Fixed Annuity: A fixed annuity is a type of annuity contract that allows for the accumulation of capital on a tax-deferred basis. B)I and III. This guideline has been prepared for use by Federal agencies. The beneficiary is taxed at ordinary income rates during the year the lump sum is received. It is the starting point of motivation because they generate emotions. During the accumulation phase, the number of accumulation units will increase as additional money is invested. *The most important consideration in purchasing a variable annuity is to be aware that benefit payments will fluctuate with the investment performance of the separate account. He wants to ensure that the client, in addition to meeting suitability requirements, is aware of certain variable annuity contract characteristics. A) Capital gains taxation on the earnings withdrawn in excess of the owner's basis. B. B) Life annuity. A joint-and-last-survivor annuity is a payout option where: Because common stocks are not fixed dollar investments, they have the opportunity to keep pace with inflation. D)Any tax due is deferred. A universal variable life policy should be purchased primarily for its insurance features, not its investment features. B)suitable regardless of funding sources A) a lifetime withdrawal benefit (LWB) or lifetime income benefit will make a periodic payment even if the account balance falls to zero Spartan Technology Services and Solutions Private Limited is a subsidiary of IBM (International Business Machines) Corporation. The trial of the assassins commenced on the following day; and the evidence being so clear, they were both found guilty, and condemned, to be broken alive on the wheel. 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. 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 . III. Based on the information given in the question, the VA recommendation would not be suitable. B) II and IV. B) II and IV. All of the following are characteristics of a variable annuity, except: a. 6102.0.55.001 - Labour Statistics: Concepts, Sources and Methods, Dec 2005 C) Life annuity with period certain. D)Municipal bonds. B) During the accumulation period. Your client owns a variable annuity contract with an AIR of 4%. The beneficiary is taxed at ordinary income rates during the year the lump sum is received. Question #44 of 48Question ID: 606797 Distribution of dividends occurs during the accumulation period. Distributions from nonqualified variable annuities are: An immediate annuity is designed to pay an income one time-period after the immediate annuity is bought. 7 - Annuities Flashcards | Quizlet variable annuity without paying tax at the time of the transfer. Question #32 of 48Question ID: 606815 D) payments continue until age 70-. C)III and IV D) Variable Annuity. C)It will be higher. Which of the following recommendations would best meet the customer profile? B) single payment deferred annuity. B) 100% taxable. B) Corporate debt securities With regard to a variable annuity, all of the following may vary EXCEPT: When a partial withdrawal is made from an annuity, the earnings are considered to be taken out first for tax purposes (or LIFO). B)II and III. What Are the Biggest Disadvantages of Annuities? 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. Question #13 of 48Question ID: 606822 One of the following would achieve that objective but a suitability discussion regarding it's risk should also occur. For this potential advantage, the investor, rather than the insurance company, assumes the investment risk. The number of annuity units becomes fixed when the contract is annuitized; it is the value of each unit that fluctuates. C)not suitable because a lifetime income rider is only for someone who is already retired C) number of accumulation units. B)I and III. *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. C)annuity units. The Project Gutenberg eBook of Memoirs of Extraordinary Popular However, it does guarantee payments for life (mortality). However, at the end of the period certain the payments to the named beneficiary (the spouse) will stop. Suggesting that loans or drawing equity from a home to fund VA contracts have also been targeted as abusive sales practices. 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)each annuity unit's value and the number of annuity units vary with time. Because the client is older than age 59-, he does not pay 10% premature distribution penalty tax. A customer has a nonqualified variable annuity. A customer has contributed $1,000 a year for 10 years to his tax-deferred nonqualified variable annuity. Reference: 12.1.2 in the License Exam. D) I and II. The remainder of the premium is invested in the separate account. *During the payout period, payments are based on a fixed number of annuity units established when the contract was annuitized. C) value of underlying securities held in the separate account. 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. B) fixed in value until the holder retires. A registered representative recommends a variable annuity with an income rider to a client. 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? Listing tax-deferred growth as an objective for retirement income, which of the following investments is most suitable? A) It will be higher. Fixed Annuity, Retirement Annuities: Know the Pros and Cons. Outgoing personality with the ability to develop relationships (i.e., "People Person") and a sincere desire to help others Fearless, positive attitude, and willingness to be accountable for results Organized, detail-oriented, and excellent time-management skills A desire for continuous learning If the contract holder dies before the period expires, the remaining payments are made to the beneficiary. C) III and IV 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. Immediate life annuity. A)Ordinary income taxation on the earnings withdrawn until reaching the owner's cost basis. A) Life-only annuity All of the following statements regarding variable annuities are true EXCEPT: A) variable annuities offer the investor protection against capital loss. vote on proposed changes in investment policy. C)I and IV. Life Insurance vs. Annuity: What's the Difference? C) 10 years of variable payments. They are more suitable for individuals who can fund the annuity with cash, want to supplement existing retirement benefits they have already funded, are comfortable with the market risk associated with a VA separate account portfolio and anticipate a long retirement. The figure below illustrates a six-month annuity with monthly payments. A) taxed at a reduced rate. C) During the annuity period. III. B) life income D) be paid to the issuing company to complete the plan. A) mortality guarantee. No, annuities are not FDIC-insured as they are not bank products. Which of the following statements regarding variable annuities are TRUE? B)FINRA. This describes which of the following annuities? D)separate account may consist of mutual funds. They offer broad diversification in the securities market and potential growth, all while using the power of tax deferral. A registered representative explaining variable annuities to a customer would be CORRECT in stating that: B) variable annuities. D) each annuity unit's value varies with time, but the number of annuity units is fixed. C) Corporate bonds. Once a variable annuity has been annuitized: 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. Contributions to a nonqualified annuity are made with the owner's after-tax dollars. 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. An accumulation unit in a variable annuity contract is: A)an accounting measure used to determine the contract owner's interest in the separate account. What type of annuity has a cash value that is based upon the performance of it's underlying investment funds? Your client has a large sum of money to invest from the proceeds of the sale of his home. Do whatever you want with a Learn About Annuities and Their Myths - F&G: fill, sign, print and send online instantly. Ideally they should be funded with readily available cash rather than using funds liquidated from existing investments. Classifying annuities There are many categories of annuities. In March, the actual net return to the separate account was 8%. Hire Velocity hiring Customer Escalation Agent in Tampa, Florida When a partial withdrawal is made from an annuity, the earnings are considered to be taken out first for tax purposes (or LIFO). C) each annuity unit's value and the number of annuity units vary with time. The fixed annuities, indexed annuities, and variable annuities are some of the major types of annuities, of which one may find immediate annuities and deferred annuities. All of the following characteristics are shared by both a mutual fund and a variable annuity's separate account EXCEPT: . A registered representative explaining variable annuities to a customer would be CORRECT in stating that: Though there is no beneficiary designation during the annuitization, this is not an issue for this annuitant. You purchase a variable annuity contract by making either a single purchase payment or a series of purchase payments. Consequently, the client pays taxes only on the growth portion of the withdrawal ($10,000). *Variable annuity contracts were devised to help investors keep pace with inflation. B)value of annuity units. Distributed along a dermatome. For example, when paying rent, the rent payment (PMT) Life income riders are best suited for those who anticipate a lengthy retirement and are generally not yet retired when making the VA purchase. 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)partially a tax-free return of capital and partially taxable. savingsbonds30,420Groupinsurance45,630$341,718\begin{array}{lrlr} 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. . The anti-money laundering rules for insurance companies highlight that each insurance company - like other financial institutions subject to anti-money laundering program requirements - must develop a risk-based anti-money laundering program that identifies, assesses, and mitigates any risks of money laundering, terrorist financing, and other D) It cannot be determined until the April return is calculated. Fixed annuities typically earn at a lower, stable rate. A) be paid to a designated beneficiary. 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. Over the following year, the stock fund has a 10% return, and the bond fund has a 5% return. C)Life annuity. The growth portion is subject to a 10% penalty. Chapter 7: Annuities Flashcards | Quizlet *Fixed income instruments, like bonds and fixed annuities, are subject to purchasing power risk. Variable Annuity Features | Annuity Guys Variable annuities operate in similar ways to . B) The proceeds minus John's cost basis taxed as ordinary income at Sue's tax rate. d) What is the probability that a user is from the United States, given that he or she logs on every day? national origin, genetics, disability, age, veteran status, or any other characteristic protected by law. D)the safety of the principal invested. When the second party dies, all payments cease. Reference: 12.1.2.1.1 in the License Exam. What are the different types of annuities? | III 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. A) number of annuity units. The amount taxed is the amount of the lump-sum payment minus the deceased's cost basis in the investment. Reference: 12.3.2.1 in the License Exam. do not have a separate account D)an accounting measure used to determine payments to the owner of the variable annuity. When the annuitization option is selected, each payment represents both capital and earnings. A security is any investment for profit with management performed by a third party. A)IPO. When money is deposited into the annuity, it is purchasing accumulation units. A)value of underlying securities held in the separate account. Question #28 of 48Question ID: 606821 C) 3800. 