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While there is no guarantee on how investments in the separate account will perform, depending on its investment performance, the separate account could provide for a larger death benefit than the minimum guaranteed amount. A separate account will invest in a number of different securities. Reference: 12.1.4.1 in the License Exam. B)Tax-free municipal bonds D)Any tax due is deferred. Travel Times Journal found that the average per person cost of a 10-day trip along the Pacific coast, per person, is $1,015. This guideline has been prepared for use by Federal agencies. He makes the following four statements, all of which are true EXCEPT Your client owns a variable annuity contract with an AIR of 4%. An investor who purchases a fixed annuity contract assumes purchasing-power risk. Essential Characteristics: An immediate annuity is designed to pay an income one time-period after the immediate annuity is bought. The income was deferred from tax over the plan's life, so it is taxable as ordinary income once distributed. Reference: 12.1.2 in the License Exam. If a customer is about to buy a variable annuity contract and wants to select an annuity with a payout option providing the largest possible monthly payment, which of the following payout options would be most suitable? II. An annuitant assumes the investment risk of a variable annuity and is not protected byt he insurance company from capital losses. Variable annuities provide protection from inflation because their monthly income can increase depending on the separate account's performance. A)It will stay the same. Random withdrawals do not guarantee how long the money will last because large withdrawals can deplete the funds before the annuitant dies. *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 Annuity: Definition and How It Works, Vs. Fixed Annuity The time period depends on how often the income is to be paid. B) The entire $10,000 is taxable as ordinary income. Once a variable annuity has been annuitized: A) Dow Jones Industrial Average. *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. Reference: 12.1.1 in the License Exam. B)Fixed annuity contract with a discussion regarding timing risk C) payments continue for a pre-determined period of time. Among annuities, variable annuities differ from fixed annuities, which provide a specific and guaranteed return. Question #27 of 48Question ID: 606818 What type of annuity has a cash value that is based upon the performance of it's underlying investment funds? C)II and IV. Of the total payroll for the last week of the year, $30,000\$30,000$30,000 is subject to unemployment compensation taxes. 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. A)I and IV. All of the following characteristics are shared by both a mutual fund and a variable annuity's separate account EXCEPT: A) variable annuities offer the investor protection against capital loss. A)I and IV. The investor has already paid tax on the contributions but the earnings have grown tax-deferred. Fixed income instruments, like bonds and fixed annuities, are subject to purchasing power risk. Owners of variable annuities, like owners of mutual fund shares, may vote on changes in investment policy and for an investment adviser. Lifetime vs. fixed period annuities The number of annuity units varies. regulated under both securities and insurance laws. Distribution can take place before or during any solicitation for sale. vote for the investment adviser. Question #15 of 48Question ID: 606804 D) an accounting measure used to determine the contract owner's interest in the separate account. C) II and IV. B) accumulation units. B) Exchange traded Funds (ETFs) or Exchange traded Notes (ETNs) Are There Penalties for Withdrawing Money From Annuities? IBM is a global brand and has its presence in 170 countries and operates . A) I and II They are also not considered suitable for anyone who anticipates needing a lump sum within a short time frame to fund other endeavors. Reference: 12.2.1 in the License Exam. Salaries:SalessalariesWarehousesalariesOfficesalaries$670,000110,000234,000$1,014,000Deductions:IncometaxwithheldSocialsecuritytaxwithheldMedicaretaxwithheldU.S. PDF The NIST definition of cloud computing C)II and IV. Variable annuities operate in similar ways to . The offers that appear in this table are from partnerships from which Investopedia receives compensation. *The minimum guaranteed death benefit is provided by that portion of the payment invested in the insurance company's general account. All of the following are characteristics of a variable annuity, except B)Universal variable life policy. Is F&G Annuities & Life Inc (FG) a Good Dividend Stock? | AAII . B) contact the issuer of the clients existing VA contract to facilitate the clients surrender of the contract. Reference: 12.3.3 in the License Exam. Reference: 12.3.3 in the License Exam. 