They are also not considered suitable for anyone who anticipates needing a lump sum within a short time frame to fund other endeavors. 6102.0.55.001 - Labour Statistics: Concepts, Sources and Methods, Dec 2005 D) II and III. Future annuity payments will vary according to the separate account's performance. The number of annuity units is fixed at the time of annuitization. a variable annuity has which of the following characteristics D) expense guarantee. Income that cannot be outlived by the owner The return on a variable annuity is not guaranteed; it is determined by the underlying portfolio's value. Policyholders . a variable annuity does not guarantee payments for life. All of the following characteristics are shared by both a mutual fund and a variable annuity's separate account EXCEPT: a) What percentage of Facebook's users are from the United States? When a partial withdrawal is made from an annuity, the earnings are considered to be taken out first for tax purposes (or LIFO). The accumulation period of a variable annuity may continue for many years. D) I and IV. C) II and III. C) early annuity phase-in \text{Salaries:} && \text{Deductions:}\\ Upon John's death during the accumulation period, Sue takes a lump-sum payment. The number of annuity units is fixed. C) suitable regardless of funding sources Securely download your document with other editable templates, any time, with PDFfiller. A) II and III. Distribution of dividends occurs during the accumulation period. A)I and IV. Consequently, the client pays taxes only on the growth portion of the withdrawal ($10,000). B)FINRA. D) reevaluate whether the recommendation for the VA contract is still suitable based on the clients proposed funding of the investment. A) I and III. 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. Over the following year, the stock fund has a 10% return, and the bond fund has a 5% return. D)Joint and last survivor annuity. D)the rate of return is determined by the underlying portfolio's value. D)0. The beneficiary is taxed at ordinary income rates during the year the lump sum is received. c) Construct a contingency table showing all the joint and marginal probabilities. If in the following year, the S&P 500 declined by 5%, the annuities value would remain at $107,000 because gains are locked in each year. A)number of annuity units. Final answer. Reference: 12.3.2.4 in the License Exam. When the annuitization option is selected, each payment represents both capital and earnings. Insurance companies introduced the variable annuity as an opportunity to keep pace with inflation. C) Unit refund life option Question #19 of 48Question ID: 606826 D)I and III. C)III and IV. 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. A) I and III. However, because the client is not yet age 59- when making the withdrawal, he also pays a 10% penalty, or $1,000. What Are the Biggest Disadvantages of Annuities? Once the contract is annuitized, monthly payments to the customer are: B) 0. C)the number of annuity units is fixed, and their value remains fixed. Suggesting that loans or drawing equity from a home to fund VA contracts have also been targeted as abusive sales practices. b) What probability is the 20%20 \%20% mentioned above? The most suitable option and one considered effective for married couples is a single joint and last survivor contract. B) I and II. B) I and IV. 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 joint life with last survivor annuity: A variable annuity is a type of annuity contract in which the value can vary based on the performance of an u . b. C)It will be higher. Full-Time. Instructions\textsf{\textcolor{#4257b2}{Instructions}}Instructions A)accumulation shares. A) variable annuities offer the investor protection against capital loss. A 3 A)unsuitable because the return on something as conservative as a variable annuity tends to be low. B)Tax-free municipal bonds What is the taxable consequence of this withdrawal to your client? *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. All of the following are characteristics of a variable annuity, except: a. must provide full and fair disclosure. How is the distribution taxed? A)II and IV. Find the per-day expense for one of these travelers who had a z-score of -1.6. c. A Bargain Times Vacation Blog writer claimed to have done this vacation for a cost of$710 per person. Universal variable life policies 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. For this potential advantage, the investor, rather than the insurance company, assumes the investment risk. John is the annuitant in a variable plan, and Sue is the beneficiary. A) be paid to a designated beneficiary. Question #40 of 48Question ID: 606800 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. During the accumulation phase, the number of accumulation units will increase as additional money is invested. Once the contract is annuitized, monthly payments to the customer are: Most annuities will not allow you to withdraw additional funds from the account once the payout phase has begun. In a joint-and-last-survivor option, the annuity payment is made jointly to both parties while both are alive. On withdrawals from a nonqualified annuity, taxes are paid only on the amount that exceeds cost basis (the amount paid into the annuity). 