B) fixed payments for 10 years, followed by variable payments for life. A)variable annuities will protect an investor against capital loss. 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 How is the distribution taxed? D) Variable annuity. Your 65-year-old client owns a nonqualified variable annuity. D) accumulation shares. D)0. Essential Characteristics: 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. A variable annuity is a security and must be registered with the SEC, not FINRA. B) II and III A)Corporate debt securities C)suitable due to the death benefit features of a variable annuity. Reference: 12.3.3 in the License Exam. C)prime rate. When a partial withdrawal is made from an annuity, the earnings are considered to be taken out first for tax purposes (or LIFO). "Variable Annuities: What You Should Know," Pages 67. An annuity is an insurance product that promises to pay out income at a future date based on invested funds. B)FINRA. C) During the annuity period. C) with guaranteed minimum withdrawal benefits (GMWBs) a lifetime of periodic payments is guaranteed B)Life annuity with period certain. D) Joint and last survivor annuity. These contracts come with high surrender charges. C) There is no tax as the withdrawal is considered return of capital. A customer has a nonqualified variable annuity. D) payments continue until age 70-. Upon John's death during the accumulation period, Sue takes a lump-sum payment. Clusters of vesicles in various stages. Question #40 of 48Question ID: 606800 If the account is annuitized, the investor has chosen a payout option. 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. 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. A) Fixed Annuity *The minimum guaranteed death benefit is provided by that portion of the payment invested in the insurance company's general account. Question #25 of 48Question ID: 606819 A)II and III a variable annuity has which of the following characteristics If an investor has a fixed-annuity contract with an insurance company, which of the following risks is assumed by the investor? D) Variable annuity. Question #45 of 48Question ID: 606795 C)the yield is always higher than bond yields. Variable Annuities. D) Variable annuities. Following the transition to T+1 in the U.S. markets, Commission staff will continue to work with industry leaders, public interest advocates, investors and other regulators to assess the future feasibility of a T+0 settlement standard cycle, and seek to identify ways to overcome the challenges associated with such a move, as articulated in the . Skylar Clarine is a fact-checker and expert in personal finance with a range of experience including veterinary technology and film studies. Reference: 12.1.2.1.1 in the License Exam. The value of the separate account is now $30,000. The value of the annuity units is fixed. A) I and III. A) the investment portfolio is managed professionally. C)III and IV. D)I and III. If at all you go deeper, then you will find a wide range of annuity products from a variety of companies. \hspace{7pt} b. January 444, to record the employers payroll taxes on the payroll to be paid on January 444. B) be paid to any legal heirs as recognized by the annuitant's state of domicile. Registration with FINRA is de facto registration with the SEC; no registration is required by the state banking commission. A) an accounting measure used to determine payments to the owner of the variable annuity. Of the total payroll for the last week of the year, $30,000\$30,000$30,000 is subject to unemployment compensation taxes. \hspace{10pt} \text{Warehouse salaries} & 110,000 & \hspace{10pt} \text{Social security tax withheld} & 51,714\\ D)II and IV. By clicking Accept All Cookies, you agree to the storing of cookies on your device to enhance site navigation, analyze site usage, and assist in our marketing efforts. CH 7 Annuities Flashcards | Quizlet The separate account performance compared to an assumed interest rate. Question #36 of 48Question ID: 606805 "Variable Annuities: What You Should Know," Page 10. Owners of variable annuities, like owners of mutual fund shares, may vote on changes in investment policy and for an investment adviser. Reference: 12.1.2 in the License Exam. B) Exchange traded Funds (ETFs) or Exchange traded Notes (ETNs) *Contributions to a nonqualified variable annuity are not tax deductible. A) waiver of premium Home; About. 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. Therefore, variable annuities must be registered with the state insurance commission and the Securities and Exchange Commission. C) A 10% penalty plus the payment of ordinary income tax on all of the funds withdrawn. variable annuity without paying tax at the time of the transfer. b. A)the yield is always higher than mortgage yields. A) taxed at a reduced rate. C)3800. These contracts come with high surrender charges. Once a variable annuity has been annuitized: are purchased primarily for their insurance features Over the past five years, 's dividend yield has averaged % per year. IV. 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. You have 4 clients each expressing interest in a variable annuity contract. Question #35 of 48Question ID: 606810 *The accumulation period of a variable annuity may continue for many years. On an annual basis, the machine will produce 20,000 units with an expected selling price of $10, prime costs of$6 per unit, and a fixed cost allocation of $3 per unit. C) 10 years of variable payments. This factor is used to establish the dollar amount of the first annuity payment. All of the following are true about annuities EXCEPT: they have all the same characteristics as life insurance. 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: An 18-year-old, unmarried high school student sought a safe investment for a $30,000 bequest until after she graduated from college. A)the state banking commission. 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. a variable annuity does not guarantee payments for life. 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. A) 4000. a variable annuity guarantees an earnings rate of return. 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. A) 2800. If your customer invests in a variable annuity and chooses to annuitize at age 65, which of the following statements are TRUE? D)I and IV. The original investment has grown to a value of $60,000. 