a variable annuity has which of the following characteristics

An example would be if a life annuity with 10-year period certain contract holder died after 5 years, payments would continue for 5 more years to the beneficiary and then stop. 8 annuities provide a guaranteed rate of return, whereas annuities provide conservative to aggressive investments whose rates of return are not guaranteed. If at all you go deeper, then you will find a wide range of annuity products from a variety of companies. He makes the following four statements, all of which are true EXCEPT Most annuities will not allow you to withdraw additional funds from the account once the payout phase has begun. 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. If the contract holder dies before the period expires, the remaining payments are made to the beneficiary. Immediate life annuity with 10-year period certain. *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. About Us During the payout period, payments are based on a fixed number of annuity units established when the contract was annuitized. 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. The separate account is NOT likely to invest in: Contributions to a nonqualified annuity are made with the owner's after-tax dollars. A registered representative recommends a variable annuity with an income rider to a client. It was a lump-sum purchase. D) A 10% penalty plus the payment of ordinary income tax on funds withdrawn in excess of the owner's basis. C)earnings only and taxable C)such an annuity is designed to combat inflation risk. A) the investment portfolio is managed professionally. When the contract is annuitized, the annuitant is credited with a fixed number of annuity units. A guaranteed death benefit guarantees that the beneficiary will receive a death benefit if the annuitant dies before the annuity begins paying benefits. The holder of a variable annuity receives the largest monthly payments under which of the following payout options? Fixed annuities typically earn at a lower, stable rate. Annuity units are units of ownership when the contract is in the payout stage. D) Life annuity with 10-year period certain. How is the distribution taxed? A) Only during the payout period. MetLife offers a comprehensive benefits program, including healthcare benefits, life insurance, retirement benefits, parental leave, legal plan services and paid time off. An accumulation unit in a variable annuity contract is: The funds in an annuity are off-limits to creditors and other debt collectors. In deciding whether to put money into a variable annuity versus some other type of investment, its worth weighing these pros and cons. However, it does guarantee payments for life (mortality). A) Capital gains taxation on the earnings withdrawn in excess of the owner's basis. How Variable Life Insurance Works: Pros and Cons - ValuePenguin An example would be if a life annuity with 10-year period certain contract holder died after 5 years, payments would continue for 5 more years to the beneficiary and then stop. She will receive the annuity's entire value in a lump-sum payment. A) I and II A customer has contributed $1,000 a year for 10 years to his tax-deferred nonqualified variable annuity. a) What percentage of Facebook's users are from the United States? Variable annuity Which of the following is characteristic of fixed annuities? Any withdrawals you make prior to the age of 59 may also be subject to a 10% tax penalty. Francisco R. - Financial Professional - Prudential Financial | LinkedIn Of the answer choices given the best would be to reevaluate the recommendation based on the new information tendered by the client. Universal variable life policies B) I and II. Variable Annuities Flashcards | Quizlet Annuities due are a type of annuity where payments are made at the beginning of each payment period. A registered representative explaining variable annuities to a customer would be CORRECT in stating that: Which of the following is characteristic of variable annuities? 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. Reference: 12.1.4 in the License Exam. A) Life-only annuity C) with guaranteed minimum withdrawal benefits (GMWBs) a lifetime of periodic payments is guaranteed a variable annuity guarantees payments for life. The investor purchased accumulation units. IV. A)Ordinary income taxation on the earnings withdrawn until reaching the owner's cost basis. The number of annuity units is fixed. A) changes in common stock prices tend to be more closely related to changes in the cost of living than changes in bond prices. Therefore only a fixed annuity could be considered as suitable. IBM hiring Practitioner- Policy Admin in Noida, Uttar Pradesh, India C)A 10% penalty plus the payment of ordinary income tax on all of the funds withdrawn. Based on the clients profile which of the following would be the best recommendation? All of the following statements regarding variable annuities are true EXCEPT: must