($5,000) to a stock fund. However, at the end of the period certain the payments to the named beneficiary (the spouse) will stop. Question #36 of 48Question ID: 606805 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. A)value of underlying securities held in the separate account. In the case of deferred annuities, this is often referred to as the accumulation phase. Spartan Technology Services and Solutions Private Limited is a subsidiary of IBM (International Business Machines) Corporation. D)value of accumulation units. For an insurance company, mortality risk turns out unfavorably if: This customer has no spouse or dependents, which negates the value of the death benefit. regulated under both securities and insurance laws. B)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. 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 fixed payment that the annuitant receives loses purchasing power over time as a result of inflation. IBM is a global brand and has its presence in 170 countries and operates . C)II and III. If the contract holder dies before the period expires, the remaining payments are made to the beneficiary. A) I and IV. The separate account performance compared to last month's performance. U.S. Securities and Exchange Commission. Clusters of vesicles in various stages. A)not suitable Accumulation Period of Fixed Annuities During this period, premiums are credited with interest which accumulates on a yearly basis. Reference: 12.3.1 in the License Exam. A) 4000. D) 4200. However, it does guarantee payments for life (mortality). All of the following statements about variable annuities are true EXCEPT: The money paid in will be returned tax free, but the earnings portion will be taxed as ordinary income. variable An immediate annuity consists of a Single Premium T has an annuity that guarantees an income payment for the rest of his life. The distribution of questions by topic is not intended to represent the 39) A variable annuity has the following guarantees: [PDF] Understanding your variable annuity UBS Variable annuities are long-term investment vehicles that with these securities as well insurance company and do not apply to the investment D) reevaluate whether the recommendation for the VA contract is still suitable based on the clients proposed funding of the investment. D) I and III. B)I and III. A) I and IV. a variable annuity guarantees payments for life. can be sold by someone with only an insurance license
Unit 12: Variable Annuities Flashcards | Chegg.com Solved Which of the following is characteristic of variable - Chegg D)It cannot be determined until the April return is calculated. Many variable annuities invest the separate account in mutual funds. b. The minimum guaranteed death benefit is provided by that portion of the payment invested in the insurance company's general account. A variable annuity is a type of annuity contract in which the value can vary based on the performance of an u . Diagnosis is made by punch biopsy. A) II and IV. D)Dow Jones Industrial Average.
A Variable Annuity Has Which of the Following Characteristics The owner of a variable annuity has all of the following rights EXCEPT 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. Reference: 12.1.4.1 in the License Exam. D)each annuity unit's value is fixed, but the number of annuity units varies with time.
Frequently Asked Questions Anti-Money Laundering Program and Suspicious Reference: 12.1.2 in the License Exam, Question #23 of 48Question ID: 901858 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. D) The investment risk is shared between the insurance company and the policyowner.
Annuities | FINRA.org a variable annuity has which of the following characteristics 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.
What are the different types of annuities? | III Reference: 12.1.2.1.1 in the License Exam. 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. Of the answer choices given the best would be to reevaluate the recommendation based on the new information tendered by the client. When a partial withdrawal is made from an annuity, the earnings are considered to be taken out first for tax purposes (or LIFO). *Annuity death benefits are generally paid in a lump sum. Contributions to a nonqualified variable annuity are not tax deductible. An annuity factor is taken from the annuity table, which considers, for example, the investor's sex and age. II. Once the cost basis is reached, any further withdrawals are a nontaxable return of principal. A customer has contributed $1,000 a year for 10 years to his tax-deferred nonqualified variable annuity. savingsbonds30,420Groupinsurance45,630$341,718\begin{array}{lrlr} C) During the annuity period. The work environment characteristics are normal office conditions. Question #26 of 48Question ID: 606811 continues payments as long as one annuitant is alive.
B) prime rate. There are two interest rates under fixed annuities. If the customer takes a withdrawal of $10,000, what are the tax consequences? A) Fixed annuities. the SEC. D)accumulation units. D)0. The LATF-adopted ILVA Actuarial Guideline has an effective date of July 1, 2024 for contracts, riders or endorsements issued on or after that date. There are two elements that contribute to the value of a variable annuity: the principal, which is the amount of money you pay into the annuity, and the returns that your annuitys underlying investments deliver on that principal over the course of time. A registered representative recommends a variable annuity with an income rider to a client. No, annuities are not FDIC-insured as they are not bank products. Changes in payments on a variable annuity correspond most closely to fluctuations in the: A)II and III Your 65-year-old client owns a nonqualified variable annuity. Your 65-year-old client owns a nonqualified variable annuity. A) I and III. John is the annuitant in a variable plan, and Sue is the beneficiary. *During the payout period, payments are based on a fixed number of annuity units established when the contract was annuitized. Question #20 of 48Question ID: 606808 A) A variable annuity *A variable annuity payout is determined by comparing account performance with AIR, and this month's payout with last month's payout. You purchase a variable annuity contract by making either a single purchase payment or a series of purchase payments. VAs, blue chip mutual fund portfolios, ETFs and ETNs are all tied to market performance in some way and have risk characteristics that would not align in terms of suitability for this client. 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 B) Exchange traded Funds (ETFs) or Exchange traded Notes (ETNs) C) II and III.
