When may a variable annuity account be surrendered? What Are the Distribution Options for an Inherited Annuity? A) 2800. Reference: 12.1.2.1.2 in the License Exam. 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 A joint life with last survivor annuity: D) Two-thirds of the withdrawal is taxable as ordinary income. *Variable annuities offer tax-deferred growth and are suitable for achieving supplemental retirement income. B) fixed in value until the holder retires. D) I and II. a variable annuity does not guarantee payments for life. C) A 10% penalty plus the payment of ordinary income tax on all of the funds withdrawn. Income that cannot be outlived by the owner What is the annual cash flow generated from the new machine? If an investor has a fixed-annuity contract with an insurance company, which of the following risks is assumed by the investor? Suppose that 20%20 \%20% of their users are United States users who log on daily. D) I and IV C) II and IV. The tax on this amount is $3,000. C)II and IV. All of the following are accurate statements to make to the client EXCEPT III. is required by the Securities Act of 1933. *A variable annuity payout is determined by comparing account performance with AIR, and this month's payout with last month's payout. John is the annuitant in a variable plan, and Sue is the beneficiary. no. B) 0. D) be paid to the issuing company to complete the plan. Since the client is older than 59 at the time of distribution, the additional 10% penalty tax is not incurred. Based only on these facts, the variable annuity recommendation is Question #43 of 48Question ID: 606809 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. 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? 10.1 This chapter addresses a number of ABS statistics relating to the economically active population which were not discussed elsewhere. Who assumes the investment risk in a variable annuity contract? B)4200. She may choose to receive monthly payments for the rest of her life. C)none of these. Reference: 12.3.3 in the License Exam. Practice all cards. During the . C) During the annuity period. 's dividend yield was % last year. Question #16 of 48Question ID: 606807 When the annuitization option is selected, each payment represents both capital and earnings. an annuitant lives longer than expected. D) a minimum of 10 years of variable payments, followed by additional variable payments for life. They are also riddled with fees, which can cut into profits. The separate account performance compared to an assumed interest rate. \end{array} A customer is receiving annuitized payments from a variable annuity. Upon John's death during the accumulation period, Sue takes a lump-sum payment. Refinancing a home to draw out equity has been identified by FINRA as an abusive sales tactic regarding the sales of VAs. 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 income was deferred from tax over the plan's life, so it is taxable as ordinary income once distributed. What is the taxable consequence of this withdrawal to your client? With variable annuities policyholders can choose from a number of investment opportunities. The figure below illustrates a six-month annuity with monthly payments. 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. Reference: 12.1.2.1.1 in the License Exam. D) A 50 year old individual with $50,000 cash to invest who has already made the maximum contributions to an IRA and the 401(k) plan at his place of employment and would like to minimize some of the tax consequences of his currently high tax bracket. However, the web version (cat. II. Reference: 12.1.2 in the License Exam. Variable Annuity Features | Annuity Guys D) I and III. 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? C) value of underlying securities held in the separate account. are purchased primarily for their insurance features A) II and III. Reference: 12.3.2.1 in the License Exam. Which of the following recommendations would best meet the customer profile? Question #24 of 48Question ID: 606806 The amount of the purchase payments that go into the account may be less than you paid because fees were taken out of the purchase payments. B)Value of each annuity unit each month. Classifying annuities There are many categories of annuities. D) expense guarantee. D) Age 27, saving for first home. Refinancing a home to draw out equity has been identified by FINRA as an abusive sales tactic regarding the sales of VAs. Licensed to sell Variable Annuities in the following state(s): FL, TX . The minimum guaranteed death benefit is provided by that portion of the payment invested in the insurance company's general account. B) fixed payments for 10 years, followed by variable payments for life. The funds in an annuity are off-limits to creditors and other debt collectors. A 45-year-old investor takes a lump-sum distribution from a nonqualified variable annuity. C)number of accumulation units. This recommendation is: Question #13 of 48Question ID: 606822 & \underline{\underline{\$1,014,000}} & \hspace{10pt} \text{U.S. savings bonds} & 30,420\\ PDF Variable Annuities: What You Should Know - SEC Annuities: How to Find the Right One for You, How a Fixed Annuity Works After Retirement, Pros and Cons of Indexed Universal Life Insurance. 