6102.0.55.001 - Labour Statistics: Concepts, Sources and Methods, Dec 2005 B) variable annuities are classified as insurance products. Complete a blank sample electronically to save yourself time and money. C) A 25year old public school teacher who would like to save enough for the purchase of her first home within the next 3 to 5 years. The AG49-A Revisions B) Life annuity. Reference: 12.1.2 in the License Exam, Question #21 of 48Question ID: 606812 Which 2 of the 4 client profiles would a VA be LEAST suitable for? 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. 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. If your customer invests in a variable annuity and chooses to annuitize at age 65, which of the following statements are TRUE? For an insurance company, mortality risk turns out unfavorably if: During the accumulation phase, you make purchase payments. B) II and IV. C) I and III. B) 0. During the payout period, payments are based on a fixed number of annuity units established when the contract was annuitized. B)100% taxable. B) Ordinary income taxation on the earnings withdrawn until reaching the owner's cost basis. Variable Annuities Flashcards | Quizlet 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. Since the client is older than 59 at the time of distribution, the additional 10% penalty tax is not incurred. C) 100% tax free. Uses in Investing, Pros, and Cons, Indexed Annuity: Definition, How It Works, Yields, and Caps. B)variable annuities are classified as insurance products. C)Corporate bonds. B)I and III. Question #26 of 48Question ID: 606811 You can tailor the income stream to suit your needs. C) II and III. Life income riders are best suited for those who anticipate a lengthy retirement and are generally not yet retired when making the VA purchase. An 18-year-old, unmarried high school student sought a safe investment for a $30,000 bequest until after she graduated from college. The wage for applicants for this position is $45,979.00 per year. D)variable annuities. Full-Time. All of the following investment strategies offer either fully or partially tax-deductible contributions to individuals who meet eligibility requirements EXCEPT: One of the following would achieve that objective but a suitability discussion regarding it's risk should also occur. Question: The following are characteristics of a public conglomerate: I) It is designed to operate various divisions for the long run. *A variable annuity is a security and must be registered with the SEC, not FINRA. Variable Annuity: Definition and How It Works, Vs. Fixed Annuity An annuity factor is taken from the annuity table, which considers, for example, the investor's sex and age. These include white papers, government data, original reporting, and interviews with industry experts. Which of the following are defined as securities? Financial Sales Professional Job in Fort Worth, TX at New York Life A life with period certain contract guarantees payments for a specified number of years to a named beneficiary if the annuitant dies during that time. order now. The number of annuity units rises once annuitization begins. The value of accumulation and annuity units varies with the investment performance of the separate account. D) III and IV. The minimum guaranteed death benefit is provided by that portion of the payment invested in the insurance company's general account. 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. A) waiver of premium A) number of annuity units. A passion for serving customers and a personal commitment to following through in a dynamic, fast-paced environment. Spartan Technology Services and Solutions Private Limited is a subsidiary of IBM (International Business Machines) Corporation. Based on the information given in the question, the VA recommendation would not be suitable. Similarly, CDs are insured, thereby eliminating risk and guaranteeing a return. Ideally they should be funded with readily available cash rather than using funds liquidated from existing investments. C)It will be higher. This factor is used to establish the dollar amount of the first annuity payment. Reference: 12.3.1 in the License Exam. A client has purchased a nonqualified variable annuity from a commercial insurance company. d) What is the probability that a user is from the United States, given that he or she logs on every day? Senior Customer Care Advocate Annuities ($22 per hour) in Warwick A) I and II During payout, distributions will fluctuate due to performance in the separate account. She will receive the annuity's entire value in a lump-sum payment. The number of annuity units is fixed at the time of annuitization. Reference: 12.3.3 in the License Exam, Question #34 of 48Question ID: 606834 A)II and IV. 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. If you die before the payout phase, your beneficiaries may receive a. Sample problems from Chapter 9. . IBM Noida, Uttar Pradesh, India1 month agoBe among the first 25 applicantsSee who IBM has hired for this roleNo longer accepting applications. At the end of the year your account has a value of 10750. If this client is in the payout phase, how would his April payment compare to his March payment? A)III and IV. For an investor, which of the following is the most important factor in determining the suitability of a variable annuity investment? B)IRAs. Reference: 12.3.3 in the License Exam. The earnings on dollars invested into a variable annuity accumulate tax deferred, which is why variable annuities are popular products for retirement accumulation. U.S. Securities and Exchange Commission. A registered representative recommends a variable annuity with an income rider to a client. FINRA. Fixed annuities pay a fixed monthly benefit which loses purchasing power if there is inflation. You purchase a variable annuity contract by making either a single purchase payment or a series of purchase payments. 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. A 45-year-old employed individual with no other retirement accounts in place The features of variable deferred annuities are many. C)The entire $10,000 is taxable as ordinary income. Needs - are goal-directed forces that people experience. C) such an annuity is designed to combat inflation risk. Question #43 of 48Question ID: 606809 Question #13 of 48Question ID: 606822 an annuitant lives longer than expected. Fixed annuities typically earn at a lower, stable rate. A) II and III. No, annuities are not FDIC-insured as they are not bank products. B)Universal variable life policy. B. Ideally they should be funded with readily available cash rather than using funds liquidated from existing investments. 