout the accumulation period. Distribution can take place before or during any solicitation for sale. When the annuitization option is selected, each payment represents both capital and earnings. A) The policy provides a minimum guaranteed death benefit. No paper. What percentile is represented by $710? All of the following statements about variable annuities are true EXCEPT: 222. At the end of the year your account has a value of 10750. If in the following year, the S&P 500 declined by 5%, the annuities value would remain at $107,000 because gains are locked in each year. A)Ordinary income taxation on the earnings withdrawn until reaching the owner's cost basis. D)Any tax due is deferred. 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. The separate account is NOT likely to invest in: An important basic characteristic of common stocks that makes them a suitable type of investment for the separate account of variable annuities is:

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