be filed with FINRA. The figure below illustrates a six-month annuity with monthly payments. IBM is a global brand and has its presence in 170 countries and operates . *Universal variable life policies are insurance company products that should be purchased primarily for the insurance features they offer rather than as an investment. Reference: 12.3.2.4 in the License Exam. Distributions from such an annuity are computed on a LIFO basis with the income taxed first. Registration with FINRA is de facto registration with the SEC; no registration is required by the state banking commission. This customer has no spouse or dependents, which negates the value of the death benefit. When the first party dies, the annuity payment is made to the survivor. no. B) Exchange traded Funds (ETFs) or Exchange traded Notes (ETNs) A) variable annuities offer the investor protection against capital loss. 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. Question #19 of 48Question ID: 606826 An annuity is an agreement for one person or organization to pay another a series of payments. have investment risk that is assumed by the investor A)II and IV. B) A 30 year old construction worker recently unemployed who wants to invest his severance pay amounting to 9 months salary. C) a variable annuity contract does not guarantee any type of return B) value of annuity units. An annuity factor is taken from the annuity table, which considers, for example, the investor's sex and age. B) the client may vote for the board of directors or board of managers. Here is how guaranteed lifetime annuities work. *Insurance companies introduced the variable annuity as an opportunity to keep pace with inflation. The original investment has grown to a value of $60,000. U.S. Securities and Exchange Commission. 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 number of accumulation units can rise during the accumulation period. B) 0. B)fixed in value until the holder retires. Variable annuities were introduced in the 1950s as an alternative to fixed annuities, which offer a guaranteedbut often lowpayout during the annuitization phase. An accumulation unit in a variable annuity contract is: A)an accounting measure used to determine the contract owner's interest in the separate account. If the customer takes a withdrawal of $10,000, what are the tax consequences? 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. D)It cannot be determined until the April return is calculated. GuranteedExamLife Flashcards by Gabriel Martinez | Brainscape Try Reference: 12.2.1 in the License Exam. 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: Therefore, ordinary income taxes will apply to the entire $10,000. C) II and III. D)A 10% penalty plus the payment of ordinary income tax on funds withdrawn in excess of the owner's basis. C) III and IV. C) 3800. Reference: 12.1.2 in the License Exam. D)the rate of return is determined by the underlying portfolio's value. Because common stocks are not fixed dollar investments, they have the opportunity to keep pace with inflation. The following changes have been incorporated into Special Publication 800145, as of the date indicated - . During the accumulation phase, you make purchase payments. Once annuitized, the number of annuity units does not vary. As of March 03, 2023, had a relative dividend yield of % compared to the industry median of %. C) each annuity unit's value and the number of annuity units vary with time. Chapter 12 - Variable Annuities Flashcards | Chegg.com A customer has an investment objective of keeping pace with inflation while assuming moderate risk. In March, the actual net return to the separate account was 8%. None of the other investments listed here offer tax-deferred growth. How to Navigate Market Volatility While Saving for Retirement, Variable Annuity: Definition and How It Works, Vs. B) fixed in value until the holder retires. Reference: 12.1.4.2 in the License Exam. Before the contract is annuitized, your client, currently age 60, withdraws some funds for personal purposes. Reference: 12.3.2.1 in the License Exam. B)variable annuities are classified as insurance products. The features of variable deferred annuities are many. A universal variable life policy should be purchased primarily for its insurance features, not its investment features. 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) During the annuity period. B) accumulation units. D) variable annuities may only be sold by registered representatives. Reference: 12.3.3 in the License Exam, Question #34 of 48Question ID: 606834 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 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) I and IV. C)municipal bonds. Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield, Claudia Bienias Gilbertson, Debra Gentene, Mark W Lehman, Eric W. Noreen, Peter C. Brewer, Ray H Garrison. A)the yield is always higher than mortgage yields. Question #32 of 48Question ID: 606815 Reference: 12.2.1 in the License Exam. must precede every sales presentation. B) the state insurance department. Assuming that the payroll for the last week of the year is to be paid on December 313131, journalize the following entries: When the second party dies, all payments cease. A) 4000. . *Variable annuities offer tax-deferred growth and are suitable for achieving supplemental retirement income. Hire Velocity hiring Customer Escalation Agent in Tampa, Florida C)III and IV. A) mutual fund units. A variable annuity is a type of annuity contract in which the value can vary based on the performance of an u . C) payments continue for a pre-determined period of time. C)II and IV. Question #17 of 48Question ID: 606802 *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. D)I and III. *Contributions to a nonqualified annuity are made with the owner's after-tax dollars. D) II and III. Do homework Doing homework can help you learn and understand the material covered in class. A) I and IV. However, they are protected by state guaranty associations in the event that the insurance company providing the product goes out of business. B) Life annuity. Life Insurance vs. Annuity: What's the Difference? Chapter 6-Classification Annuities Flashcards | Quizlet What is the taxable consequence of this withdrawal to your client? B) II and III. It's somewhat similar to a variable life insurance policy in that: You can choose how the product's value is invested. The company's well-known Rock symbol is an icon of strength, stability, expertise and innovation that has stood the test of time. B)part earnings and part cost basis All of the following investment strategies offer either fully or partially tax-deductible contributions to individuals who meet eligibility requirements EXCEPT: Your client owns a variable annuity contract with an AIR of 4%. The owner of a life annuity with 10-year period certain will receive payments for life, subject to a minimum of 10 years. c) Construct a contingency table showing all the joint and marginal probabilities. A variable annuity is both an insurance and a securities product. *Annuity death benefits are generally paid in a lump sum. This chapter was updated on 15 December, 2005. a variable annuity guarantees payments for life. The investor has already paid tax on the contributions but the earnings have grown tax-deferred. C)the invested money will be professionally managed according to the issuers' investment objectives. U.S. Securities and Exchange Commission. Science Health Science Nursing. B)Life annuity with period certain. D) value of accumulation units. used for the investment of funds paid by contract holders. *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. D) I and II. Vaccine has decreased the incidence. An ordinary simple annuity has the following characteristics: For example, most car loans are ordinary simple annuities where payments are. How Good of a Deal Is an Indexed Annuity? A)There is no tax as the withdrawal is considered return of capital. B)corporate stock. The value of the customer's account is converted into annuity units if and when the customer decides to annuitize the contract. 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. Once a customer annuitizes a variable annuity, which of the following statements are TRUE? a variable annuity does not guarantee payments for life. A) be paid to a designated beneficiary. A) Any tax due is deferred. Annuity death benefits are generally paid in a lump sum. Variable annuity salespeople must register with all of the following EXCEPT: Before the contract is annuitized, your client, currently age 60, withdraws some funds for personal purposes. D)Variable annuity contract with a discussion regarding legislative risk, A VA with its investments in the separate account subject to market risk would not align with the customer's objective. & \underline{\underline{\$1,014,000}} & \hspace{10pt} \text{U.S. savings bonds} & 30,420\\ C) 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 Simple and general annuities problems with solutions Periodic payment deferred annuity. The accumulation period of a variable annuity may continue for many years. *A joint life with last survivor contract covers multiple annuitants and ceases payments at the death of the last surviving annuitant. A) The fact that the annuity payment may increase or decrease. B) The policyowner. Question #12 of 48Question ID: 606814 Question #15 of 48Question ID: 606804 Question #28 of 48Question ID: 606821 C)The entire $10,000 is taxable as ordinary income. A) taxed at a reduced rate. The trial of the assassins commenced on the following day; and the evidence being so clear, they were both found guilty, and condemned, to be broken alive on the wheel. 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. The number of annuity units becomes fixed when the contract is annuitized; it is the value of each unit that fluctuates. D)I and II. Life income riders are best suited for those who anticipate a lengthy retirement and are generally not yet retired when making the VA purchase. Variable annuities operate in similar ways to . 