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. C)the yield is always higher than bond yields. A client has purchased a nonqualified variable annuity from a commercial insurance company. Payments from a variable annuity depend on the securities' value in the separate account's underlying investment portfolio. Based on the clients profile which of the following would be the best recommendation? *The number of variable annuity accumulation units can rise during the accumulation period when additional units are being purchased. must provide full and fair disclosure. B)each annuity unit's value varies with time, but the number of annuity units is fixed. D) value of accumulation units. Variable Annuities | Investor.gov An important basic characteristic of common stocks that makes them a suitable type of investment for the separate account of variable annuities is: Life with period certain will produce a smaller check for life because the insurance company will guarantee payments to a beneficiary for a certain period of time designated in the contract should the annuitant die within that period. D) the number of annuity units becomes fixed when the contract is annuitized. D) Variable annuities. A)II and IV. The investor purchased accumulation units. B)Fixed annuity contract with a discussion regarding timing risk If an investor has a fixed-annuity contract with an insurance company, which of the following risks is assumed by the investor? D) I and IV. Question #46 of 48Question ID: 606796 Variable Annuity: Definition and How It Works, Vs. Fixed Annuity (The exception is the fixed income annuity, which has a moderate to high payout that rises as the annuitant ages). Is F&G Annuities & Life Inc (FG) a Good Dividend Stock? | AAII If your customer invests in a variable annuity and chooses to annuitize at age 65, which of the following statements are TRUE? U.S. Securities and Exchange Commission. D) II and IV. Your client has $50,000 to invest. A)Fixed annuity contract with a discussion regarding purchasing power risk D) Joint and last survivor annuity. 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. Variable annuities are riskier than fixed annuities because the underlying investments may lose value. *Waiver of premium is a benefit available on qualified life insurance contracts, usually in the form of a rider, which provides for the waiver of premium payments that fall due while the policyholder is totally disabled. A Variable Annuity Has Which of the Following Characteristics D) Two-thirds of the withdrawal is taxable as ordinary income. C) taxed as ordinary income only to the extent of earnings. You can buy an annuity with either a lump sum or a series of payments, and the accounts value will grow accordingly. Try B)Tax-free municipal bonds B) I and IV. *Once a variable annuity is annuitized, the accumulation units are converted into a fixed number of annuity units. The accumulation unit's value is used to calculate the total value of the account. Solved Which of the following is characteristic of variable - Chegg D) I and IV. A 58-year-old individual near retirement who is in good health and anticipates a lengthy retirement If an insurance holder dies sooner than expected, the insurance company will have to pay the death benefit sooner. An ordinary simple annuity has the following characteristics: For example, most car loans are ordinary simple annuities where payments are. C)none of these. A) 2800. A)It will stay the same. C) taxed as ordinary income only to the extent of earnings. They are also riddled with fees, which can cut into profits. Ideally they should be funded with readily available cash rather than using funds liquidated from existing investments. 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. B)a lifetime withdrawal benefit (LWB) or lifetime income benefit will make a periodic payment even if the account balance falls to zero C)the number of annuity units is fixed, and their value remains fixed. With variable annuities policyholders can choose from a number of investment opportunities. Prudential Retirement Security Annuity VI is a group variable annuity (GVA) issued by Prudential Retirement Insurance and Annuity Company (PRIAC) which utilizes a Separate Account offered 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. Reference: 12.3.4 in the License Exam. A) Age 56, available cash to invest, makes the maximum retirement plan contributions to an existing IRA and 401(k) plan have investment risk that is assumed by the investor The investor has already paid tax on the contributions but the earnings have grown tax-deferred. \hspace{7pt} b. January 444, to record the employers payroll taxes on the payroll to be paid on January 444. B)It will be lower. "Variable Annuities: What You Should Know," Pages 67. A)defined contribution plans. Paraplanner / Marketing Support Specialist Job in Austin, TX B) fixed payments for 10 years, followed by variable payments for life. A) be paid to a designated beneficiary. Her agent recommended she choose a variable annuity as a safe haven for the funds. Annuities are complicated products, so that may be easier said than done. If a 42-year-old customer has been depositing money in a variable annuity for 5 years, and he plans to stop investing but has no intention of withdrawing any funds for at least 20 years, he is holding: An annuity is an insurance product that promises to pay out income at a future date based on invested funds. The entire amount is taxed as ordinary income. C) a variable annuity contract does not guarantee any type of return There are two interest rates under fixed annuities. All of the following statements regarding variable annuities are true EXCEPT: D)each annuity unit's value is fixed, but the number of annuity units varies with time. Carefully look at your options when choosing an annuity. C) insurance companies keep variable annuity funds in separate accounts from other insurance products. C) The insurance company. On any device & OS. 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. IV. A)I and IV. The annuity unit's value represents a guaranteed return. A fixed annuity is an insurance contract that pays a guaranteed rate of interest on the owner's contributions and later provides a guaranteed income. Policyholders . The amount taxed is the amount of the lump-sum payment minus the deceased's cost basis in the investment. Once a customer annuitizes a variable annuity, which of the following statements are TRUE? Herpes Zoster has all of the following characteristics except:
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