a variable annuity has which of the following characteristics a variable annuity has which of the following characteristics

If at all you go deeper, then you will find a wide range of annuity products from a variety of companies. a variable annuity has which of the following characteristics C) insurance guarantee. You can tailor the income stream to suit your needs. A) I and III. Options. You have 4 clients each expressing interest in a variable annuity contract. &&& \underline{\underline{\$341,718}} What type of annuity has a cash value that is based upon the performance of it's underlying investment funds? D) accumulation shares. D)II and III. Variable annuity salespeople must register with all of the following EXCEPT: III. A registered representative explaining variable annuities to a customer would be CORRECT in stating that: 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: D) Keogh plans. (The exception is the fixed income annuity, which has a moderate to high payout that rises as the annuitant ages). D) Life annuity with 10-year period certain. Full-Time. Reference: 12.3.3 in the License Exam. 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. The value of a variable annuity is based on the performance of an underlying portfolio of sub accounts selected by the annuity owner. D) the yield is always higher than mortgage yields. D) minimum guaranteed death benefit. Shortening the Securities Transaction Settlement Cycle C) II and III. Essential Characteristics: Typically, they allow one withdrawal each year during the accumulation phase. B) IPO. Then find the probability of the event. Reference: 12.1.1 in the License Exam. Variable annuities are designed to combat inflation risk. C) Tax-free municipal bonds The client's investment objectives, tax bracket, investment experience and risk tolerance all align well with a VA recommendation. The client's investment objectives, tax bracket, investment experience and risk tolerance all align well with a VA recommendation. Each of the remaining statements are true. B) It will be lower. B)It will be lower. B) single payment deferred annuity. What will this transaction provide? D) I and III. Suggesting that loans or drawing equity from a home to fund VA contracts have also been targeted as abusive sales practices. Variable Annuity Advantages and Disadvantages, Guide to Annuities: What They Are, Types, and How They Work. A) It will be higher. *Accumulation units represent units of ownership in a life insurance company's separate account when the contract is in the accumulation stage. "Variable Annuities: What You Should Know," Page 10. Investopedia does not include all offers available in the marketplace. Sub accounts and mutual funds are conceptually. C) suitable regardless of funding sources D) 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. Which of the following statements regarding variable annuities are TRUE? D) Age 27, saving for first home. *Mortality risk- If an annuitant lives longer than expected, the insurance company will have to continue payments longer than expected. The holder of a variable annuity receives the largest monthly payments under which of the following payout options? C) Unit refund life option 's dividend yield was % last year. A) mortality guarantee. B) The proceeds minus John's cost basis taxed as ordinary income at Sue's tax rate. When the second party dies, all payments cease. Policyholders . A trend is formed from non-repetitive actions of people. Reference: 12.1.4.1 in the License Exam. A)Corporate debt securities C) The portion of the premium invested in the insurance company's general account is used to provide for the minimum guaranteed amount of the death benefit. On any device & OS. *A joint life with last survivor contract covers multiple annuitants and ceases payments at the death of the last surviving annuitant. A) variable annuities offer the investor protection against capital loss. If the customer takes a withdrawal of $10,000, what are the tax consequences? D) I and III. B) II and III. B)value of annuity units. D) the payout plans provide the client income for life. C)suitable due to the death benefit features of a variable annuity. must be filed with FINRA. D) Two-thirds of the withdrawal is taxable as ordinary income. B) II and IV. C) III and IV 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. With a fixed annuity, by contrast, the insurance company assumes the risk of delivering whatever return it has promised. Reference: 12.2.1 in the License Exam. He originally invested $29,000 4 years ago; it now has a value of $39,000. If the customer takes a withdrawal of $10,000, what are the tax consequences? IV. A) I and II 111. *Under the mortality guarantee, the insurance company assumes mortality risk by guaranteeing payments for life, though the amount of each payment is not guaranteed. When the annuitization option is selected, each payment represents both capital and earnings. Among annuities, variable