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. C) value of underlying securities held in the separate account. We also reference original research from other reputable publishers where appropriate. A 10% penalty applies only if distributions begin before age 59-. A) periodic payment immediate 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. The beneficiary is taxed at ordinary income rates during the year the lump sum is received. An Immediate Annuity is designed to provide each of the following features, EXCEPT: The creation of an estate. B)Capital gains taxation on the earnings withdrawn in excess of the owner's basis. Home; About. The amount taxed is the amount of the lump-sum payment minus the deceased's cost basis in the investment. No, annuities are not FDIC-insured as they are not bank products. Question #27 of 48Question ID: 606818 *The investor has already paid tax on the contributions but the earnings have grown tax-deferred. With regard to a variable annuity, all of the following may vary EXCEPT: 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? The tax on this is $2,800 ($10,000 x 28%). IBM Noida, Uttar Pradesh, India1 month agoBe among the first 25 applicantsSee who IBM has hired for this roleNo longer accepting applications. 's dividend yield was % last year. 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. A) 4000. DR:BASSANT ADEL 9 QUIZ CH 6 Choose the correct answer: 1-Insurance policy benefits are classified on an insurance company's balance sheet as A. liabilities, because the insurance company may have to pay out the benefits B. assets, because policy benefits are valuable to the company C. liabilities, because customers may fall behind on their premium payments D. assets, because policy benefits . Question #38 of 48Question ID: 606798 Of the four client profiles below which might be the best suited for a variable annuity recommendation? Question #43 of 48Question ID: 606809 Reference: 12.1.1 in the License Exam. D)suitable due to the relative safety of the investment. Variable annuities gave buyers a chance to benefit from rising markets by investing in a menu of mutual funds offered by the insurer. A)accumulation shares. The fees on variable annuities can be quite hefty. A joint life with last survivor annuity: A registered representative's (RR) customer is speaking of a variable life insurance contract he owns. who needs access to the sum invested at later time. C) Universal variable life policy. a. Clusters of vesicles in various stages. Solved Which of the following is characteristic of variable - Chegg Question #29 of 48Question ID: 606831 C)none of these. The noble relatives of the Count d'Horn absolutely blocked up the ante-chambers of the regent, praying for mercy on the misguided youth, and alleging that he was insane . What are the different types of annuities? | III When a variable annuity contract is annuitized, the number of annuity units is fixed. There are two interest rates under fixed annuities. The income was deferred from tax over the plan's life, so it is taxable as ordinary income once distributed. A) complete all paper work to purchase the annuity contract and obtain the clients signature immediately. A) I and IV. 10.1 This chapter addresses a number of ABS statistics relating to the economically active population which were not discussed elsewhere. 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? 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. Herpes Zoster has all of the following characteristics except: Which of the following statements regarding variable annuities are TRUE? D)suggest to the client that perhaps a loan or refinancing his vacation home might be a better way to fund the contract purchase. Your 65-year-old client owns a nonqualified variable annuity. A) not suitable D) II and IV. 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) taxed as ordinary income only to the extent of earnings. 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 does not guarantee an earnings rate of return. *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. IBM Noida, Uttar Pradesh, India4 weeks agoBe among the first 25 applicantsSee who IBM has hired for this roleNo longer accepting applications. C) the yield is always higher than bond yields. A separate account will invest in a number of different securities. required to be located off of the company's premises. B)II and III. are purchased primarily for their insurance features B)It will be lower. B) a variable annuity contract is not required to be sold by prospectus because it is an insurance contract Reference: 12.1.4.1 in the License Exam. Life with period certain will produce a smaller check for life because the insurance company will guarantee payments to a beneficiary for a certain period of time designated in the contract should the annuitant die within that period.