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. Reference: 12.1.4.1 in the License Exam. *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. A) Dow Jones Industrial Average. B) The policyowner. IBM is a global brand and has its presence in 170 countries and operates . C) insurance guarantee. A variable annuity's separate account is: D)II and IV. D)II and III. 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 is a security and must be registered with the SEC, not FINRA. Question #44 of 48Question ID: 606797 C) The insurance company. C)100% tax deferred. A)an accounting measure used to determine the contract owner's interest in the separate account. While there is no guarantee on how investments in the separate account will perform, depending on its investment performance, the separate account could provide for a larger death benefit than the minimum guaranteed amount. Suppose that 20%20 \%20% of their users are United States users who log on daily. A)100% tax free. All of the following investment strategies offer either fully or partially tax-deductible contributions to individuals who meet eligibility requirements EXCEPT: B) variable annuities. *The accumulation period of a variable annuity may continue for many years. Variable annuities were introduced in the 1950s as an alternative to fixed annuities, which offer a guaranteedbut often lowpayout during the annuitization phase. What type of annuity has a cash value that is based upon the performance of it's underlying investment funds? D)It cannot be determined until the April return is calculated. D) I and III. A trend is formed from non-repetitive actions of people. D) I and III. *Insurance companies introduced the variable annuity as an opportunity to keep pace with inflation. He originally invested $29,000 4 years ago; it now has a value of $39,000. A)Purchasing power risk. *The number of variable annuity accumulation units can rise during the accumulation period when additional units are being purchased. Your 65-year-old client owns a nonqualified variable annuity. Therefore, variable annuities must be registered with the state insurance commission and the Securities and Exchange Commission. C)earnings only and taxable B) The entire $10,000 is taxable as ordinary income. You have 4 clients each expressing interest in a variable annuity contract. C)Life annuity. A client has purchased a nonqualified variable annuity from a commercial insurance company. In a variable life annuity with 10-year period certain, a contract holder receives: How is the distribution taxed? A)equity funds. Reference: 12.1.2.1.1 in the License Exam. C) II and IV. The value of the annuity units varies. D) Any time before the accumulation period. As part of his profile he stresses that he has had uncomfortable experiences in the past with the stock market and is not inclined to invest in anything that is based on stock market performance and would opt for principal protection instead. B)unsuitable because her situation exposes her to surrender charges and early withdrawal penalties in exchange for insufficient benefits. Science Health Science Nursing. C) IRAs. Reference: 12.3.3 in the License Exam. B) allow customers to opt out of sharing of financial information with certain nonaffiliated firms. C)Keogh plans. C) During the annuity period. 2019 Ted Fund Donors B) During the accumulation period. A registered representative's (RR) customer is speaking of a variable life insurance contract he owns. When a variable annuity contract is annuitized, the number of annuity units is fixed. D) Growth mutual funds. Question #13 of 48Question ID: 606822 D) II and IV. Once annuitized, the number of annuity units does not vary. In the case of deferred annuities, this is often referred to as the accumulation phase. Table1. PDF Prudential IncomeFlex Target Vanguard Balanced Index Fund B)mutual fund units. A 45-year-old employed individual with no other retirement accounts in place The funds are not liquid due to the surrender fees, and there is also a 10% penalty on withdrawals before age 59-. 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. 