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. Salaries:SalessalariesWarehousesalariesOfficesalaries$670,000110,000234,000$1,014,000Deductions:IncometaxwithheldSocialsecuritytaxwithheldMedicaretaxwithheldU.S. Question #40 of 48Question ID: 606800 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, Universal variable life policies are insurance company products that should be purchased primarily for the insurance features they offer rather than as an investment. B) taxed as ordinary income. An ordinary simple annuity has the following characteristics: For example, most car loans are ordinary simple annuities where payments are. Simple and general annuities problems with solutions \hspace{10pt} \text{Warehouse salaries} & 110,000 & \hspace{10pt} \text{Social security tax withheld} & 51,714\\ *The accumulation period of a variable annuity may continue for many years. C)not suitable because a lifetime income rider is only for someone who is already retired A passion for serving customers and a personal commitment to following through in a dynamic, fast-paced environment. Herpes Zoster has all of the following characteristics except: D)It cannot be determined until the April return is calculated. The number of variable annuity accumulation units can rise during the accumulation period when additional units are being purchased. savingsbondsGroupinsurance$198,74451,71415,21030,42045,630$341,718, Tax rates assumed: Question #36 of 48Question ID: 606805 Variable annuities provide protection from inflation because their monthly income can increase depending on the separate account's performance. All of the following statements about variable annuities are true EXCEPT: C)municipal bonds. A) the investment portfolio is managed professionally. If the contract holder dies before the period expires, the remaining payments are made to the beneficiary. If the customer takes a withdrawal of $10,000, what are the tax consequences? A trend makes considerable influence or impact. B) I and III. II) It has an internal capital market wherein each division competes for funds. Expert Answer. Sample problems from Chapter 9. . 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? Question #35 of 48Question ID: 606810 IBM hiring Practitioner- Policy Admin in Noida, Uttar Pradesh, India *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. The growth portion is taxed as ordinary income. All of the following characteristics are shared by both a mutual fund and a variable annuity's separate account EXCEPT: However, at the end of the period certain the payments to the named beneficiary (the spouse) will stop. Immediate life annuity with 10-year period certain. Because common stocks are not fixed dollar investments, they have the opportunity to keep pace with inflation. C)such an annuity is designed to combat inflation risk. A) Fixed annuities. \hspace{7pt} a. December 303030, to record the payroll. In a variable life annuity with 10-year period certain, a contract holder receives: Which of the following is not a characteristic of a program module? The annuitized payments are viewed for tax purposes as Solved 6. Which of the following is not a characteristic of | Chegg.com A)contact the issuer of the clients existing VA contract to facilitate the clients surrender of the contract. A) variable annuities offer the investor protection against capital loss. A) complete all paper work to purchase the annuity contract and obtain the clients signature immediately. A) I and II These include white papers, government data, original reporting, and interviews with industry experts. C) the yield is always higher than bond yields. D) variable annuities may only be sold by registered representatives. IBM Noida, Uttar Pradesh, India4 weeks agoBe among the first 25 applicantsSee who IBM has hired for this roleNo longer accepting applications. The value of the customer's account is converted into annuity units if and when the customer decides to annuitize the contract. C) 3800. B)I and III. D) value of accumulation units. *A variable annuity does not guarantee an earnings rate because earnings will depend on the performance of the separate account. An Immediate Annuity is designed to provide each of the following features, EXCEPT: The creation of an estate. A) number of annuity units. Senior Customer Care Advocate Annuities ($22 per hour) in Warwick A) be paid to a designated beneficiary. When a variable annuity contract is annuitized, the number of annuity units is fixed. Science Health Science Nursing. D)I and III. Table1. Once the cost basis is reached, any further withdrawals are a nontaxable return of principal. B)value of annuity units. D) reevaluate whether the recommendation for the VA contract is still suitable based on the clients proposed funding of the investment. A) mutual fund units. Post navigation Variable annuities provide protection from inflation because their monthly income can increase depending on the separate account's performance. You can buy an annuity with either a lump sum or a series of payments, and the accounts value will grow accordingly. B) IPO. In March, the actual net return to the separate account was 8%. B) It will be lower. D) an accounting measure used to determine the contract owner's interest in the separate account. The upside was the possibility of higher returns during the accumulation phase and a larger income during the payout phase. However, a discussion should occur regarding the risks that are associated with a fixed annuity; purchasing power risk. However, it does guarantee payments for life (mortality). Reference: 12.1.2 in the License Exam. During payout, distributions will fluctuate due to performance in the separate account. C) payments continue for a pre-determined period of time. When a partial withdrawal is made from an annuity, the earnings are considered to be taken out first for tax purposes (or LIFO). He originally invested $29,000 4 years ago; it now has a value of $39,000. 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 joint life with last survivor contract covers multiple annuitants and ceases payments at the death of the last surviving annuitant. Life Insurance vs. Annuity: What's the Difference? \hspace{7pt} a. December 303030, to record the payroll. \hspace{10pt} Federal unemployment (employer only), 0.8%0.8\%0.8%. B) contact the issuer of the clients existing VA contract to facilitate the clients surrender of the contract. Travel Times Journal found that the average per person cost of a 10-day trip along the Pacific coast, per person, is $1,015. An accumulation unit in a variable annuity contract is: B) suitable if she has enough equity in the home to fund the variable annuity without cashing out the other VA contract A)100% tax free. For an insurance company, mortality risk turns out unfavorably if: B) I and III. Sample problems from Chapter 9 . Most annuities will not allow you to withdraw additional funds from the account once the payout phase has begun. "Variable Annuities: What You Should Know," Pages 67. 