Reference: 12.1.2.1.1. in the License Exam. 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. 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) Variable annuities. Because common stocks are not fixed dollar investments, they have the opportunity to keep pace with inflation. Contributions to an IRA may be tax deductible, depending on the individual's earnings and participation in a company-sponsored qualified retirement plan. The number of annuity units varies. *During the payout period, payments are based on a fixed number of annuity units established when the contract was annuitized. Question #15 of 48Question ID: 606804 This recommendation is: I. B) Municipal bonds. D) Keogh plans. D) 4500. 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. B)a minimum rate of return is guaranteed. A)IPO. *Mortality risk- If an annuitant lives longer than expected, the insurance company will have to continue payments longer than expected. Variable annuities involve underlying equity investments in a separate account. 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 has which of the following characteristics D)II and III. 8 annuities provide a guaranteed rate of return, whereas annuities provide conservative to aggressive investments whose rates of return are not guaranteed. Income that cannot be outlived by the owner There are two interest rates under fixed annuities. Reference: 12.1.4.1 in the License Exam. 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. Variable Annuities Flashcards | Quizlet \hspace{7pt} b. January 444, to record the employers payroll taxes on the payroll to be paid on January 444. Variable annuity salespeople must be registered with FINRA and the state insurance department. Clusters of vesicles in various stages. externalities. D) accumulation shares. The beneficiary is taxed at ordinary income rates during the year the lump sum is received. A) II and IV. Distributions from such an annuity are computed on a LIFO basis with the income taxed first. C) suggest to the client that perhaps a loan or refinancing his vacation home might be a better way to fund the contract purchase. The correct answer was: partially a tax-free return of capital and partially taxable. A) Joint tenants annuity. The separate account is used for both variable life insurance and variable annuity investments. An annuity is an agreement for one person or organization to pay another a series of payments. The client agrees to purchase the contract and informs the RR that he will be cashing out a VA he purchased 2 years ago to fund the new contract and will forward the check as soon as he receives it. His objective is monthly income that he can receive after he retires to supplement his small pension and social security benefits. B) the safety of the principal invested. Both products typically have a wide range of options across equities, bonds and money market instruments. D)the rate of return is determined by the underlying portfolio's value. Over the following year, the stock fund has a 10% return, and the bond fund has a 5% return. Since the client is older than 59 at the time of distribution, the additional 10% penalty tax is not incurred. C)such an annuity is designed to combat inflation risk. The client agrees to purchase the contract and informs the RR that he will be cashing out a VA he purchased 2 years ago to fund the new contract and will forward the check as soon as he receives it. C)II and IV. 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. D) II and IV. C)II and IV. B) Corporate debt securities D)Any tax due is deferred. Sub accounts and mutual funds are conceptually identical, but sub accounts don't have ticker symbols that investors can easily type into a fund tracker for research purposes. A the safety of the principal invested B the yield is always higher than bond yields. Chapter 7: Annuities Flashcards | Quizlet must provide full and fair disclosure. **Because common stocks are not fixed dollar investments, they have the opportunity to keep pace with inflation. Reference: 12.2.1 in the License Exam. Which 2 of the 4 client profiles would a VA be LEAST suitable for? They are also riddled with fees, which can cut into profits. Question #33 of 48Question ID: 606832 Reference: 12.1.2.1.2 in the License Exam. D)II and III. 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. *VAs are less suitable for individuals who have not yet made maximum contributions to other retirement accounts such as IRAs and 401ks. Question #29 of 48Question ID: 606831 A) It will be higher. B)unsuitable because her situation exposes her to surrender charges and early withdrawal penalties in exchange for insufficient benefits. A) II and III. Reference: 12.1.1 in the License Exam. B) be paid to any legal heirs as recognized by the annuitant's state of domicile. What Are the Risks of Annuities in a Recession? Of the 4 client profiles below, which might be the best suited for a variable annuity recommendation? Reference: 12.3.2.4 in the License Exam. The following changes have been incorporated into Special Publication 800145, as of the date indicated - . Licensed to sell Variable Annuities in the following state(s): FL, TX . B) II and III. The most popular type of variable annuity is a deferred annuity. What is the annual cash flow generated from the new machine? A customer has an investment objective of keeping pace with inflation while assuming moderate risk. 