a variable annuity has which of the following characteristics a variable annuity has which of the following characteristics

B)variable annuities are classified as insurance products. Periodic payments are not a consideration because normally the payments into an annuity are level or in a lump sum. B)Fixed annuity contract with a discussion regarding timing risk C) 100% tax free. D) the yield is always higher than mortgage yields. If your customer invests in a variable annuity and chooses to annuitize at age 65, which of the following statements are TRUE? Reference: 12.1.4.2 in the License Exam. A)It will stay the same. A) 4000. 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. However, they are protected by state guaranty associations in the event that the insurance company providing the product goes out of business. C)with guaranteed minimum withdrawal benefits (GMWBs) the periodic payments can be monthly, quarterly or annually Therefore, variable annuities must be registered with the state insurance commission and the Securities and Exchange Commission. 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. A security is any investment for profit with management performed by a third party. C) single payment immediate annuity. \end{array} D) Joint and last survivor annuity. A registered representative's (RR) customer is speaking of a variable life insurance contract he owns. order now. C)I and IV. Home; About. Since the client is older than 59 at the time of distribution, the additional 10% penalty tax is not incurred. B) Ordinary income taxation on the earnings withdrawn until reaching the owner's cost basis. B) I and II. Because the client is older than age 59-, he does not pay 10% premature distribution penalty tax. Reference: 12.3.3 in the License Exam. a variable annuity guarantees payments for life. Which of the following statements is not true about the characteristics of a trend? Universal variable life policies C) II and III. This chapter was updated on 15 December, 2005. When the annuitization option is selected, each payment represents both capital and earnings. Policyholders . How does an indexed annuity differ from a fixed annuity? With regard to a variable annuity, all of the following may vary EXCEPT: A) There is no risk in a variable annuity. 222. The amount taxed is the amount of the lump-sum payment minus the deceased's cost basis in the investment. C) III and IV. The most popular type of variable annuity is a deferred annuity. The work environment characteristics are normal office conditions. Therefore only a fixed annuity could be considered as suitable. A variable annuity does not guarantee an earnings rate because earnings will depend on the performance of the separate account. C)The entire $10,000 is taxable as ordinary income. Reference: 12.3.2.4 in the License Exam. && \hspace{10pt}\text{Group insurance} & \underline{45,630}\\ B)I and III. An 18-year-old, unmarried high school student sought a safe investment for a $30,000 bequest until after she graduated from college. Question #16 of 48Question ID: 606807 This would not align with the couple's criteria for coverage as long as they both live. D)I and III. C)not suitable because a lifetime income rider is only for someone who is already retired C)suitable due to the death benefit features of a variable annuity. A) The fact that the annuity payment may increase or decrease. Assuming that the payroll for the last week of the year is to be paid on December 313131, journalize the following entries: C) I and III. Essential Characteristics: Fixed annuities, on the other hand, provide a guaranteed return. Question #47 of 48Question ID: 606813 This customer has no spouse or dependents, which negates the value of the death benefit. The growth portion is taxed as ordinary income. This role is also eligible for annual short-term incentive compensation. Though there is no beneficiary designation during the annuitization, this is not an issue for this annuitant. For example, when paying rent, the rent payment (PMT) Sample problems from Chapter 9 . C) II and IV. B) II and III Herpes Zoster has all of the following characteristics except: Group of answer choices. John is the annuitant in a variable plan, and Sue is the beneficiary. 10.1 This chapter addresses a number of ABS statistics relating to the economically active population which were not discussed elsewhere. A) the investment portfolio is managed professionally. a. C) suitable regardless of funding sources D) Variable annuity. Spartan Technology Services and Solutions Private Limited is a subsidiary of IBM (International Business Machines) Corporation. B)part earnings and part cost basis A)II and IV. A) Life-only annuity a variable annuity guarantees an earnings rate of return. A) I and III. 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. *The customer, in the accumulation stage of the annuity, is holding accumulation units. A customer has contributed $1,000 a year for 10 years to his tax-deferred nonqualified variable annuity. A) 2800. B) Municipal bonds. She will receive the annuity's entire value in a lump-sum payment. When the second party dies, all payments cease. Reference: 12.3.1 in the License Exam, Question #30 of 48Question ID: 606833 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 B)fixed in value until the holder retires. A 1 The applicant and possibly the agent initial any changes made. *Variable annuities offer tax-deferred growth and are suitable for achieving supplemental retirement income. *The most important consideration in purchasing a variable annuity is to be aware that benefit payments will fluctuate with the investment performance of the separate account. A) I and II. D) II and IV. Most annuities will not allow you to withdraw additional funds from the account once the payout phase has begun. 