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

8 annuities provide a guaranteed rate of return, whereas annuities provide conservative to aggressive investments whose rates of return are not guaranteed. What is the taxable consequence of this withdrawal to your client? *Under the mortality guarantee, the insurance company assumes mortality risk by guaranteeing payments for life, though the amount of each payment is not guaranteed. Her intent was to use the funds for the down payment on a house after graduation. continues payments only as long as all annuitants are still alive. A) Life-only annuity When the annuitization option is selected, each payment represents both capital and earnings. C) III and IV If you die before the payout phase, your beneficiaries may receive a. Upon John's death during the accumulation period, Sue takes a lump-sum payment. And, unlike a fixed annuity, variable annuities do not provide any guarantee that you will earn a return on your investment. Owners of variable annuities, like owners of mutual fund shares, may vote on changes in investment policy and for an investment adviser. A trend makes considerable influence or impact. C)It will be higher. D) expense guarantee. An annuity payment is the dollar amount of the equal periodic payment in an annuity environment. Once a customer annuitizes a variable annuity, which of the following statements are TRUE? B)variable annuities are classified as insurance products. This factor is used to establish the dollar amount of the first annuity payment. 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. *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. C)prime rate. a life insurance holder lives longer than expected. Practice all cards. *Annuity death benefits are generally paid in a lump sum. A variable annuity is a type of annuity contract in which the value can vary based on the performance of an u . *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. **Because common stocks are not fixed dollar investments, they have the opportunity to keep pace with inflation. A) I and IV. 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 On any device & OS. You can tailor the income stream to suit your needs. C) 10 years of variable payments. A) number of annuity units. D)Variable annuity. (The exception is the fixed income annuity, which has a moderate to high payout that rises as the annuitant ages). Question: The following are characteristics of a public conglomerate: I) It is designed to operate various divisions for the long run. IV. All of the following statements concerning a variable annuity are correct EXCEPT: C) The investor's concerns about taxes. D) be paid to the issuing company to complete the plan. Instructions\textsf{\textcolor{#4257b2}{Instructions}}Instructions Are There Penalties for Withdrawing Money From Annuities? When a variable annuity contract is annuitized, the number of annuity units is fixed. C) a variable annuity contract does not guarantee any type of return Consequently, the client pays taxes only on the growth portion of the withdrawal ($10,000). With regard to a variable annuity, all of the following may vary EXCEPT: C) with guaranteed minimum withdrawal benefits (GMWBs) a lifetime of periodic payments is guaranteed D) I and IV. a) What percentage of Facebook's users are from the United States? Fixed Annuity, Retirement Annuities: Know the Pros and Cons. Carefully look at your options when choosing an annuity. $63,000 b.$51,000 c. $18,000 d.$6,000. 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. B)a minimum rate of return is guaranteed. He makes the following four statements, all of which are true EXCEPT A) Capital gains taxation on the earnings withdrawn in excess of the owner's basis. D) 100% tax deferred. All of the following are true about annuities EXCEPT: they have all the same characteristics as life insurance. C)III and IV (Check all that apply.) A) two people are covered and payments continue until the second death. Distribution can take place before or during any solicitation for sale. She may choose to receive monthly payments for the rest of her life. D) minimum guaranteed death benefit. The remainder of the premium is invested in the separate account. 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. The growth portion is subject to a 10% penalty. D) accumulation shares. D) III and IV. A variable annuity is both an insurance and a securities product. B) the rate of return is determined by the underlying portfolio's value. regulated under both securities and insurance laws. are purchased primarily for their insurance features The beneficiary is taxed at ordinary income rates during the year the lump sum is received. C)II and IV. Random withdrawals do not guarantee how long the money will last because large withdrawals can deplete the funds before the annuitant dies. B) II and IV. Your client owns a variable annuity contract with an AIR of 4%. 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) be paid to a designated beneficiary. Question #44 of 48Question ID: 606797 Question #24 of 48Question ID: 606806 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. He earned the Chartered Financial Consultant designation for advanced financial planning, the Chartered Life Underwriter designation for advanced insurance specialization, the Accredited Financial Counselor for Financial Counseling and both the Retirement Income Certified Professional, and Certified Retirement Counselor designations for advance retirement planning. C) suitable regardless of funding sources D) periodic payment deferred annuity. For a nonqualified variable annuity, cost basis for the annuitant would use the after-tax dollars contributed. III. About Us If the client, who is in a 30% tax bracket, makes a random withdrawal of $15,000, what will the tax liability to the IRS be? An 18-year-old, unmarried high school student sought a safe investment for a $30,000 bequest until after she graduated from college. She may choose to receive monthly payments for the rest of her life. the agent must be licensed in both insurance and securities. have investment risk that is assumed by the investor Of the four client profiles below which might be the best suited for a variable annuity recommendation? The following are the characteristics or the hierarchy of a trend except A. Gigatrends C. Megatrends B. Macrotrends D. Nanotrends _____11. C) II and IV The tax on this is $2,800 ($10,000 x 28%). D)an accounting measure used to determine payments to the owner of the variable annuity. A demonstrated ability to quickly learn and continuously develop functional knowledge and an understanding of company products as well as administrative, claims, underwriting and marketing functions. *The minimum guaranteed death benefit is provided by that portion of the payment invested in the insurance company's general account. A)not suitable Variable annuities must be registered with: Reference: 12.3.3 in the License Exam. D)I and II. 