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. An accumulation unit in a variable annuity contract is: C) III and IV A customer is receiving annuitized payments from a variable annuity. For an investor, which of the following is the most important factor in determining the suitability of a variable annuity investment? Reference: 12.3.2.1 in the License Exam. Shortening the Securities Transaction Settlement Cycle Question #17 of 48Question ID: 606802 A) not suitable III. The payout compared to last month's payout. D)each annuity unit's value is fixed, but the number of annuity units varies with time. There are two interest rates under fixed annuities. The downside was that the buyer was exposed to market risk, which could result in losses. The annuitant may not contribute and withdraw simultaneously. 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. Variable annuities gave buyers a chance to benefit from rising markets by investing in a menu of mutual funds offered by the insurer. 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. must be filed with FINRA. If the contract holder dies before the period expires, the remaining payments are made to the beneficiary. Which of the following is NOT associated with characteristics of shares C) suitable regardless of funding sources A variable annuity has two phases: an accumulation phase and a payout (annuitization) phase. 222. Question #26 of 48Question ID: 606811 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. Changes in payments on a variable annuity correspond most closely to fluctuations in the: The most suitable option and one considered effective for married couples is a single joint and last survivor contract. A) I and III. A customer has contributed $1,000 a year for 10 years to his tax-deferred nonqualified variable annuity. Are Variable Annuities Subject to Required Minimum Distributions? B) The policyowner. Sub accounts and mutual funds are conceptually. 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. Question #38 of 48Question ID: 606798 Your 65-year-old client owns a nonqualified variable annuity. "Variable Annuities: What You Should Know," Page 10. A guaranteed death benefit guarantees that the beneficiary will receive a death benefit if the annuitant dies before the annuity begins paying benefits. Of the 4 client profiles below, which might be the best suited for a variable annuity recommendation? The entire amount is taxed as ordinary income. The money paid in will be returned tax free, but the earnings portion will be taxed as ordinary income. *A variable annuity may only be surrendered during the accumulation period. This describes which of the following annuities? The growth portion is taxed as ordinary income. *Mortality risk- If an annuitant lives longer than expected, the insurance company will have to continue payments longer than expected. B) The proceeds minus John's cost basis taxed as ordinary income at Sue's tax rate. Chapter 12: Variable Annuities Flashcards | Quizlet The number of annuity units becomes fixed when the contract is annuitized; it is the value of each unit that fluctuates. Withdrawals from a nonqualified variable annuity are made on a LIFO basis, so the taxable earnings are considered taken out before principal. B) The entire $10,000 is taxable as ordinary income. If the account is annuitized, the investor has chosen a payout option. Reference: 12.1.2.1.1 in the License Exam. C) the client assumes the investment risk. B)I and IV. D) reevaluate whether the recommendation for the VA contract is still suitable based on the clients proposed funding of the investment. An annuity payment is the dollar amount of the equal periodic payment in an annuity environment. Her agent recommended she choose a variable annuity as a safe haven for the funds. They are also riddled with fees, which can cut into profits. D)Dow Jones Industrial Average. B)I and III. Fixed annuities are not considered securities as return is guaranteed by the insurance company issuer. An annuity may be purchased under all of the following methods EXCEPT: Reference: 12.3.1 in the License Exam. An annuity factor is taken from the annuity table, which considers, for example, the investor's sex and age. A joint life with last survivor annuity: Which is it? MetLife, Inc. Senior Customer Care Advocate Annuities ($22 per hour For example, when paying rent, the rent payment (PMT) \hspace{10pt} \text{Sales salaries} & \$\hspace{5pt} 670,000 & \hspace{10pt} \text{Income tax withheld} & \$198,744\\ C) III and IV. 11.1: Fundamentals of Annuities - Mathematics LibreTexts The value of accumulation and annuity units varies with the investment performance of the separate account. 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. Immediate life annuity. A variable annuity is a combination of 2 products: an insurance contract and a mutual fund. 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. B) single payment deferred annuity. Therefore only a fixed annuity could be considered as suitable. The features of variable deferred annuities are many. B) the client may vote for the board of directors or board of managers. Word bank:Fixed, Variable Fixedannuities provide a guaranteed rate of return, whereas Variableannuities provide conservative to aggressive investments whose rates of return are not guaranteed. 