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. B) I and II. Senior Customer Care Advocate Annuities ($22 per hour) in Warwick Facebook reports that 70%70 \%70% of their users are from outside the United States and that 50%50 \%50% of their users log on to Facebook daily. . Which is it? B) allow customers to opt out of sharing of financial information with certain nonaffiliated firms. Fixed annuities pay a fixed monthly benefit which loses purchasing power if there is inflation. Immediate annuities purchase annuity units directly. A)II and III. Spartan Technology Services and Solutions Private Limited is a subsidiary of IBM (International Business Machines) Corporation. C) There is no tax as the withdrawal is considered return of capital. U.S. Securities and Exchange Commission. C)III and IV They offer broad diversification in the securities market and potential growth, all while using the power of tax deferral. Which of the following is not a characteristic of a program module? As the name implies, the investment performance of a variable annuity's portfolio (separate account) can vary, and the investor bears the risk of any potential decline in its value. The downside was that the buyer was exposed to market risk, which could result in losses. PDF The NIST definition of cloud computing A registered representative's (RR) customer is speaking of a variable life insurance contract he owns. Based on the clients profile which of the following would be the best recommendation? However, it does guarantee payments for life (mortality). \hspace{7pt} b. December 303030, to record the employers payroll taxes on the payroll to be paid on December 313131. Ideally they should be funded with readily available cash rather than using funds liquidated from existing investments. An 18-year-old, unmarried high school student sought a safe investment for a $30,000 bequest until after she graduated from college. The annuity unit's value represents a guaranteed return. The value of a variable annuity is based on the performance of an underlying portfolio of sub accounts selected by the annuity owner. a variable annuity guarantees payments for life. The earnings on dollars invested into a variable annuity accumulate tax deferred, which is why variable annuities are popular products for retirement accumulation. 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. 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 . Question #44 of 48Question ID: 606797 Variable annuities operate in similar ways to . order now. When the second party dies, all payments cease. They can be classified by: Nature of the underlying investment - fixed or variable 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. A) Life-only annuity Question #35 of 48Question ID: 606810 C)insurance companies keep variable annuity funds in separate accounts from other insurance products. 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. A customer is receiving annuitized payments from a variable annuity. Then find the probability of the event. D) I and IV. D) I and IV. IBM is a global brand and has its presence in 170 countries and operates . C) annuity units. required to be located off of the company's premises. B) I and II. A) the investment portfolio is managed professionally. What is the taxable consequence of this withdrawal to your client? Diagnosis is made by punch biopsy. C) 10% penalty plus payment of ordinary income tax on all funds withdrawn exceeding basis. B)I and IV. 6102.0.55.001 - Labour Statistics: Concepts, Sources and Methods, Dec 2005 B) IPO. All of the following investment strategies offer either fully or partially tax-deductible contributions to individuals who meet eligibility requirements EXCEPT: B)II and III. In addition, an element of risk must be present. 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 The annuitant may not contribute and withdraw simultaneously. B)changes in common stock prices tend to be more closely related to changes in the cost of living than changes in bond prices. Unit 12: Variable Annuities Flashcards | Chegg.com Reference: 12.1.2 in the License Exam, Question #39 of 48Question ID: 721469 Similarly, CDs are insured, thereby eliminating risk and guaranteeing a return. U.S. Securities and Exchange Commission. When a variable contract is annuitized (distributed in regular payments, not as a lump sum), the number of accumulation units is multiplied by the unit value to arrive at the account's current value. What type of annuity has a cash value that is based upon the performance of it's underlying investment funds? *Accumulation units represent units of ownership in a life insurance company's separate account when the contract is in the accumulation stage. Which of the following is not characteristic of a fixed annuity? The value of the separate account is now $30,000. A registered person recommends the purchase of a variable annuity to one of his clients. A) I and IV. *Once a variable annuity is annuitized, the accumulation units are converted into a fixed number of annuity units. b. B) I and III. Fixed Annuity, Retirement Annuities: Know the Pros and Cons. Among annuities, variable annuities differ from fixed annuities, which provide a specific and guaranteed return. A variable annuity is a type of annuity contract in which the value can vary based on the performance of an u . A) complete all paper work to purchase the annuity contract and obtain the clients signature immediately. B) the rate of return is determined by the underlying portfolio's value. Your 55-year-old client invested $50,000 four years ago in a nonqualified variable annuity. B) payments continue until the death of the primary owner. C)Life annuity. However, the web version (cat. There is a guaranteed minimum interest rate, normally amounting to between 1 and 3 percent. A) waiver of premium D) Variable Annuity. A) periodic payment immediate annuity. Reference: 12.1.4.1 in the License Exam. The entire amount is taxed as ordinary income. The time period depends on how often the income is to be paid. On withdrawals from a nonqualified annuity, taxes are paid only on the amount that exceeds cost basis (the amount paid into the annuity). C) III and IV. a variable annuity does not guarantee an earnings rate of return. It is innate and universal. An 18-year-old, unmarried high school student sought a safe investment for a $30,000 bequest until after she graduated from college. 