a variable annuity has which of the following characteristics

Lifetime vs. fixed period annuities A) It will be higher. *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. Variable annuities must be registered with: C) II and IV. B)Variable annuities. B) I and II. B) 100% taxable. Of the total payroll for the last week of the year, $30,000\$30,000$30,000 is subject to unemployment compensation taxes. 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. B. A)II and IV. All of the following are characteristics of a variable annuity, except: a. Guaranteed Lifetime Annuity: How They Work, When They Pay You, This is also generally true of retirement plans. B) I and III. It may be used by nongovernmental . *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. B)cost of living. While variable annuities have greater potential for earnings, since their interest rate rises and falls with their underlying investments, they can lose money. Reference: 12.3.4 in the License Exam. An annuity is an insurance product that promises to pay out income at a future date based on invested funds. Are There Penalties for Withdrawing Money From Annuities? A) mutual fund units. An annuitant assumes the investment risk of a variable annuity and is not protected by the insurance company from capital losses. 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. Salaries:SalessalariesWarehousesalariesOfficesalaries$670,000110,000234,000$1,014,000Deductions:IncometaxwithheldSocialsecuritytaxwithheldMedicaretaxwithheldU.S. Variable annuities were introduced in the 1950s as an alternative to fixed annuities, which offer a guaranteedbut often lowpayout during the annuitization phase. This factor is used to establish the dollar amount of the first annuity payment. Once the cost basis is reached, any further withdrawals are a nontaxable return of principal. With variable annuities policyholders can choose from a number of investment opportunities. The figure below illustrates a six-month annuity with monthly payments. A) Joint tenants annuity. 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. This recommendation is: D) unsuitable because her situation exposes her to surrender charges and early withdrawal penalties in exchange for insufficient benefits. IV. Which of the following is not a characteristic of a program module? The tax on this is $2,800 ($10,000 x 28%). You can learn more about the standards we follow in producing accurate, unbiased content in our. D) 4500. *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. III. In a joint-and-last-survivor option, the annuity payment is made jointly to both parties while both are alive. Question #12 of 48Question ID: 606814 c) Construct a contingency table showing all the joint and marginal probabilities. 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 B) I and IV. c. The separate account provides for a guaranteed minimum return. Variable annuity salespeople must register with all of the following EXCEPT: D) Variable annuities. 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. The investor has already paid tax on the contributions but the earnings have grown tax-deferred. A)Joint tenants annuity. C) Life annuity with period certain. These contracts cover both lives and will continue to make payments until the last spouse dies. The growth portion is taxed as a capital gain. B) Ordinary income taxation on the earnings withdrawn until reaching the owner's cost basis. a. The value of a variable annuity is based on the performance of an underlying portfolio of sub accounts selected by the annuity owner. They are also not considered suitable for anyone who anticipates needing a lump sum within a short time frame to fund other endeavors. C)earnings only and taxable When the first party dies, the annuity payment is made to the survivor. 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. The AG49-A Revisions *Contributions to a nonqualified variable annuity are not tax deductible. III. Inflation-hedging, using both tax deferral combined with market growth potential, is made possible by variable annuities #. How Are Nonqualified Variable Annuities Taxed? A) A 75 year old women, who is a former executive retired for over ten years who wants to preserve as much capital as she can to leave to her two grandchildren. When may a variable annuity account be surrendered? P=525p2+65,326p185,000E=326p+185,000P=-525 p^{2}+65,326 p-185,000 \quad E=-326 p+185,000P=525p2+65,326p185,000E=326p+185,000. What is her total tax liability? Fixed Annuity: A fixed annuity is a type of annuity contract that allows for the accumulation of capital on a tax-deferred basis. The original investment has grown to a value of $60,000. D) reevaluate whether the recommendation for the VA contract is still suitable based on the clients proposed funding of the investment. Variable Annuity Advantages and Disadvantages, Guide to Annuities: What They Are, Types, and How They Work. Question #44 of 48Question ID: 606797 Once the cost basis is reached, any further withdrawals are a nontaxable return of principal. Reference: 12.3.3 in the License Exam. In March, the actual net return to the separate account was 8%. Qualified Longevity Annuity Contract (QLAC): Definition, Taxes, and Example, Present Value of an Annuity: Meaning, Formula, and Example, Future Value of an Annuity: What Is It, Formula, and Calculation, Calculating Present and Future Value of Annuities, Present Value Interest Factor of Annuity (PVIFA) Formula, Tables. A customer has a nonqualified variable annuity. A) mortality guarantee. During the accumulation phase, you make purchase payments. C) none of these. D) an accounting measure used to determine the contract owner's interest in the separate account. The separate account performance compared to last month's performance. In a variable annuity contract, the provision that guarantees the annuitant payments for life is called the: B) II and IV. At the end of the year your account has a value of 10750. A passion for serving customers and a personal commitment to following through in a dynamic, fast-paced environment. The owner of a life annuity with 10-year period certain will receive payments for life, subject to a minimum of 10 years. 