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. *The customer, in the accumulation stage of the annuity, is holding accumulation units. Which of the following is NOT associated with characteristics of shares D)accumulation units. B) Corporate debt securities A 45-year-old investor takes a lump-sum distribution from a nonqualified variable annuity. There are two interest rates under fixed annuities. The growth portion is subject to a 10% penalty. B) I and II. D) 4500. A) Age 56, available cash to invest, makes the maximum retirement plan contributions to an existing IRA and 401(k) plan Once the cost basis is reached, any further withdrawals are a nontaxable return of principal. A) Fixed Annuity 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 dissolution of the trust c. for distributing income and capital gains. A) a variable annuity contract will provide a fluctuating monthly check upon the annuitization of the contract A) a minimum rate of return is guaranteed. II. No software installation. D) a variable annuity contract is subject to fluctuating values due to market fluctuations of the underlying separate accounts. III. 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. Question #37 of 48Question ID: 606817 C) such an annuity is designed to combat inflation risk. D)the safety of the principal invested. 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 When the second party dies, all payments cease. 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 prospectus for a variable annuity contract: D) II and IV. Ideally they should be funded with readily available cash rather than using funds liquidated from existing investments. A) Joint tenants annuity. In a variable annuity contract, the provision that guarantees the annuitant payments for life is called the: You can learn more about the standards we follow in producing accurate, unbiased content in our. 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) not suitable Reference: 12.3.2.4 in the License Exam. Fixed interest rates during the payout period The value of each accumulation unit varies: Daily Variable annuities have Variable interest rates and benefits All of the following statements are true regarding the interest rate guarantees of fixed annuities, EXCEPT: 6102..55.001) is being updated on an ongoing basis. B) During the accumulation period. The separate account is used for both variable life insurance and variable annuity investments. A)Purchasing power risk. The return on a variable annuity is not guaranteed; it is determined by the underlying portfolio's value. Transcribed image text: 6. Contributions to a nonqualified annuity are made with the owner's after-tax dollars. Annuities | FINRA.org Complete a blank sample electronically to save yourself time and money. It may be used by nongovernmental . *Only variable annuities have payout plans that provide the client income for life. A joint life with last survivor contract covers multiple annuitants and ceases payments at the death of the last surviving annuitant. Chapter 4: Annuities Flashcards | Chegg.com *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. D) A 10% penalty plus the payment of ordinary income tax on funds withdrawn in excess of the owner's basis. Owners of variable annuities, like owners of mutual fund shares, may vote on changes in investment policy and for an investment adviser. *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. Anthony Battle is a CERTIFIED FINANCIAL PLANNER professional. When a partial withdrawal is made from an annuity, the earnings are considered to be taken out first for tax purposes (or LIFO). The entire amount is taxed as ordinary income. B)each annuity unit's value varies with time, but the number of annuity units is fixed. D) Variable Annuity. With a fixed annuity, by contrast, the insurance company assumes the risk of delivering whatever return it has promised. If an investor has purchased an immediate variable annuity, which of the following statements best describe the investment? A) waiver of premium Get the free Learn About Annuities and Their Myths - F&G A)an accounting measure used to determine the contract owner's interest in the separate account. However, if you take a withdrawal during the contractssurrender period, which can be as long as 15 years, youll generally have to pay a surrender fee. The number of accumulation units is always fixed throughout the accumulation period. D) Capital gains tax on earnings exceeding basis. At the end of the year your account has a value of 10750. must be filed with FINRA. They can be classified by: Nature of the underlying investment - fixed or variable B) II and IV. D)the rate of return is determined by the underlying portfolio's value. A the safety of the principal invested B the yield is always higher than bond yields. C)3800. D)I and III. A) The entire amount is taxed as ordinary income, because it is not life insurance. . A) II and III. About Us Financial Sales Professional Job in Fort Worth, TX at New York Life C) annuity units. Though there is no beneficiary designation during the annuitization, this is not an issue for this annuitant. The growth portion is taxed as a capital gain. 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) 10 years of variable payments. *A periodic payment immediate annuity is a contradiction in terms. Generally, a life-only contract pays the most per month because payments cease at the annuitant's death. If the data is normally distributed with standard deviation$198, find the percent of vacationers who spent less than $1,200 per day.
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