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. *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 features of variable deferred annuities are many. He wants to ensure that the client, in addition to meeting suitability requirements, is aware of certain variable annuity contract characteristics. Random withdrawals do not guarantee how long the money will last because large withdrawals can deplete the funds before the annuitant dies. The money paid in will be returned tax free, but the earnings portion will be taxed as ordinary income. III) A hierarchy of corporate staff evaluates divisions' plans and performance. C) value of underlying securities held in the separate account. Reference: 12.3.3 in the License Exam. B) The entire $10,000 is taxable as ordinary income. For a nonqualified variable annuity, cost basis for the annuitant would use the after-tax dollars contributed. Fixed annuities. B) taxed as ordinary income. Question #43 of 48Question ID: 606809 Reference: 12.3.4 in the License Exam, Chapter 16: U.S. Government and State Rules a, Chapter 17: Other SEC and SRO Rules and Regul, Chapter 15: Ethics, Recommendations, and Taxa, Chapter 13: Direct Participation Programs, Fundamentals of Financial Management, Concise Edition, Joe B. Hoyle, Thomas F. Schaefer, Timothy S. Doupnik, Carl Warren, James M Reeve, Jonathan E. Duchac. Early withdrawal is either removal of funds from a fixed-term investment before the maturity date, or the removal of funds from a tax-deferred investment account or retirement savings account before a prescribed time. What Are Ordinary Annuities, and How Do They Work (With Example)? Over the past five years, 's dividend yield has averaged % per year. A Variable Annuity Has Which of the Following Characteristics Suggesting that loans or drawing equity from a home to fund VA contracts have also been targeted as abusive sales practices. Changes in payments on a variable annuity correspond most closely to fluctuations in the: 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. C)3800. The remainder of the premium is invested in the separate account. A) A variable annuity 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. 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. Underlying equity investments T, age 70, withdraws cash from a profit-sharing plan and purchases a Straight Life Annuity. C)I and IV. Distributions from nonqualified variable annuities are: This compensation may impact how and where listings appear. A joint life with last survivor annuity: Get the free Learn About Annuities and Their Myths - F&G When a variable annuity contract is annuitized, the number of annuity units is fixed. Variable annuities were introduced in the 1950s as an alternative to fixed annuities, which offer a guaranteedbut often lowpayout during the annuitization phase. Single payment deferred annuity. Determine whether the following events are independent or dependent. Paraplanner / Marketing Support Specialist Job in Austin, TX In the case of deferred annuities, this is often referred to as the accumulation phase. About Us C) III and IV I. An annuity is an insurance product that promises to pay out income at a future date based on invested funds. A)II and III Chapter 6-Classification Annuities Flashcards | Quizlet Once annuitized, the number of annuity units does not vary. B)Value of each annuity unit each month. Variable annuities are designed to combat inflation risk. Which of the following statements is not true about the characteristics of a trend? MetLife, Inc. Senior Customer Care Advocate Annuities ($22 per hour A separate account will invest in a number of different securities. continues payments as long as one annuitant is alive. C) Age 40, currently unemployed For example, if the income is monthly, the first payment comes one month after the immediate annuity is bought. Owners of variable annuities, like owners of mutual fund shares, may vote on changes in investment policy and for an investment adviser. The following are the characteristics or the hierarchy of a trend except A. Gigatrends C. Megatrends B. Macrotrends D. Nanotrends _____11. 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. B)I and III. C) 3800. is required by the Securities Act of 1933. B) Life annuity. A)variable annuities will protect an investor against capital loss. \hspace{7pt} a. December 303030, to record the payroll. *Fixed income instruments, like bonds and fixed annuities, are subject to purchasing power risk. B) Life annuity. C) During the annuity period. B) the state insurance department. The value of the separate account is now $30,000. The value of accumulation and annuity units varies with the investment performance of the separate account. All of the following are characteristics of a variable annuity, except: a. D) payments continue until age 70-. D)variable annuities. C) 10 years of variable payments. 