annuities differ from fixed annuities, which provide a specific and guaranteed return. In a variable life annuity with 10-year period certain, a contract holder receives: The Three Main Types of Annuity Insurance - Fixed, Variable, and Equity must provide full and fair disclosure. There is a guaranteed minimum interest rate, normally amounting to between 1 and 3 percent. B)II and III. B) 10% penalty plus payment of ordinary income tax on all funds withdrawn. A separate account will invest in a number of different securities. A) II and IV. continues payments as long as one annuitant is alive. Reference: 12.2.1 in the License Exam. Question #35 of 48Question ID: 606810 Needs - are goal-directed forces that people experience. The accumulation unit's value is used to calculate the total value of the account. III. I. A) I and III. B) allow customers to opt out of sharing of financial information with certain nonaffiliated firms. D)I and II. A) partially a tax-free return of capital and partially taxable. Chapter 12 - Variable Annuities Flashcards | Chegg.com An annuity factor is taken from the annuity table, which considers, for example, the investor's sex and age. c. The separate account provides for a guaranteed minimum return. C) IRAs. It is innate and universal. When a variable annuity contract is annuitized, the number of annuity units is fixed. a variable annuity does not guarantee an earnings rate of return. Once the contract is annuitized, monthly payments to the customer are: Simple and general annuities problems with solutions A client has purchased a nonqualified variable annuity from a commercial insurance company. The entire amount is taxed as ordinary income. *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. Financial Sales Professional Job in Fort Worth, TX at New York Life He makes the following four statements, all of which are true EXCEPT Ideally they should be funded with readily available cash rather than using funds liquidated from existing investments. Question #33 of 48Question ID: 606832 B) II and III Question #45 of 48Question ID: 606795 Since the client is older than 59 at the time of distribution, the additional 10% penalty tax is not incurred. If an insurance holder dies sooner than expected, the insurance company will have to pay the death benefit sooner. *Variable annuity contracts were devised to help investors keep pace with inflation. The number of annuity units is fixed. 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) each annuity unit's value is fixed, but the number of annuity units varies with time. C)III and IV. A)the state banking commission. Deal with mathematic Math is all about solving equations and finding the right answer. B)Tax-free municipal bonds Therefore, ordinary income taxes will apply to the entire $10,000. Universal variable life policies The remainder of the premium is invested in the separate account. The accumulation period of a variable annuity may continue for many years. Skylar Clarine is a fact-checker and expert in personal finance with a range of experience including veterinary technology and film studies. For example, if the income is monthly, the first payment comes one month after the immediate annuity is bought. 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. The correct answer was: partially a tax-free return of capital and partially taxable. A) complete all paper work to purchase the annuity contract and obtain the clients signature immediately. C) value of underlying securities held in the separate account. Question #25 of 48Question ID: 606819 A 32-year-old with a company-sponsored 401k plan who will need a lump sum soon to finance graduate school tuition Variable Annuities Flashcards - Cram.com Once annuitized, the number of annuity units does not vary. A)an accounting measure used to determine the contract owner's interest in the separate account. Underlying equity investments T, age 70, withdraws cash from a profit-sharing plan and purchases a Straight Life Annuity. Your client owns a variable annuity contract with an AIR of 4%. 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. Reference: 12.3.4 in the License Exam. The investor has already paid tax on the contributions but the earnings have grown tax-deferred. C) II and III. PGIM Fixed Income has over $900 billion in assets under management across a broad array of fixed . A variable annuity is a security and must be registered with the SEC, not FINRA. $63,000 b.$51,000 c. $18,000 d.