5 Q All of the following are characteristics of variable whole life EXCEPT the premium is level there is no guaranteed cash value there is no guaranteed minimum death benefit. Withdrawals from a nonqualified variable annuity are made on a LIFO basis, so the taxable earnings are considered taken out before principal. D) not suitable because a lifetime income rider is only for someone who is already retired. Sub accounts and mutual funds are conceptually. Based only on these facts, the variable annuity recommendation is Assuming that the payroll for the last week of the year is to be paid on January 444 of the following fiscal year, journalize the following entries: Once a variable annuity has been annuitized: An investor who purchases a fixed annuity contract assumes purchasing-power risk. must provide full and fair disclosure. D) value of accumulation units. B) Exchange traded Funds (ETFs) or Exchange traded Notes (ETNs) B) It will be lower. Contributions to an IRA may be tax deductible, depending on the individual's earnings and participation in a company-sponsored qualified retirement plan. *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. D) III and IV. However, a discussion should occur regarding the risks that are associated with a fixed annuity; purchasing power risk. *The minimum guaranteed death benefit is provided by that portion of the payment invested in the insurance company's general account. Question #36 of 48Question ID: 606805 How to Rollover a Variable Annuity Into an IRA. This role is also eligible for annual short-term incentive compensation. An individual retirement annuity is an investment vehiclesimilar to an individual retirement accountthat is offered by insurance companies. B) the number of annuity units is fixed, and their value remains fixed. Once the cost basis is reached, any further withdrawals are a nontaxable return of principal. no. Variable annuity salespeople must register with all of the following EXCEPT: A) FINRA. Variable annuities involve underlying equity investments in a separate account. B) payment guarantee. *During the accumulation phase, the number of accumulation units will increase as additional money is invested. Question #47 of 48Question ID: 606813 A) I and II Determine whether the following events are independent or dependent. A 45-year-old investor takes a lump-sum distribution from a nonqualified variable annuity. Simple and general annuities problems with solutions If your 60-year-old customer purchases a nonqualified variable annuity and withdraws some of her funds before the contract is annuitized, what are the consequences of this action? d. Each month the payment will increase, decrease, or remain the same as the previous month's payment . 111. Travel Times Journal found that the average per person cost of a 10-day trip along the Pacific coast, per person, is $1,015. The earnings on dollars invested into a variable annuity accumulate tax deferred, which is why variable annuities are popular products for retirement accumulation. Your customer in his early 30s has received a modest inheritance from a relative. Changes in payments on a variable annuity correspond most closely to fluctuations in the: A) the investment portfolio is managed professionally. *The customer, in the accumulation stage of the annuity, is holding accumulation units. B)II and III. do not have a separate account B) suitable if she has enough equity in the home to fund the variable annuity without cashing out the other VA contract B)changes in common stock prices tend to be more closely related to changes in the cost of living than changes in bond prices. A customer has contributed $1,000 a year for 10 years to his tax-deferred nonqualified variable annuity. Variable annuities are designed to combat inflation risk. Her intent was to use the funds for the down payment on a house after graduation. D) 100% tax deferred. B) During the accumulation period. 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 . Reference: 12.1.2 in the License Exam. C)municipal bonds. *The investor has already paid tax on the contributions but the earnings have grown tax-deferred. The separate account is NOT likely to invest in: Since the client is older than 59 at the time of distribution, the additional 10% penalty tax is not incurred. && \hspace{10pt}\text{Group insurance} & \underline{45,630}\\ the state insurance commission. Variable annuities offer the possibility of higher returns and greater income than fixed annuities, but theres also a risk that the account will fall in value. You can learn more about the standards we follow in producing accurate, unbiased content in our. The payout compared to the initial payout upon annuitization. B) I and III. *VAs are less suitable for individuals who have not yet made maximum contributions to other retirement accounts such as IRAs and 401ks. The offers that appear in this table are from partnerships from which Investopedia receives compensation. IBM Noida, Uttar Pradesh, India4 weeks agoBe among the first 25 applicantsSee who IBM has hired for this roleNo longer accepting applications. C)II and IV. B) The death benefit cannot ever be more than the guaranteed benefit. B) II and IV. Solved 6. Which of the following is not a characteristic of | Chegg.com A) Life-only annuity B)I and IV. Solved Which of the following is characteristic of variable - Chegg

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