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. Distributions from nonqualified variable annuities are: A variable annuity does not guarantee an earnings rate because earnings will depend on the performance of the separate account. B)value of annuity units. Income that cannot be outlived by the owner A) Age 56, available cash to invest, makes the maximum retirement plan contributions to an existing IRA and 401(k) plan A) 2800. &&& \underline{\underline{\$341,718}} Immediate life annuity with 10-year period certain. With regard to a variable annuity, all of the following may vary EXCEPT: Guaranteed Lifetime Annuity: How They Work, When They Pay You, This is also generally true of retirement plans. Reference: 12.1.2.1.1. in the License Exam. An annuity payment is the dollar amount of the equal periodic payment in an annuity environment. *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. The money paid in will be returned tax free, but the earnings portion will be taxed as ordinary income. The beneficiary is taxed at ordinary income rates during the year the lump sum is received. \end{array} *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. 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. A)not suitable have investment risk that is assumed by the investor B) Age 78, retired for 20 years, lives comfortably and wants to leave all liquid assets to children 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. Your 55-year-old client invested $50,000 four years ago in a nonqualified variable annuity. D) Keogh plans. Transcribed image text: 6. A)II and IV. Reference: 12.2.1 in the License Exam. 222. A)accumulation shares. Reference: 12.3.1 in the License Exam. D) tax free. Explain what is meant by positive and negative C) 3000. D)the safety of the principal invested. Consequently, the client pays taxes only on the growth portion of the withdrawal ($10,000). Question #24 of 48Question ID: 606806 If the data is normally distributed with standard deviation$198, find the percent of vacationers who spent less than $1,200 per day. B) payment guarantee. Which of the following is NOT associated with characteristics of shares Annuity units are units of ownership when the contract is in the payout stage. 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. B) The proceeds minus John's cost basis taxed as ordinary income at Sue's tax rate. A)II and IV. How Variable Life Insurance Works: Pros and Cons - ValuePenguin If the customer takes a withdrawal of $10,000, what are the tax consequences? 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: 12.1.2 in the License Exam, Question #23 of 48Question ID: 901858 Her agent recommended she choose a variable annuity as a safe haven for the funds. *Accumulation units represent units of ownership in a life insurance company's separate account when the contract is in the accumulation stage. C)municipal bonds. The number of annuity units varies. Herpes Zoster has all of the following characteristics except: A)equity funds. Contributions to a nonqualified annuity are made with the owner's after-tax dollars. This recommendation is: D) unsuitable because her situation exposes her to surrender charges and early withdrawal penalties in exchange for insufficient benefits. Question #37 of 48Question ID: 606817 The value of these units varies with the performance of the separate account. Salaries:SalessalariesWarehousesalariesOfficesalaries$670,000110,000234,000$1,014,000Deductions:IncometaxwithheldSocialsecuritytaxwithheldMedicaretaxwithheldU.S. The company's well-known Rock symbol is an icon of strength, stability, expertise and innovation that has stood the test of time. John is the annuitant in a variable plan, and Sue is the beneficiary. A) Any tax due is deferred. B) The proceeds minus John's cost basis taxed as ordinary income at Sue's tax rate. A customer, who has contributed to an IRA and to an employer matching 401(k) plan continuously for many years, wants to purchase an annuity contract to add additional monthly income once retired. *Insurance companies introduced the variable annuity as an opportunity to keep pace with inflation. Sas#8-psy 002 - Organizational Behavior *The number of variable annuity accumulation units can rise during the accumulation period when additional units are being purchased. Annuities: How to Find the Right One for You, How a Fixed Annuity Works After Retirement, Pros and Cons of Indexed Universal Life Insurance. Given that all of the current retirement investments are subject to market risk, the customer wants these new funds to have no market risk exposure. When the first party dies, the annuity payment is made to the survivor. Securely download your document with other editable templates, any time, with PDFfiller. Question #15 of 48Question ID: 606804 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. Chapter 7: Annuities Flashcards | Quizlet D)variable annuities offer the investor protection against capital loss. The growth portion is taxed as ordinary income. D) II and III. All of the following statements regarding variable annuities are true EXCEPT: A) variable annuities offer the investor protection against capital loss. An investor owning which of the following variable annuity contracts would hold accumulation units? 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: Annuities due are a type of annuity where payments are made at the beginning of each payment period. Question #33 of 48Question ID: 606832 A variable annuity has two phases: an accumulation phase and a payout (annuitization) phase. D) I and III. 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) an accounting measure used to determine the contract owner's interest in the separate account. Question #27 of 48Question ID: 606818 Annuity death benefits are generally paid in a lump sum. The owner of a variable annuity has all of the following rights EXCEPT How to Rollover a Variable Annuity Into an IRA. Every annuity has some characteristics in common. 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. A) I and IV. 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. All of the following statements regarding variable annuities are true EXCEPT:

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