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. C)Keogh plans. What is her total tax liability? Reference: 12.2.1 in the License Exam, Question #48 of 48Question ID: 606835 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 variable annuity's separate account is: A) used for the investment of monies paid by variable annuity contract holders B) separate from the insurance company's general investments C) operated in a manner similar to an investment company D) as much a security as it is an insurance product All of the above Deferred Annuity Definition, Types, How They Work, What Is a Fixed Annuity? *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. However, a discussion should occur regarding the risks that are associated with a fixed annuity; purchasing power risk. *The return on a variable annuity is not guaranteed; it is determined by the underlying portfolio's value. can be sold by someone with only an insurance license \text{Salaries:} && \text{Deductions:}\\ A joint life with last survivor contract covers multiple annuitants and ceases payments at the death of the last surviving annuitant. A 45-year-old investor takes a lump-sum distribution from a nonqualified variable annuity. All of the following are accurate statements to make to the client EXCEPT B) 0. 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 This cloud model is composed of five essential characteristics, three service models, and four deployment models. III. The number of annuity units rises once annuitization begins. Because the client is older than age 59-, he does not pay 10% premature distribution penalty tax. Which is it? vote for the investment adviser. 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. D) the payout plans provide the client income for life. 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. U.S. Securities and Exchange Commission. A) Dow Jones Industrial Average. The payout compared to the initial payout upon annuitization. B) I and III. A)II and IV. Her intent was to use the funds for the down payment on a house after graduation. C)the invested money will be professionally managed according to the issuers' investment objectives. C) the client assumes the investment risk. C)prime rate. C) A 25year old public school teacher who would like to save enough for the purchase of her first home within the next 3 to 5 years. Variable annuities gave buyers a chance to benefit from rising markets by investing in a menu of mutual funds offered by the insurer. 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. Question #36 of 48Question ID: 606805 *Insurance companies introduced the variable annuity as an opportunity to keep pace with inflation. 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. I. required to be located off of the company's premises. For a retired person, which of the following investments would provide the greatest protection against inflation? III) A hierarchy of corporate staff evaluates divisions' plans and performance. Registration with FINRA is de facto registration with the SEC; no registration is required by the state banking commission. 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 . C)100% tax deferred. D) Variable Annuity. B)mutual fund units. A)defined contribution plans. The number of annuity units varies. In a variable annuity contract, the provision that guarantees the annuitant payments for life is called the: A)Purchasing power risk. Changes in payments on a variable annuity correspond most closely to fluctuations in the: *Variable annuity contracts were devised to help investors keep pace with inflation. D)I and III. How is the distribution taxed? Question #24 of 48Question ID: 606806 B) single payment deferred annuity. Question #31 of 48Question ID: 606836 A 45-year-old employed individual with no other retirement accounts in place C) Life annuity with period certain. B) a variable annuity contract is not required to be sold by prospectus because it is an insurance contract He originally invested $29,000 4 years ago; it now has a value of $39,000. If this client is in the payout phase, how would his April payment compare to his March payment? a. Reference: 12.3.2.1 in the License Exam. With a fixed annuity, by contrast, the insurance company assumes the risk of delivering whatever return it has promised. The number of accumulation units is always fixed throughout the accumulation period. 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. D) The investment risk is shared between the insurance company and the policyowner. B) the client may vote for the board of directors or board of managers. B) taxed as ordinary income. 