Sub accounts and mutual funds are conceptually. Which of the following is characteristic of variable annuities? What is the taxable consequence of this withdrawal to your client? Ideally they should be funded with readily available cash rather than using funds liquidated from existing investments. What is the annual cash flow generated from the new machine? C) Unit refund life option A customer has a nonqualified variable annuity. Variable annuity salespeople must register with all of the following EXCEPT: A) FINRA. A 1 The applicant and possibly the agent initial any changes made. The accumulation period of a variable annuity may continue for many years. 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: Reference: 12.1.1 in the License Exam. If an investor has purchased an immediate variable annuity, which of the following statements best describe the investment? Reference: 12.2.1 in the License Exam. Explain what is meant by positive and negative D) minimum guaranteed death benefit. C)the yield is always higher than bond yields. 6102.0.55.001 - Labour Statistics: Concepts, Sources and Methods, Dec 2005 A) taxed at a reduced rate. do not have a separate account Do homework Doing homework can help you learn and understand the material covered in class. The number of annuity units varies. 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. The number of annuity units rises once annuitization begins. None of the other investments listed here offer tax-deferred growth. 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 \hspace{7pt} a. December 303030, to record the payroll. A customer has an investment objective of keeping pace with inflation while assuming moderate risk. As with most retirement account options, withdrawals before the age of 59 will result in a 10% tax penalty. PDF Prudential IncomeFlex Target Vanguard Balanced Index Fund Question #42 of 48Question ID: 606830 D) reevaluate whether the recommendation for the VA contract is still suitable based on the clients proposed funding of the investment. All of the following are accurate statements to make to the client EXCEPT 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. All of the following are characteristics of variable annuity contracts C) Age 40, currently unemployed C) IRAs. D) I and II. 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. D) periodic payment deferred annuity. Try Her intent was to use the funds for the down payment on a house after graduation. A joint life with last survivor annuity: C) The portion of the premium invested in the insurance company's general account is used to provide for the minimum guaranteed amount of the death benefit. The annuity unit's value represents a guaranteed return. B) Age 78, retired for 20 years, lives comfortably and wants to leave all liquid assets to children A) I and III. *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. used for the investment of funds paid by contract holders. B) be paid to any legal heirs as recognized by the annuitant's state of domicile. 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. The features of variable deferred annuities are many. Full-Time. Based on the clients profile which of the following would be the best recommendation? Question: The following are characteristics of a public conglomerate: I) It is designed to operate various divisions for the long run. The creation of an estate. 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. 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. D) I and II. A) The fact that the annuity payment may increase or decrease. D)Municipal bonds. C)Growth mutual funds D)A variable annuity, Variable annuities offer tax-deferred growth and are suitable for achieving supplemental retirement income. B) IPO. B) a variable annuity contract is not required to be sold by prospectus because it is an insurance contract B) II and III Therefore, variable annuities must be registered with the state insurance commission and the Securities and Exchange Commission. B)Variable annuities. The amount taxed is the amount of the lump-sum payment minus the deceased's cost basis in the investment. Reference: 12.1.2.1.1 in the License Exam. B) II and III. C) Corporate bonds. A) Age 56, available cash to invest, makes the maximum retirement plan contributions to an existing IRA and 401(k) plan D) A 10% penalty plus the payment of ordinary income tax on funds withdrawn in excess of the owner's basis. A) I and II. Question #28 of 48Question ID: 606821 C) I and IV. D) II and IV. The upside was the possibility of higher returns during the accumulation phase and a larger income during the payout phase. Consequently, the client pays taxes only on the growth portion of the withdrawal ($10,000). B)mutual fund units. A) Money market fund. LESSON 7: ANNUITIES - FIXED AND VARIABLE - course.uceusa.com C) value of underlying securities held in the separate account. A) waiver of premium This makes a total of $4,000 tax and penalty paid on the random withdrawal. "Variable Annuities: What You Should Know," Page 10. A variable annuity is just a tax-deferred annuity in which you get to choose how the value of the annuity is invested. The investor has already paid tax on the contributions but the earnings have grown tax-deferred. All of the following are true about annuities EXCEPT: they have all the same characteristics as life insurance. A variable annuity is both an insurance and a securities product. Clusters of vesicles in various stages. e) Are From the United States and Log on every day independently? 