This recommendation is: D) unsuitable because her situation exposes her to surrender charges and early withdrawal penalties in exchange for insufficient benefits. The tax on this is $2,800 ($10,000 x 28%). A) Ordinary income tax on earnings exceeding basis. A security is any investment for profit with management performed by a third party. Fixed income instruments, like bonds and fixed annuities, are subject to purchasing power risk. The separate account is used for both variable life insurance and variable annuity investments. C)Money market fund. 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. A) mortality guarantee. In addition, if the customer is not at least 59-, there will be a tax penalty of an additional 10%. B)a minimum rate of return is guaranteed. Question #24 of 48Question ID: 606806 D)an accounting measure used to determine payments to the owner of the variable annuity. Which of the following is not a characteristic of a program module? *Insurance companies introduced the variable annuity as an opportunity to keep pace with inflation. If the data is normally distributed with standard deviation$198, find the percent of vacationers who spent less than $1,200 per day. There are also immediate annuities, which begin paying income right away. I. D)partially a tax-free return of capital and partially taxable. III. An ordinary simple annuity has the following characteristics: For example, most car loans are ordinary simple annuities where payments are. Question: The following are characteristics of a public conglomerate: I) It is designed to operate various divisions for the long run. Reference: 12.2.1 in the License Exam. d. Each month the payment will increase, decrease, or remain the same as the previous month's payment . B) The proceeds minus John's cost basis taxed as ordinary income at Sue's tax rate. His objective is monthly income that he can receive after he retires to supplement his small pension and social security benefits. Uses in Investing, Pros, and Cons, Indexed Annuity: Definition, How It Works, Yields, and Caps. Distribution can take place before or during any solicitation for sale. A 45-year-old employed individual with no other retirement accounts in place Variable Annuities Flashcards | Quizlet The correct answer was: partially a tax-free return of capital and partially taxable. You can learn more about the standards we follow in producing accurate, unbiased content in our. When the annuitization option is selected, each payment represents both capital and earnings. 111. A)It will stay the same. A passion for serving customers and a personal commitment to following through in a dynamic, fast-paced environment. Many variable annuities invest the separate account in mutual funds. Post navigation withdraw funds without any tax consequences. 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. Her agent recommended she choose a variable annuity as a safe haven for the funds. In March, the actual net return to the separate account was 8%. C)Mortality risk. When a partial withdrawal is made from an annuity, the earnings are considered to be taken out first for tax purposes (or LIFO). All of the following characteristics are shared by both a mutual fund and a variable annuity's separate account EXCEPT: Question #20 of 48Question ID: 606808 A) I and III. If the owner of a variable annuity dies during the accumulation period, any death benefit will: Your 55-year-old client invested $50,000 four years ago in a nonqualified variable annuity. C)A 10% penalty plus the payment of ordinary income tax on all of the funds withdrawn. 8 annuities provide a guaranteed rate of return, whereas annuities provide conservative to aggressive investments whose rates of return are not guaranteed. A 45-year-old investor takes a lump-sum distribution from a nonqualified variable annuity. All of the following are characteristics of a variable annuity, except An important basic characteristic of common stocks that makes them a suitable type of investment for the separate account of variable annuities is: If the annuitant should die during that time, any death benefit would be paid to a beneficiary designated by the annuitant at the time the annuity was purchased. A) 4000. Each of the remaining statements are true. "Variable Annuities: What You Should Know," Page 10. If the contract holder dies before the period expires, the remaining payments are made to the beneficiary. B) fixed payments for 10 years, followed by variable payments for life. Diagnosis is made by punch biopsy. B) The entire $10,000 is taxable as ordinary income. Question #32 of 48Question ID: 606815 However, a discussion should occur regarding the risks that are associated with a fixed annuity; purchasing power risk. U.S. Securities and Exchange Commission. a variable annuity does not guarantee payments for life. Round to the nearest hundredth of a percent. The separate account performance compared to last month's performance. Sas#8-psy 002 - Organizational Behavior A)There is no tax as the withdrawal is considered return of capital. Question #11 of 48Question ID: 606816 Variable Annuities Flashcards - Cram.com Only variable annuities have payout plans that provide the client income for life. Reference: 12.1.4.2 in the License Exam. B)I and IV. *An immediate annuity has no accumulation period. *The return on a variable annuity is not guaranteed; it is determined by the underlying portfolio's value. A variable annuity is both an insurance and a securities product. B) single payment deferred annuity. A) waiver of premium 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 . *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)unsuitable because the return on something as conservative as a variable annuity tends to be low. B) Life annuity. 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 dissolutions of the trust for distributing income and capital gains. Periodic payment deferred annuity. A) The fact that the annuity payment may increase or decrease. The number of annuity units is fixed at the time of annuitization. Changes in payments on a variable annuity correspond most closely to fluctuations in the: D) cost of living. Reference: 12.1.4 in the License Exam. C) III and IV. The number of annuity units rises once annuitization begins. Variable Annuity Features | Annuity Guys A)II and III. *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 growth portion is taxed as a capital gain. C)Corporate bonds. A 32-year-old with a company-sponsored 401k plan who will need a lump sum soon to finance graduate school tuition Listing tax-deferred growth as an objective for retirement income, which of the following investments is most suitable? 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. I. 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. Question #42 of 48Question ID: 606830 *Contributions to a nonqualified annuity are made with the owner's after-tax dollars. Which of the following is NOT an accurate statement concerning a variable life insurance contract? Question #12 of 48Question ID: 606814 No software installation. *When money is deposited into the annuity, it is purchasing accumulation units. Variable annuities are riskier than fixed annuities because the underlying investments may lose value. Variable annuity Which of the following is characteristic of fixed annuities? The funds in an annuity are off-limits to creditors and other debt collectors. When a variable annuity contract is annuitized, the number of annuity units is fixed. You can tailor the income stream to suit your needs. A customer is receiving annuitized payments from a variable annuity. Spartan Technology Services and Solutions Private Limited is a subsidiary of IBM (International Business Machines) Corporation. an annuitant lives longer than expected. A prospectus for a variable annuity contract: Reference: 12.2.1 in the License Exam, Question #48 of 48Question ID: 606835 C) annuity units. 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. They are also not considered suitable for anyone who anticipates needing a lump sum within a short time frame to fund other endeavors. 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. A guaranteed death benefit guarantees that the beneficiary will receive a death benefit if the annuitant dies before the annuity begins paying benefits. 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. The value of the customer's account is converted into annuity units if and when the customer decides to annuitize the contract. C)earnings only and taxable A) two people are covered and payments continue until the second death. Reference: 12.3.2.1 in the License Exam. Question #43 of 48Question ID: 606809 The beneficiary is taxed at ordinary income rates during the year the lump sum is received. He makes the following four statements, all of which are true EXCEPT C) There is no tax as the withdrawal is considered return of capital. B) I and III. For example, when paying rent, the rent payment (PMT) *The minimum guaranteed death benefit is provided by that portion of the payment invested in the insurance company's general account. Reference: 12.1.4.1 in the License Exam. C)Life annuity. A) not suitable *Once a variable annuity is annuitized, the accumulation units are converted into a fixed number of annuity units. C) III and IV. Variable annuity salespeople must register with all of the following EXCEPT: Which of the following are defined as securities? A) number of annuity units. B) the safety of the principal invested. *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.
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