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 . a variable annuity has which of the following characteristics C)Mortality risk. 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. B) fixed payments for 10 years, followed by variable payments for life. The growth portion is subject to a 10% penalty. A) be paid to a designated beneficiary. A) Dow Jones Industrial Average. A 3 Premiums made into the annuity purchase accumulation units. who needs access to the sum invested at later time. It may be used by nongovernmental . D)I and III. must be filed with FINRA. Full-Time. The income was deferred from tax over the plan's life, so it is taxable as ordinary income once distributed. FINRA. D)It cannot be determined until the April return is calculated. B) 100% taxable. Travel Times Journal found that the average per person cost of a 10-day trip along the Pacific coast, per person, is $1,015. C)the number of annuity units is fixed, and their value remains fixed. If this client is in the payout phase, how would his April payment compare to his March payment? It was a lump-sum purchase. The number of annuity units is fixed at the time of annuitization. A universal variable life policy should be purchased primarily for its insurance features, not its investment features. The number of accumulation units can rise during the accumulation period. Reference: 12.1.2 in the License Exam, Question #23 of 48Question ID: 901858 What will this transaction provide? A 45-year-old investor takes a lump-sum distribution from a nonqualified variable annuity. *When a variable contract is annuitized (distributed in regular payments, not as a lump sum), the number of accumulation units is multiplied by the unit value to arrive at the account's current value. a. EEO IS THE LAW . Variable Annuities. The accumulation unit's value is used to calculate the total value of the account. 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: A 45-year-old investor takes a lump-sum distribution from a nonqualified variable annuity. C) taxed as ordinary income only to the extent of earnings. Listing tax-deferred growth as an objective for retirement income, which of the following investments is most suitable? guarantees payments for a certain period of time. A)variable annuities may only be sold by registered representatives. 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. Though there is no beneficiary designation during the annuitization, this is not an issue for this annuitant. C) number of accumulation units. *Contributions to a nonqualified annuity are made with the owner's after-tax dollars. As part of the registration requirements, a prospectus must be filed and distributed to prospective investors. D) minimum guaranteed death benefit. 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? *Contributions to a nonqualified variable annuity are not tax deductible. C)complete all paper work to purchase the annuity contract and obtain the clients signature immediately. Therefore, variable annuities must be registered with the state insurance commission and the Securities and Exchange Commission. If the data is normally distributed with standard deviation$198, find the percent of vacationers who spent less than $1,200 per day. Classifying annuities There are many categories of annuities. a variable annuity does not guarantee an earnings rate of return. Reference: 12.1.4.2 in the License Exam. However, it does guarantee payments for life (mortality). When a variable annuity contract is annuitized, the number of annuity units is fixed. As part of the registration requirements, a prospectus must be filed and distributed to prospective investors. The customer, in the accumulation stage of the annuity, is holding accumulation units. Question #40 of 48Question ID: 606800 D) each annuity unit's value varies with time, but the number of annuity units is fixed. 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. CH 7 Annuities Flashcards | Quizlet The paper publication will not be rereleased. A) Fixed Annuity D)each annuity unit's value is fixed, but the number of annuity units varies with time. A) I and II B) variable annuities. D)all return of cost basis and nontaxable, Annuitized payments from a variable annuity are viewed for tax purposes as part earnings and part cost basis. national origin, genetics, disability, age, veteran status, or any other characteristic protected by law. B)cost of living. All of the following are characteristics of variable annuity contracts D)Investment risk. These contracts come with high surrender charges. Because the client is older than age 59-, he does not pay 10% premature distribution penalty tax. B) a variable annuity contract is not required to be sold by prospectus because it is an insurance contract How Good of a Deal Is an Indexed Annuity? This describes which of the following annuities? Any withdrawals you make prior to the age of 59 may also be subject to a 10% tax penalty. An investor owning which of the following variable annuity contracts would hold accumulation units? Question #38 of 48Question ID: 606798 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 The holder of a variable annuity receives the largest monthly payments under which of the following payout options?
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