The Three Main Types of Annuity Insurance - Fixed, Variable, and Equity Question #38 of 48Question ID: 606798 Spartan Technology Services and Solutions Private Limited is a subsidiary of IBM (International Business Machines) Corporation. C)insurance companies keep variable annuity funds in separate accounts from other insurance products. The accumulation unit's value is used to calculate the total value of the account. Licensed to sell Variable Annuities in the following state(s): FL, TX . A)variable annuities may only be sold by registered representatives. 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. IV. a variable annuity does not guarantee an earnings rate of return. B) 10% penalty plus payment of ordinary income tax on all funds withdrawn. D) a variable annuity contract is subject to fluctuating values due to market fluctuations of the underlying separate accounts. III) A hierarchy of corporate staff evaluates divisions' plans and performance. C) Universal variable life policy. C) 10% penalty plus payment of ordinary income tax on all funds withdrawn exceeding basis. The separate account is NOT likely to invest in: An important basic characteristic of common stocks that makes them a suitable type of investment for the separate account of variable annuities is: A) II and III. What will this transaction provide? *When money is deposited into the annuity, it is purchasing accumulation units. Variable annuity salespeople must register with all of the following EXCEPT: Which of the following are defined as securities? Fixed annuities typically earn at a lower, stable rate. All of the following statements about variable annuities are true EXCEPT: A) II and III. If you need to withdraw money from the account because of a financial emergency, you may face surrender fees. A 45-year-old investor takes a lump-sum distribution from a nonqualified variable annuity. Bear in mind that between the numerous feessuch as investment management fees,mortality fees, and administrative feesand charges for any additional riders, a variable annuitysexpenses can quickly add up. used for the investment of funds paid by contract holders. savingsbondsGroupinsurance$198,74451,71415,21030,42045,630$341,718, Tax rates assumed: A) I and II B) Ordinary income taxation on the earnings withdrawn until reaching the owner's cost basis. Registration with FINRA is de facto registration with the SEC; no registration is required by the state banking commission. A rider or statement of condition that allows a variable life insured to maintain policy coverage after becoming disabled is a benefit known as Similarly, CDs are insured, thereby eliminating risk and guaranteeing a return. Question #19 of 48Question ID: 606826 \end{array} Underlying equity investments T, age 70, withdraws cash from a profit-sharing plan and purchases a Straight Life Annuity. What is the taxable consequence of this withdrawal to your client?
7 - Annuities Flashcards | Quizlet The earnings are taxable but the cost basis is returned tax free. All of the following are accurate statements to make to the client EXCEPT B) 100% taxable. is required by the Securities Act of 1933. B)corporate stock. Lifetime vs. fixed period annuities A)the number of annuity units becomes fixed when the contract is annuitized. The original investment has grown to a value of $60,000. Your customer in his early 30s has received a modest inheritance from a relative. C) number of accumulation units. CDs insured by the FDIC. D) The fact that periodic payments into the contract may increase or decrease. C) a variable annuity contract does not guarantee any type of return During the accumulation phase, the number of accumulation units will increase as additional money is invested. Refinancing a home to draw out equity has been identified by FINRA as an abusive sales tactic regarding the sales of VAs. A)Corporate debt securities 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. D) I and II. This includes transportation, food, lodging, and entertainment. D) II and IV. Among annuities, variable annuities differ from fixed annuities, which provide a specific and guaranteed return. Table1. A)II and IV. C) I and IV. D)suitable due to the relative safety of the investment. Reference: 12.3.3 in the License Exam. A joint-and-last-survivor annuity is a payout option where: A registered representative's (RR) customer is speaking of a variable life insurance contract he owns. The annuity unit's value represents a guaranteed return. A) I and II Only variable annuities have payout plans that provide the client income for life. 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. Are There Penalties for Withdrawing Money From Annuities? An annuity is a continuous stream of equal periodic payments from one party to another for a specified period of time to fulfill a financial obligation. A)Ordinary income taxation on the earnings withdrawn until reaching the owner's cost basis. Determine whether the following events are independent or dependent. With variable annuities policyholders can choose from a number of investment opportunities. IV. B) The entire $10,000 is taxable as ordinary income. For an investor, which of the following is the most important factor in determining the suitability of a variable annuity investment? D) It cannot be determined until the April return is calculated. C)number of accumulation units. View full document. used to escrow late or otherwise delinquent premium payments. A variable annuity is both an insurance and a securities product. Question #37 of 48Question ID: 606817 *Universal variable life policies are insurance company products that should be purchased primarily for the insurance features they offer rather than as an investment. "Variable Annuities: What You Should Know," Pages 67. B)II and III. Fixed annuities pay a fixed monthly benefit which loses purchasing power if there is inflation. C) 3000. B)100% taxable. 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. must provide full and fair disclosure. When the annuitization option is selected, each payment represents both capital and earnings. D) A 50 year old individual with $50,000 cash to invest who has already made the maximum contributions to an IRA and the 401(k) plan at his place of employment and would like to minimize some of the tax consequences of his currently high tax bracket. A) changes in common stock prices tend to be more closely related to changes in the cost of living than changes in bond prices. 