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. The features of variable deferred annuities are many. A registered person recommends the purchase of a variable annuity to one of his clients. These contracts come with high surrender charges. Which is it? Your 65-year-old client owns a nonqualified variable annuity. C)Mortality risk. A customer has contributed $1,000 a year for 10 years to his tax-deferred nonqualified variable annuity. 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)There is no tax as the withdrawal is considered return of capital. An annuity factor is taken from the annuity table, which considers, for example, the investor's sex and age. The holder of a variable annuity receives the largest monthly payments under which of the following payout options? Because the client is older than age 59-, he does not pay 10% premature distribution penalty tax. The tax on this amount is $3,000. The $30,000 contract value represents $10,000 of contributions and $20,000 of earnings. A) Fixed Annuity D) a variable annuity contract is subject to fluctuating values due to market fluctuations of the underlying separate accounts. ($5,000) to a stock fund. Surrender fees and penalties for early withdrawal. D) I and III. A) The fact that the annuity payment may increase or decrease. Deal with mathematic Math is all about solving equations and finding the right answer. D) not suitable because a lifetime income rider is only for someone who is already retired. B) variable annuities are classified as insurance products. Reference: 12.3.4 in the License Exam. B) I and III. When the contract is annuitized, the annuitant is credited with a fixed number of annuity units. What type of annuity has a cash value that is based upon the performance of it's underlying investment funds? An Immediate Annuity is designed to provide each of the following features, EXCEPT: The creation of an estate. B)It will be lower. B)I and III. B) the number of annuity units is fixed, and their value remains fixed. The work environment characteristics are normal office conditions. What is the taxable consequence of this withdrawal to your client? The value of an annuity unit varies from month to month according to the performance of the separate account in comparison to the assumed interest rate. 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. D) II and III. Because the client is older than age 59-, he does not pay 10% premature distribution penalty tax. The offers that appear in this table are from partnerships from which Investopedia receives compensation. During the . D) I and IV. A) It will be higher. A)III and IV. Any withdrawals you make prior to the age of 59 may also be subject to a 10% tax penalty. A)II and IV. 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. Your 65-year-old client owns a nonqualified variable annuity. Reference: 12.1.2 in the License Exam, Question #39 of 48Question ID: 721469 Deferred Annuity Definition, Types, How They Work, What Is a Fixed Annuity? Reference: 12.2.1 in the License Exam. An important basic characteristic of common stocks that makes them a suitable type of investment for the separate account of variable annuities is: \text{Salaries:} && \text{Deductions:}\\ A) mortality guarantee. Final answer. D) an accounting measure used to determine the contract owner's interest in the separate account. A)100% tax free. *An immediate annuity has no accumulation period. 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. C) It will stay the same. Fixed annuities are not considered securities as return is guaranteed by the insurance company issuer. 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. C) Corporate bonds. Science Health Science Nursing. Then find the probability of the event. In March, the actual net return to the separate account was 8%. A)Fixed annuity contract with a discussion regarding purchasing power risk If the customer takes a withdrawal of $10,000, what are the tax consequences? B) The policyowner. 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. Round to the nearest hundredth of a percentile. D) Variable annuity. Refinancing a home to draw out equity has been identified by FINRA as an abusive sales tactic regarding the sales of VAs. D) I and III. D)It cannot be determined until the April return is calculated. A)each annuity unit's value and the number of annuity units vary with time. 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 B) allow customers to opt out of sharing of financial information with certain nonaffiliated firms. Variable annuities should be considered long-term investments due to the limitations on withdrawals. used for the investment of funds paid by contract holders. EEO IS THE LAW . Clusters of vesicles in various stages. B) Municipal bonds. C)Variable annuity contract with a discussion regarding interest rate risk The number of annuity units is fixed. D) Any time before the accumulation period. Determine the revenue equation given the profit and expense equations. *When money is deposited into the annuity, it is purchasing accumulation units. An ordinary simple annuity has the following characteristics: For example, most car loans are ordinary simple annuities where payments are. A)value of underlying securities held in the separate account. Transcribed image text: 6. Needs - are goal-directed forces that people experience. Each of the remaining statements are true. Reference: 12.1.2 in the License Exam. A)2800. She will receive the annuity's entire value in a lump-sum payment. do not have a separate account C) none of these. D)I and III. Therefore only a fixed annuity could be considered as suitable. However, a discussion should occur regarding the risks that are associated with a fixed annuity; purchasing power risk. *Variable annuities offer tax-deferred growth and are suitable for achieving supplemental retirement income. The number of annuity units is fixed at the time of annuitization. Typically, they allow one withdrawal each year during the accumulation phase. How to Rollover a Variable Annuity Into an IRA. C)the yield is always higher than bond yields. The following changes have been incorporated into Special Publication 800145, as of the date indicated - . used to escrow late or otherwise delinquent premium payments. D) reevaluate whether the recommendation for the VA contract is still suitable based on the clients proposed funding of the investment. An investor owning which of the following variable annuity contracts would hold accumulation units? Reference: 12.3.1 in the License Exam. A)Ordinary income taxation on the earnings withdrawn until reaching the owner's cost basis. C) Age 40, currently unemployed Your client has a large sum of money to invest from the proceeds of the sale of his home.