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. B) The entire $10,000 is taxable as ordinary income. D) the number of annuity units becomes fixed when the contract is annuitized. *Mortality risk- If an annuitant lives longer than expected, the insurance company will have to continue payments longer than expected. do not have a separate account PGIM Fixed Income has over $900 billion in assets under management across a broad array of fixed . Drives - are hardwired characteristics of the brain that correct deficiencies or maintain an internal equilibrium by producing emotions to energize individuals. The return on a variable annuity is not guaranteed; it is determined by the underlying portfolio's value. The value of the separate account is now $30,000. 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. D) Variable Annuity. A) each annuity unit's value is fixed, but the number of annuity units varies with time. D) Age 27, saving for first home. B)II and III. Herpes Zoster has all of the following characteristics except: Group of answer choices. Deal with mathematic Math is all about solving equations and finding the right answer. C) the yield is always higher than bond yields. Which of the following statements regarding variable annuities are TRUE? When the contract is annuitized, the annuitant is credited with a fixed number of annuity units. The amount taxed is the amount of the lump-sum payment minus the deceased's cost basis in the investment. What Are the Distribution Options for an Inherited Annuity? A)IPO. When a variable annuity contract is annuitized, the number of annuity units is fixed. 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? 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. C) III and IV D)I and II. C)The entire $10,000 is taxable as ordinary income. The beneficiary is taxed at ordinary income rates during the year the lump sum is received. C)Keogh plans. A) Age 56, available cash to invest, makes the maximum retirement plan contributions to an existing IRA and 401(k) plan B) taxed as ordinary income. & \underline{\underline{\$1,014,000}} & \hspace{10pt} \text{U.S. savings bonds} & 30,420\\ The growth portion is taxed as a capital gain. C)II and IV. Owners of variable annuities, like owners of mutual fund shares, may vote on changes in investment policy and for an investment adviser. FINRA. The number of accumulation units can rise during the accumulation period. *The owner of a life annuity with 10-year period certain will receive payments for life, subject to a minimum of 10 years. Distributions from nonqualified variable annuities are: This would not align with the couple's criteria for coverage as long as they both live. B) I and III. The number of annuity units is fixed. B) suitable if she has enough equity in the home to fund the variable annuity without cashing out the other VA contract Once annuitized, the number of annuity units does not vary. U.S. Securities and Exchange Commission. Needs - are goal-directed forces that people experience. C) II and IV C) such an annuity is designed to combat inflation risk. A)variable annuities may only be sold by registered representatives. must precede every sales presentation. Which is it? C) with guaranteed minimum withdrawal benefits (GMWBs) a lifetime of periodic payments is guaranteed A) 4000. order now. Reference: 12.3.3 in the License Exam, Question #34 of 48Question ID: 606834 During the accumulation phase, the number of accumulation units will increase as additional money is invested. Before the contract is annuitized, your client, currently age 60, withdraws some funds for personal purposes. A)II and III. *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. A) a minimum rate of return is guaranteed. A)unsuitable because the return on something as conservative as a variable annuity tends to be low. 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. IV. D)II and IV. B) Municipal bonds. . Anthony Battle is a CERTIFIED FINANCIAL PLANNER professional. This includes transportation, food, lodging, and entertainment. D) II and III. The number of accumulation units is always fixed throughout the accumulation period. C) III and IV. A) waiver of premium Distributions to the annuitant will fluctuate during the payout period. C) Universal variable life policy. *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. A) II and IV. D) expense guarantee. Round to the nearest hundredth of a percent. B) It will be lower. A) II and III. This chapter was updated on 15 December, 2005. If the owner of a variable annuity dies during the accumulation period, any death benefit will: D)II and III. a variable annuity does not guarantee an earnings rate of return. D)variable annuities offer the investor protection against capital loss. The number of variable annuity accumulation units can rise during the accumulation period when additional units are being purchased. The money paid in will be returned tax free, but the earnings portion will be taxed as ordinary income. Sample problems from Chapter 9 . Ideally they should be funded with readily available cash rather than using funds liquidated from existing investments. 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. 