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. C)The entire $10,000 is taxable as ordinary income. "Variable Annuities: What You Should Know," Page 6. A variable annuity is both an insurance and a securities product. What will this transaction provide? The figure below illustrates a six-month annuity with monthly payments. Reference: 12.1.4.2 in the License Exam. && \hspace{10pt}\text{Group insurance} & \underline{45,630}\\ Universal variable life policies A customer has an investment objective of keeping pace with inflation while assuming moderate risk. Because common stocks are not fixed dollar investments, they have the opportunity to keep pace with inflation. The anti-money laundering rules for insurance companies highlight that each insurance company - like other financial institutions subject to anti-money laundering program requirements - must develop a risk-based anti-money laundering program that identifies, assesses, and mitigates any risks of money laundering, terrorist financing, and other An important basic characteristic of common stocks that makes them a suitable type of investment for the separate account of variable annuities is: B) I and III. a variable annuity does not guarantee payments for life. C) The insurance company. C)I and IV. B)each annuity unit's value varies with time, but the number of annuity units is fixed. An Immediate Annuity is designed to provide each of the following features, EXCEPT: The creation of an estate. D)with guaranteed minimum withdrawal benefits (GMWBs) a lifetime of periodic payments is guaranteed, 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. D) 4500. D) I and II. D) II and IV. Classifying annuities There are many categories of annuities. D) an accounting measure used to determine the contract owner's interest in the separate account. Before the contract is annuitized, your client, currently age 60, withdraws some funds for personal purposes. *Waiver of premium is a benefit available on qualified life insurance contracts, usually in the form of a rider, which provides for the waiver of premium payments that fall due while the policyholder is totally disabled. Investopedia requires writers to use primary sources to support their work. All of the following investment strategies offer either fully or partially tax-deductible contributions to individuals who meet eligibility requirements EXCEPT: There are also immediate annuities, which begin paying income right away. The work environment characteristics are normal office conditions. The most popular type of variable annuity is a deferred annuity. The money paid in will be returned tax free, but the earnings portion will be taxed as ordinary income. Immediate life annuity with 10-year period certain. Reference: 12.1.2.1.1 in the License Exam. When money is deposited into the annuity, it is purchasing accumulation units. B) II and IV. Question #31 of 48Question ID: 606836 A 1 The applicant and possibly the agent initial any changes made. This cloud model is composed of five essential characteristics, three service models, and four deployment models. D) Joint and last survivor annuity. Simple and general annuities problems with solutions Of the four client profiles below which might be the best suited for a variable annuity recommendation? A) I and II. *A variable annuity does not guarantee an earnings rate because earnings will depend on the performance of the separate account. C) a variable annuity contract does not guarantee any type of return Of the answer choices given the best would be to reevaluate the recommendation based on the new information tendered by the client. This factor is used to establish the dollar amount of the first annuity payment. & \underline{\underline{\$1,014,000}} & \hspace{10pt} \text{U.S. savings bonds} & 30,420\\ The growth portion is taxed as ordinary income. The original investment has grown to a value of $60,000. The growth portion is subject to a 10% penalty. B) accumulation units. The funds in an annuity are off-limits to creditors and other debt collectors. 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. The following changes have been incorporated into Special Publication 800145, as of the date indicated - . What are the characteristics of fixed annuities? - InsuranceQnA Question #33 of 48Question ID: 606832 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. *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)I and III. The growth portion is taxed as a capital gain. C)Growth mutual funds A) 4000. A)the yield is always higher than mortgage yields. Listing tax-deferred growth as an objective for retirement income, which of the following investments is most suitable? a variable annuity guarantees an earnings rate of return. A)II and III Explain what is meant by positive and negative A)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 IBM hiring Practitioner- Policy Admin in Noida, Uttar Pradesh, India Hire Velocity hiring Customer Escalation Agent in Tampa, Florida ($5,000) to a stock fund. Question #44 of 48Question ID: 606797 C) 10 years of variable payments. IV. C) II and IV. Registration with FINRA is de facto registration with the SEC; no registration is required by the state banking commission. Needs - are goal-directed forces that people experience.