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. A) periodic payment immediate annuity. D) The fact that periodic payments into the contract may increase or decrease. Sample problems from Chapter 9. . This includes transportation, food, lodging, and entertainment. There is a guaranteed minimum interest rate, normally amounting to between 1 and 3 percent. Accumulation Period of Fixed Annuities During this period, premiums are credited with interest which accumulates on a yearly basis. Variable annuities should be considered long-term investments due to the limitations on withdrawals. D) I and III B) During the accumulation period. B) the state insurance department. D) Any time before the accumulation period. *During the accumulation phase, the number of accumulation units will increase as additional money is invested. Question #20 of 48Question ID: 606808 Question #27 of 48Question ID: 606818 A)I and IV. *Under the mortality guarantee, the insurance company assumes mortality risk by guaranteeing payments for life, though the amount of each payment is not guaranteed. "Variable Annuities: What You Should Know," Page 10. However, it does guarantee payments for life (mortality). 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. Listing tax-deferred growth as an objective for retirement income, which of the following investments is most suitable? D) There is no guarantee regarding the investment results of the separate account. Table1. Question #19 of 48Question ID: 606826 The number of annuity units is fixed at the time of annuitization. If the data is normally distributed with standard deviation$198, find the percent of vacationers who spent less than $1,200 per day. If this client is in the payout phase, how would his April payment compare to his March payment? Science Health Science Nursing. & \underline{\underline{\$1,014,000}} & \hspace{10pt} \text{U.S. savings bonds} & 30,420\\ "Variable Annuities: What You Should Know," Page 3. Which Earns More: Variable or Fixed Annuities? For this potential advantage, the investor, rather than the insurance company, assumes the investment risk. A) two people are covered and payments continue until the second death. A) 4000. D) I and II. A) periodic payment immediate annuity. C)the number of annuity units is fixed, and their value remains fixed. *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. He earned the Chartered Financial Consultant designation for advanced financial planning, the Chartered Life Underwriter designation for advanced insurance specialization, the Accredited Financial Counselor for Financial Counseling and both the Retirement Income Certified Professional, and Certified Retirement Counselor designations for advance retirement planning. Contributions to an IRA may be tax deductible, depending on the individual's earnings and participation in a company-sponsored qualified retirement plan. A)accumulation shares. CDs insured by the FDIC. All of the following statements concerning a variable annuity are correct EXCEPT: Complete a blank sample electronically to save yourself time and money. This guideline has been prepared for use by Federal agencies. The company's well-known Rock symbol is an icon of strength, stability, expertise and innovation that has stood the test of time. B)fixed in value until the holder retires. C)A 10% penalty plus the payment of ordinary income tax on all of the funds withdrawn. A) I and II. D) variable annuities may only be sold by registered representatives. B) A 30 year old construction worker recently unemployed who wants to invest his severance pay amounting to 9 months salary. 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. \hspace{7pt} a. December 303030, to record the payroll. D) Age 27, saving for first home. *A variable annuity does not guarantee an earnings rate because earnings will depend on the performance of the separate account. A) Ordinary income tax on earnings exceeding basis. D)I and III. Salaries:SalessalariesWarehousesalariesOfficesalaries$670,000110,000234,000$1,014,000Deductions:IncometaxwithheldSocialsecuritytaxwithheldMedicaretaxwithheldU.S. No, annuities are not FDIC-insured as they are not bank products. A) I and III. D) I and III. The tax on this is $2,800 ($10,000 x 28%). C)Growth mutual funds &&& \underline{\underline{\$341,718}} \hspace{7pt} b. December 303030, to record the employers payroll taxes on the payroll to be paid on December 313131. Once the cost basis is reached, any further withdrawals are a nontaxable return of principal. B) The investor's marital status. A)not suitable Variable annuities grow tax-deferred, so you dont have to pay taxes on any investment gains until you begin receiving income or make a withdrawal. A variable annuity is a long term investment issued by an insurance company that can help you grow your money, take income in retirement and pass on your wealth. A variable annuity's separate account is: B) a variable annuity contract is not required to be sold by prospectus because it is an insurance contract C) annuity units. 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. D) reevaluate whether the recommendation for the VA contract is still suitable based on the clients proposed funding of the investment. Reference: 12.1.4.1 in the License Exam. Distributions from such an annuity are computed on a LIFO basis with the income taxed first. Withdrawals from a nonqualified variable annuity are made on a LIFO basis, so the taxable earnings are considered taken out before principal. A) Capital gains taxation on the earnings withdrawn in excess of the owner's basis. A Variable Annuity has which of the following characteristics? Reference: 12.1.2 in the License Exam. 5 Q All of the following are characteristics of variable whole life EXCEPT the premium is level there is no guaranteed cash value there is no guaranteed minimum death benefit. Income that cannot be outlived by the owner *A periodic payment immediate annuity is a contradiction in terms. An Immediate Annuity is designed to provide each of the following features, EXCEPT: The creation of an estate.