Usually the term "annuity" relates to a contract between an individual and a life insurance company. Question #37 of 48Question ID: 606817 When the annuitization option is selected, each payment represents both capital and earnings. Life Insurance vs. Annuity: What's the Difference? Get the free Learn About Annuities and Their Myths - F&G B) IPO. Future annuity payments will vary according to the separate account's performance. Upon John's death during the accumulation period, Sue takes a lump-sum payment. But again, the need to designate beneficiaries is not an issue for this annuitant. Her intent was to use the funds for the down payment on a house after graduation. If the owner of a variable annuity dies during the accumulation period, any death benefit will: *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. Because the client is older than age 59-, he does not pay 10% premature distribution penalty tax. Registration with FINRA is de facto registration with the SEC; no registration is required by the state banking commission. &&& \underline{\underline{\$341,718}} a life insurance holder lives longer than expected. A) a minimum rate of return is guaranteed. A) changes in common stock prices tend to be more closely related to changes in the cost of living than changes in bond prices. Question #13 of 48Question ID: 606822 C)Growth mutual funds *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. A)contact the issuer of the clients existing VA contract to facilitate the clients surrender of the contract. The tax on this amount is $3,000. a variable annuity does not guarantee payments for life. 111. A) Any tax due is deferred. Your client has a large sum of money to invest from the proceeds of the sale of his home. If this client is in the payout phase, how would his April payment compare to his March payment? D) expense guarantee. B) II and IV. B) I and IV. How Are Nonqualified Variable Annuities Taxed? D)It cannot be determined until the April return is calculated. B) fixed payments for 10 years, followed by variable payments for life. Investopedia requires writers to use primary sources to support their work. For a retired person, which of the following investments would provide the greatest protection against inflation? However, they are protected by state guaranty associations in the event that the insurance company providing the product goes out of business. *Once a variable annuity is annuitized, the accumulation units are converted into a fixed number of annuity units. 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 client's investment objectives, tax bracket, investment experience and risk tolerance all align well with a VA recommendation. The number of annuity units is fixed at the time of annuitization. Which of the following are defined as securities? Insurance companies introduced the variable annuity as an opportunity to keep pace with inflation. 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. Indexed annuity owners receive credited interest tied to the fluctuations of the linked index An immediate annuity consists of a single premium An immediate annuity has a single premium. Once annuitized, the number of annuity units does not vary. \hspace{10pt} State unemployment (employer only), 3.8%3.8\%3.8% A) I and II \hspace{7pt} a. December 303030, to record the payroll. D)money market funds. D) Keogh plans. Therefore only a fixed annuity could be considered as suitable. *Universal variable life policies are insurance company products that should be purchased primarily for the insurance features they offer rather than as an investment. D)A variable annuity, Variable annuities offer tax-deferred growth and are suitable for achieving supplemental retirement income. Though there is no beneficiary designation during the annuitization, this is not an issue for this annuitant. Fixed Annuity, Retirement Annuities: Know the Pros and Cons. Sample problems from Chapter 9. . continues payments only as long as all annuitants are still alive. PGIM Fixed Income, a division of PGIM Inc., an SEC-registered investment adviser and a business unit of Prudential Financial, Inc. is seeking a Portfolio Risk Surveillance Analyst. How does an indexed annuity differ from a fixed annuity? Life income riders are best suited for those who anticipate a lengthy retirement and are generally not yet retired when making the VA purchase. A variable annuity's separate account is: A separate account will invest in a number of different securities. An annuity factor is taken from the annuity table, which considers, for example, the investor's sex and age. $63,000 b.$51,000 c. $18,000 d.$6,000. Carefully look at your options when choosing an annuity. Distribution can take place before or during any solicitation for sale. A variable annuity is a tax-deferred retirement vehicle that allows you to choose from a selection of investments and then pays you a level of income in retirement that is determined by the performance of the investments you choose. Suppose that 20%20 \%20% of their users are United States users who log on daily. \end{array} D)accumulation units. They can be classified by: Nature of the underlying investment - fixed or variable Life income riders are best suited for those who anticipate a lengthy retirement and are generally not yet retired when making the VA purchase. a variable annuity guarantees payments for life. C)number of accumulation units. Based only on these facts, the variable annuity recommendation is B) the client may vote for the board of directors or board of managers. Reference: 12.2.1 in the License Exam. a variable annuity has which of the following characteristics Is F&G Annuities & Life Inc (FG) a Good Dividend Stock? | AAII For this potential advantage, the investor, rather than the insurance company, assumes the investment risk. He makes the following four statements, all of which are true EXCEPT 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) III and IV. *The return on a variable annuity is not guaranteed; it is determined by the underlying portfolio's value. C) II and IV A)IPO. For a retired person, which of the following investments would provide