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. With regard to a variable annuity, all of the following may vary EXCEPT: Your client has $50,000 to invest. & \underline{\underline{\$1,014,000}} & \hspace{10pt} \text{U.S. savings bonds} & 30,420\\ B) II and IV. D) each annuity unit's value varies with time, but the number of annuity units is fixed. B) Life annuity. D)A 10% penalty plus the payment of ordinary income tax on funds withdrawn in excess of the owner's basis. D) II and IV. *The investor has already paid tax on the contributions but the earnings have grown tax-deferred. But again, the need to designate beneficiaries is not an issue for this annuitant. This recommendation is: D) unsuitable because her situation exposes her to surrender charges and early withdrawal penalties in exchange for insufficient benefits. That can adversely affect your returns over the long term, compared with other types of investments. It is innate and universal. C) with guaranteed minimum withdrawal benefits (GMWBs) a lifetime of periodic payments is guaranteed A)equity funds. \hspace{10pt} \text{Warehouse salaries} & 110,000 & \hspace{10pt} \text{Social security tax withheld} & 51,714\\ a life insurance holder lives longer than expected. B) allow customers to opt out of sharing of financial information with certain nonaffiliated firms. Reference: 12.1.2 in the License Exam, Question #39 of 48Question ID: 721469 A client has purchased a nonqualified variable annuity from a commercial insurance company. Which is it? Variable Annuity Advantages and Disadvantages, Guide to Annuities: What They Are, Types, and How They Work. Question #43 of 48Question ID: 606809 D) 4500. Reference: 12.3.3 in the License Exam. C) The investor's concerns about taxes. Investopedia does not include all offers available in the marketplace. Once the cost basis is reached, any further withdrawals are a nontaxable return of principal. Refinancing a home to draw out equity has been identified by FINRA as an abusive sales tactic regarding the sales of VAs. *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. vote for the investment adviser. 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. The time period depends on how often the income is to be paid. B) I and III. *As contributions are made with after-tax dollars, only the earnings generated are taxed on withdrawal. C)100% tax deferred. 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. covers more than one person.
Variable Annuity Features | Annuity Guys B) The policyowner. D) Any time before the accumulation period. c. The separate account provides for a guaranteed minimum return. Distribution can take place before or during any solicitation for sale. Annuities are complicated products, so that may be easier said than done. Based on this information the RR should: B)IRAs. Annuities due are a type of annuity where payments are made at the beginning of each payment period. \hspace{7pt} b. December 303030, to record the employers payroll taxes on the payroll to be paid on December 313131. C) II and III. D) None, because it is the proceeds from a life insurance company. While a variable annuity has the benefit of tax-deferred growth, its annual expenses are likely to be much higher than the expenses of a typical mutual fund. On withdrawals from a nonqualified annuity, taxes are paid only on the amount that exceeds cost basis (the amount paid into the annuity). Variable annuities were introduced in the 1950s as an alternative to fixed annuities, which offer a guaranteedbut often lowpayout during the annuitization phase. Random withdrawals do not guarantee how long the money will last because large withdrawals can deplete the funds before the annuitant dies. 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 . *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)Universal variable life policy. D)variable annuities offer the investor protection against capital loss. C)Life annuity. If an investor has a fixed-annuity contract with an insurance company, which of the following risks is assumed by the investor? D) the yield is always higher than mortgage yields. A)II and IV.
A Variable Annuity Has Which of the Following Characteristics Usually the term "annuity" relates to a contract between an individual and a life insurance company. Variable annuities provide protection from inflation because their monthly income can increase depending on the separate account's performance. A joint life with last survivor contract covers multiple annuitants and ceases payments at the death of the last surviving annuitant. However, because the client is not yet age 59- when making the withdrawal, he also pays a 10% penalty, or $1,000. A) The fact that the annuity payment may increase or decrease. *A joint life with last survivor contract covers multiple annuitants and ceases payments at the death of the last surviving annuitant. Variable Annuities. They offer broad diversification in the securities market and potential growth, all while using the power of tax deferral. Final answer. If an investor has a fixed-annuity contract with an insurance company, which of the following risks is assumed by the investor? can be sold by someone with only an insurance license B) Ordinary income taxation on the earnings withdrawn until reaching the owner's cost basis. As part of the registration requirements, a prospectus must be filed and distributed to prospective investors. The growth portion is taxed as a capital gain. In a joint-and-last-survivor option, the annuity payment is made jointly to both parties while both are alive. The downside was that the buyer was exposed to market risk, which could result in losses. D) Keogh plans. Income that cannot be outlived by the owner IBM is a global brand and has its presence in 170 countries and operates . A) be paid to a designated beneficiary. 111. These include white papers, government data, original reporting, and interviews with industry experts.