$6,000. B) the safety of the principal invested. The following are the characteristics or the hierarchy of a trend except A. Gigatrends C. Megatrends B. Macrotrends D. Nanotrends _____11. are purchased primarily for their insurance features C)Mortality risk. C) It will stay the same. II. Describe. C)annuity units. B)corporate stock. The money paid in will be returned tax free, but the earnings portion will be taxed as ordinary income. The offers that appear in this table are from partnerships from which Investopedia receives compensation. B)IRAs. C)It will be higher. The separate account performance compared to last month's performance. The value of the separate account is now $30,000. An accumulation unit in a variable annuity contract is: D) III and IV. *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. Annuities | FINRA.org Once a customer annuitizes a variable annuity, which of the following statements are TRUE? Payments from a variable annuity depend on the securities' value in the separate account's underlying investment portfolio. C)100% tax deferred. D) the number of annuity units becomes fixed when the contract is annuitized. All of the following statements about variable annuities are true EXCEPT: D) Capital gains tax on earnings exceeding basis. B)Two-thirds of the withdrawal is taxable as ordinary income. Question #44 of 48Question ID: 606797 I. An ordinary simple annuity has the following characteristics: For example, most car loans are ordinary simple annuities where payments are. 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. do not have a separate account C) early annuity phase-in A) Joint tenants annuity. \end{array} If your customer invests in a variable annuity and chooses to annuitize at age 65, which of the following statements are TRUE? FINRA. "Variable Annuities: What You Should Know," Page 6. C)with guaranteed minimum withdrawal benefits (GMWBs) the periodic payments can be monthly, quarterly or annually Question #36 of 48Question ID: 606805 C) During the annuity period. A) taxed at a reduced rate. A registered representative explaining variable annuities to a customer would be CORRECT in stating that: Do homework Doing homework can help you learn and understand the material covered in class. This recommendation is: D) unsuitable because her situation exposes her to surrender charges and early withdrawal penalties in exchange for insufficient benefits. B)I and III. A client has purchased a nonqualified variable annuity from a commercial insurance company. All of the following are true about annuities EXCEPT: they have all the same characteristics as life insurance. Suppose that 20%20 \%20% of their users are United States users who log on daily. What Are the Biggest Disadvantages of Annuities? Deferred Annuity Definition, Types, How They Work, What Is a Fixed Annuity? . The beneficiary is taxed at ordinary income rates during the year the lump sum is received. The funds in an annuity are off-limits to creditors and other debt collectors. During the accumulation phase, you make purchase payments. Reference: 12.3.2.1 in the License Exam. A) Money market fund. He wants to ensure that the client, in addition to meeting suitability requirements, is aware of certain variable annuity contract characteristics. Licensed to sell Variable Annuities in the following state(s): FL, TX . U.S. Securities and Exchange Commission. All of the following are characteristics of a variable annuity, except: a. C) the yield is always higher than bond yields. 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. \hspace{10pt} Medicare, 1.5%1.5\%1.5% If you die before the payout phase, your beneficiaries may receive a. A) 2800. When a partial withdrawal is made from an annuity, the earnings are considered to be taken out first for tax purposes (or LIFO). C) 3800. B) II and IV. 7 - Annuities Flashcards | Quizlet The number of accumulation units is always fixed throughout the accumulation period. 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. Your customer is interested in a variable annuity but is unclear on some of the details regarding different specifications and riders that can be attached to the contract. A Variable Annuity Has Which of the Following Characteristics 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. However, they are protected by state guaranty associations in the event that the insurance company providing the product goes out of business. A) A variable annuity Which of the following is not characteristic of a fixed annuity? D) a minimum of 10 years of variable payments, followed by additional variable payments for life. A) II and III. Your customer in his early 30s has received a modest inheritance from a relative. a variable annuity guarantees payments for life. Which is it? Your 65-year-old client owns a nonqualified variable annuity. The $30,000 contract value represents $10,000 of contributions and $20,000 of earnings. A 45-year-old investor takes a lump-sum distribution from a nonqualified variable annuity. C) with guaranteed minimum withdrawal benefits (GMWBs) a lifetime of periodic payments is guaranteed C) number of accumulation units. Usually the term "annuity" relates to a contract between an individual and a life insurance company. D) expense guarantee. He makes several statements regarding the contract. A) an accounting measure used to determine payments to the owner of the variable annuity. 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.