the greatest protection against inflation? D)Investment risk. View full document. *Fixed income instruments, like bonds and fixed annuities, are subject to purchasing power risk. *As contributions are made with after-tax dollars, only the earnings generated are taxed on withdrawal. Annuity death benefits are generally paid in a lump sum. D) None, because it is the proceeds from a life insurance company. Which of the following statements regarding variable annuities are TRUE? Your customer in his early 30s has received a modest inheritance from a relative. During payout, distributions will fluctuate due to performance in the separate account. Your client owns a variable annuity contract with an AIR of 4%. C)not suitable because a lifetime income rider is only for someone who is already retired B)a minimum rate of return is guaranteed. A) waiver of premium ($5,000) to a stock fund. b. A)Fixed annuity contract with a discussion regarding purchasing power risk *Of the four customer profiles the individual already making the maximum retirement account contributions available to him and wanting to minimize the tax consequences of being in a high income tax bracket would be most suitable for a VA recommendation. The growth portion is subject to a 10% penalty. Which of the following is not a characteristic of a program module? Securely download your document with other editable templates, any time, with PDFfiller. The client's investment objectives, tax bracket, investment experience and risk tolerance all align well with a VA recommendation. vote on proposed changes in investment policy. a variable annuity does not guarantee payments for life. D) minimum guaranteed death benefit. Simple and general annuities problems with solutions D)the safety of the principal invested. Periodic payment deferred annuity. C)earnings only and taxable Final answer. Reference: 12.3.3 in the License Exam. Variable Annuities Flashcards | Quizlet A) I and IV. Annuities basics | III covers more than one person. variable annuity without paying tax at the time of the transfer. When a partial withdrawal is made from an annuity, the earnings are considered to be taken out first for tax purposes (or LIFO). The investor purchased accumulation units. Changes in payments on a variable annuity correspond most closely to fluctuations in the: You can learn more about the standards we follow in producing accurate, unbiased content in our. A) not suitable && \hspace{10pt}\text{Group insurance} & \underline{45,630}\\ D) It cannot be determined until the April return is calculated. A) Age 56, available cash to invest, makes the maximum retirement plan contributions to an existing IRA and 401(k) plan *Payments from a variable annuity depend on the securities' value in the separate account's underlying investment portfolio. Which of the following statements regarding variable annuities are TRUE? Her intent was to use the funds for the down payment on a house after graduation. Table1. B)I and IV. Generally, a life-only contract pays the most per month because payments cease at the annuitant's death. B) 0. *Contributions to a nonqualified variable annuity are not tax deductible. Variable Annuities | Investor.gov Which 2 of the 4 client profiles would a VA be LEAST suitable for? 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. B) the state insurance department. The value of the annuity units is fixed. B) Life annuity with period certain Reference: 12.1.2 in the License Exam, Question #39 of 48Question ID: 721469 C)3800. *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. B) Ordinary income taxation on the earnings withdrawn until reaching the owner's cost basis. An Immediate Annuity is designed to provide each of the following features, EXCEPT: The creation of an estate. 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)II and IV. Question #18 of 48Question ID: 606827 do not have a separate account national origin, genetics, disability, age, veteran status, or any other characteristic protected by law. For an insurance company, mortality risk turns out unfavorably if: A)Fixed annuities. Random withdrawals do not guarantee how long the money will last because large withdrawals can deplete the funds before the annuitant dies. EEO IS THE LAW . vote for the investment adviser. These include white papers, government data, original reporting, and interviews with industry experts. Reference: 12.1.2 in the License Exam, Question #21 of 48Question ID: 606812 Reference: 12.3.2.1 in the License Exam. A) The fact that the annuity payment may increase or decrease. B) II and III. C) insurance companies keep variable annuity funds in separate accounts from other insurance products. *The accumulation period of a variable annuity may continue for many years. B) Corporate debt securities is required by the Securities Act of 1933. Fixed annuities, on the other hand, provide a guaranteed return. A) variable annuities offer the investor protection against capital loss. No paper. 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 . The nature of the securities invested in-bonds and growth stocks-makes it necessary that sales representatives and their principals be licensed in securities as well as insurance. All of the following are characteristics of a variable annuity, except: a. When the second party dies, all payments cease. The following are the characteristics or the hierarchy of a trend except A. Gigatrends C. Megatrends B. Macrotrends D. Nanotrends _____11. The work environment characteristics are normal office conditions. 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 Chapter 7: Annuities Flashcards | Quizlet A. Frequently Asked Questions Anti-Money Laundering Program and Suspicious A customer has contributed $1,000 a year for 10 years to his tax-deferred nonqualified variable annuity. B)Variable annuities. A) Joint tenants annuity. IBM hiring Practitioner- Policy Admin in Noida, Uttar Pradesh, India Chapter 12: Variable Annuities Flashcards | Quizlet You purchase a variable annuity contract by making either a single purchase payment or a series of purchase payments. If at all you go deeper, then you will find a wide range of annuity products from a variety of companies. Variable annuities provide protection from inflation because their monthly income can increase depending on the separate account's performance. IV. Expert Answer. Reference: 12.2.1 in the License Exam. B) II and III The growth portion is taxed as ordinary income. B)Value of each annuity unit each month. 