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. 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. Policyholders . If a 42-year-old customer has been depositing money in a variable annuity for 5 years, and he plans to stop investing but has no intention of withdrawing any funds for at least 20 years, he is holding: B) II and III This makes a total of $4,000 tax and penalty paid on the random withdrawal. a variable annuity guarantees payments for life. A)each annuity unit's value and the number of annuity units vary with time. Reference: 12.3.1 in the License Exam. B)Capital gains taxation on the earnings withdrawn in excess of the owner's basis. C) II and III. B)Universal variable life policy. I. If this client is in the payout phase, how would his April payment compare to his March payment? 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? 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) Dow Jones Industrial Average. A universal variable life policy should be purchased primarily for its insurance features, not its investment features. The separate account performance compared to an assumed interest rate. Reference: 12.1.4.2 in the License Exam. This describes which of the following annuities? 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. If an investor has a fixed-annuity contract with an insurance company, which of the following risks is assumed by the investor? Of the four client profiles below which might be the best suited for a variable annuity recommendation? A) The fact that the annuity payment may increase or decrease. A single lump-sum investment is made, and payments begin immediately, since the investor has purchased annuity units. She will receive the annuity's entire value in a lump-sum payment. continues payments as long as one annuitant is alive. This guideline has been prepared for use by Federal agencies. A)I and IV. *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) There is no risk in a variable annuity. When the contract is annuitized, the annuitant is credited with a fixed number of annuity units. The fixed payment that the annuitant receives loses purchasing power over time as a result of inflation. These contracts come with high surrender charges. a. If the account is annuitized, the investor has chosen a payout option. B) 0. C)III and IV B)IRAs. If a 42-year-old customer has been depositing money in a variable annuity for 5 years, and he plans to stop investing but has no intention of withdrawing any funds for at least 20 years, he is holding: An ordinary simple annuity has the following characteristics: For example, most car loans are ordinary simple annuities where payments are Get Started. IBM Noida, Uttar Pradesh, India4 weeks agoBe among the first 25 applicantsSee who IBM has hired for this roleNo longer accepting applications. Universal variable life policies In addition, if the customer is not at least 59-, there will be a tax penalty of an additional 10%. $63,000 b.$51,000 c. $18,000 d.$6,000. In addition, an element of risk must be present. A trend makes considerable influence or impact. Fixed annuities typically earn at a lower, stable rate. *VAs are less suitable for individuals who have not yet made maximum contributions to other retirement accounts such as IRAs and 401ks. A client has purchased a nonqualified variable annuity from a commercial insurance company. 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. What is the taxable consequence of this withdrawal to your client? Transcribed image text: 6. How is the distribution taxed? A) I and IV. Based on the information given in the question, the VA recommendation would not be suitable. a) What percentage of Facebook's users are from the United States? Final answer. Which of the following is NOT an accurate statement concerning a variable life insurance contract? The number of accumulation units is always fixed throughout the accumulation period. C)the invested money will be professionally managed according to the issuers' investment objectives. B) II and IV. He makes several statements regarding the contract. Spartan Technology Services and Solutions Private Limited is a subsidiary of IBM (International Business Machines) Corporation. A)III and IV. The downside was that the buyer was exposed to market risk, which could result in losses. C) Age 40, currently unemployed If the data is normally distributed with standard deviation$198, find the percent of vacationers who spent less than $1,200 per day. \hspace{10pt} State unemployment (employer only), 3.8%3.8\%3.8% This compensation may impact how and where listings appear. D)the state insurance department. D) each annuity unit's value varies with time, but the number of annuity units is fixed. b. 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. If one purchases an annuity for a set price, the issuing company would invest the funds and hold them until they are supposed to be disbursed, generally based on the owner's age. A) not suitable Fixed annuities. Reference: 12.1.2 in the License Exam, Question #23 of 48Question ID: 901858 An ordinary simple annuity has the following characteristics: For example, most car loans are ordinary simple annuities where payments are. 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) I and II John is the annuitant in a variable plan, and Sue is the beneficiary. B)II and III. When the annuitization option is selected, each payment represents both capital and earnings. D) The fact that periodic payments into the contract may increase or decrease. C)100% tax deferred. How to Navigate Market Volatility While Saving for Retirement, Variable Annuity: Definition and How It Works, Vs. The value of accumulation and annuity units varies with the investment performance of the separate account. variable annuity without paying tax at the time of the transfer. a variable annuity does not guarantee an earnings rate of return. The client's investment objectives, tax bracket, investment experience and risk tolerance all align well with a VA recommendation. MetLife offers a comprehensive benefits program, including healthcare benefits, life insurance, retirement benefits, parental leave, legal plan services and paid time off. A guaranteed death benefit guarantees that the beneficiary will receive a death benefit if the annuitant dies before the annuity begins paying benefits. Contributions to a nonqualified variable annuity are not tax deductible. Question #36 of 48Question ID: 606805 An accumulation unit in a variable annuity contract is: no. Question #29 of 48Question ID: 606831 Only variable annuities have payout plans that provide the client income for life. \hspace{10pt} Social security, 6%6\%6% on first $100,000\$100,000$100,000 of employee annual earnings Changes in payments on a variable annuity correspond most closely to fluctuations in the: variable An immediate annuity consists of a Single Premium T has an annuity that guarantees an income payment for the rest of his life. d) What is the probability that a user is from the United States, given that he or she logs on every day? C)It will be higher. For a nonqualified variable annuity, cost basis for the annuitant would use the after-tax dollars contributed. All of the following statements regarding variable annuities are true EXCEPT: A) variable annuities offer the investor protection against capital loss. D) variable annuities may only be sold by registered representatives. Her agent recommended she choose a variable annuity as a safe haven for the funds. B)reevaluate whether the recommendation for the VA contract is still suitable based on the clients proposed funding of the investment. C) II and IV. *During the payout period, payments are based on a fixed number of annuity units established when the contract was annuitized. C) Tax-free municipal bonds A) partially a tax-free return of capital and partially taxable. 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. Since the client is older than 59 at the time of distribution, the additional 10% penalty tax is not incurred. Based on this information the RR should: An important basic characteristic of common stocks that makes them a suitable type of investment for the separate account of variable annuities is: Annuity death benefits are generally paid in a lump sum. Distribution can take place before or during any solicitation for sale. All of the following statements about variable annuities are true EXCEPT: A) the investment portfolio is managed professionally. && \hspace{10pt}\text{Group insurance} & \underline{45,630}\\ However, because the client is not yet age 59- when making the withdrawal, he also pays a 10% penalty, or $1,000. B) Corporate debt securities Spartan Technology Services and Solutions Private Limited is a subsidiary of IBM (International Business Machines) Corporation. Every annuity has some characteristics in common. C) II and III. 111. 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) allow customers to opt out of sharing of financial information with certain nonaffiliated firms. In deciding whether to put money into a variable annuity versus some other type of investment, its worth weighing these pros and cons. A 58-year-old individual near retirement who is in good health and anticipates a lengthy retirement Withdrawals from a nonqualified variable annuity are made on a LIFO basis, so the taxable earnings are considered taken out before principal. A) Any tax due is deferred. As of March 03, 2023, had a relative dividend yield of % compared to the industry median of %. must provide full and fair disclosure. No paper. 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. Variable annuity salespeople must be registered with FINRA and the state insurance department. The funds are not liquid due to the surrender fees, and there is also a 10% penalty on withdrawals before age 59-. Changes in payments on a variable annuity correspond most closely to fluctuations in the: Consequently, the client pays taxes only on the growth portion of the withdrawal ($10,000). Contributions to an IRA may be tax deductible, depending on the individual's earnings and participation in a company-sponsored qualified retirement plan. C) 10 years of variable payments. Many variable annuities invest the separate account in mutual funds. Do homework Doing homework can help you learn and understand the material covered in class. "Variable Annuities: What You Should Know," Pages 67. D) A 10% penalty plus the payment of ordinary income tax on funds withdrawn in excess of the owner's basis. Insurance companies introduced the variable annuity as an opportunity to keep pace with inflation. *An immediate annuity has no accumulation period. Reference: 12.3.3 in the License Exam. Here is how guaranteed lifetime annuities work. externalities. 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. It is innate and universal. Then find the probability of the event. Variable annuities provide protection from inflation because their monthly income can increase depending on the separate account's performance. An accumulation unit in a variable annuity contract is: A) Money market fund. A) be paid to a designated beneficiary. D)an accounting measure used to determine payments to the owner of the variable annuity. 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. We also reference original research from other reputable publishers where appropriate.

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