8 annuities provide a guaranteed rate of return, whereas annuities provide conservative to aggressive investments whose rates of return are not guaranteed. Question #27 of 48Question ID: 606818 Reference: 12.3.3 in the License Exam. She will receive the annuity's entire value in a lump-sum payment. *Variable annuities offer tax-deferred growth and are suitable for achieving supplemental retirement income. 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. B)each annuity unit's value varies with time, but the number of annuity units is fixed. e) Are From the United States and Log on every day independently? *Only variable annuities have payout plans that provide the client income for life. Fixed Annuity: A fixed annuity is a type of annuity contract that allows for the accumulation of capital on a tax-deferred basis. Sub accounts and mutual funds are conceptually. All of the following statements about variable annuities are true EXCEPT: Question #11 of 48Question ID: 606816 A)II and IV. We also reference original research from other reputable publishers where appropriate. A prospectus for a variable annuity 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. An important basic characteristic of common stocks that makes them a suitable type of investment for the separate account of variable annuities is: Question #42 of 48Question ID: 606830 In a joint-and-last-survivor option, the annuity payment is made jointly to both parties while both are alive. 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. In a joint-and-last-survivor option, the annuity payment is made jointly to both parties while both are alive. The investor has already paid tax on the contributions but the earnings have grown tax-deferred. an annuitant lives longer than expected. The income was deferred from tax over the plan's life, so it is taxable as ordinary income once distributed. *Contributions to a nonqualified annuity are made with the owner's after-tax dollars. A variable annuity does not guarantee an earnings rate because earnings will depend on the performance of the separate account. A) 4000. *An immediate annuity has no accumulation period. As with most retirement account options, withdrawals before the age of 59 will result in a 10% tax penalty. . Reference: 12.3.1 in the License Exam. B) The policyowner. A) A variable annuity C)II and IV. 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: C) IRAs. III. 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)100% taxable. A) variable payments for 10 years, followed by fixed payments for life. This recommendation is: 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. Distributions from such an annuity are computed on a LIFO basis with the income taxed first. C)the number of annuity units is fixed, and their value remains fixed. The payout compared to the initial payout upon annuitization. He makes several statements regarding the contract. D) III and IV. Both products typically have a wide range of options across equities, bonds and money market instruments. Do homework Doing homework can help you learn and understand the material covered in class. A customer has a nonqualified variable annuity. The value of these units varies with the performance of the separate account. A client has purchased a nonqualified variable annuity from a commercial insurance company. A Variable Annuity has which of the following characteristics? \text{Salaries:} && \text{Deductions:}\\ D)variable annuities. 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. C) Unit refund life option For example, when paying rent, the rent payment (PMT) Over the past five years, 's dividend yield has averaged % per year. A) I and II Premiums made into the annuity purchase accumulation units. An annuity is an agreement for one person or organization to pay another a series of payments. C) the yield is always higher than bond yields. A) number of annuity units. A)accumulation shares. *Under the mortality guarantee, the insurance company assumes mortality risk by guaranteeing payments for life, though the amount of each payment is not guaranteed. C)complete all paper work to purchase the annuity contract and obtain the clients signature immediately. Question #24 of 48Question ID: 606806 The remainder of the premium is invested in the separate account. Financial Sales Professional Job in Fort Worth, TX at New York Life Once the cost basis is reached, any further withdrawals are a nontaxable return of principal. 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. 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. IBM Noida, Uttar Pradesh, India4 weeks agoBe among the first 25 applicantsSee who IBM has hired for this roleNo longer accepting applications. Underlying equity investments T, age 70, withdraws cash from a profit-sharing plan and purchases a Straight Life Annuity. In March, the actual net return to the separate account was 8%. Payments from a variable annuity depend on the securities' value in the separate account's underlying investment portfolio. A) Fixed Annuity A) A variable annuity Travel Times Journal found that the average per person cost of a 10-day trip along the Pacific coast, per person, is $1,015. There are two interest rates under fixed annuities. C) Age 40, currently unemployed U.S. Securities and Exchange Commission. Variable annuities provide protection from inflation because their monthly income can increase depending on the separate account's performance. Question #15 of 48Question ID: 606804 D) I and II. Annuities: How to Find the Right One for You, How a Fixed Annuity Works After Retirement, Pros and Cons of Indexed Universal Life Insurance. In addition, if the customer is not at least 59-, there will be a tax penalty of an additional 10%.
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