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. Each of the remaining statements are true. D) a minimum of 10 years of variable payments, followed by additional variable payments for life. The AG49-A Revisions *Once a variable annuity is annuitized, the accumulation units are converted into a fixed number of annuity units. "Variable Annuities: What You Should Know," Page 3. "Variable Annuities: What You Should Know," Pages 67. *Fixed income instruments, like bonds and fixed annuities, are subject to purchasing power risk. B)Fixed annuity contract with a discussion regarding timing risk The remainder of the premium is invested in the separate account. A registered representative recommends a variable annuity with an income rider to a client. C) During the annuity period. Distributions from such an annuity are computed on a LIFO basis with the income taxed first. An immediate annuity is designed to pay an income one time-period after the immediate annuity is bought. A) 2800. C) the yield is always higher than bond yields. Reference: 12.3.3 in the License Exam. The investor has already paid tax on the contributions but the earnings have grown tax-deferred. What Are the Distribution Options for an Inherited Annuity? 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. The client agrees to purchase the contract and informs the RR that he will be cashing out a VA he purchased 2 years ago to fund the new contract and will forward the check as soon as he receives it. D) Two-thirds of the withdrawal is taxable as ordinary income. 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. Variable annuity Which of the following is characteristic of fixed annuities? A customer has contributed $1,000 a year for 10 years to his tax-deferred nonqualified variable annuity. An individual retirement annuity is an investment vehiclesimilar to an individual retirement accountthat is offered by insurance companies. Because this is not guaranteed, the policyowner bears the investment risk. He makes the following four statements, all of which are true EXCEPT Variable annuity salespeople must register with all of the following EXCEPT: Which of the following are defined as securities? Solved 6. Which of the following is not a characteristic of | Chegg.com C)the number of annuity units is fixed, and their value remains fixed. III) A hierarchy of corporate staff evaluates divisions' plans and performance. D) value of accumulation units. They are also riddled with fees, which can cut into profits. No software installation. & \underline{\underline{\$1,014,000}} & \hspace{10pt} \text{U.S. savings bonds} & 30,420\\ The number of accumulation units is always fixed throughout the accumulation period. B) fixed payments for 10 years, followed by variable payments for life. *A joint life with last survivor contract covers multiple annuitants and ceases payments at the death of the last surviving annuitant. 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. *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. Deferred Annuity Definition, Types, How They Work, What Is a Fixed Annuity? Deal with mathematic Math is all about solving equations and finding the right answer. IV. C) I and III. D) reevaluate whether the recommendation for the VA contract is still suitable based on the clients proposed funding of the investment. B) II and III All of the following statements about variable annuities are true EXCEPT: I. D) I and III. Question #19 of 48Question ID: 606826 is required by the Securities Act of 1933. The holder of a variable annuity receives the largest monthly payments under which of the following payout options? Vaccine has decreased the incidence. Question #40 of 48Question ID: 606800 When a variable annuity contract is annuitized, the number of annuity units is fixed. D) an accounting measure used to determine the contract owner's interest in the separate account. Annuity death benefits are generally paid in a lump sum. Question #25 of 48Question ID: 606819 D) The investment risk is shared between the insurance company and the policyowner. Solved The following are characteristics of a public | Chegg.com 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. Chapter 12 - Variable Annuities Flashcards | Chegg.com Registration with FINRA is de facto registration with the SEC; no registration is required by the state banking commission. The customer, in the accumulation stage of the annuity, is holding accumulation units. a variable annuity guarantees payments for life. Solved Which of the following is characteristic of variable - Chegg *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. Reference: 12.3.3 in the License Exam. D) cost of living. A) II and IV. Generally, a life-only contract pays the most per month because payments cease at the annuitant's death. 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. B) 100% taxable. D) I and II. C) single payment immediate annuity. a variable annuity has which of the following characteristics 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. vote for the investment adviser. Variable Annuities. As of March 03, 2023, had a relative dividend yield of % compared to the industry median of %. Simple and general annuities problems with solutions Distributions to the annuitant will fluctuate during the payout period. 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. He wants to ensure that the client, in addition to meeting suitability requirements, is aware of certain variable annuity contract characteristics. The owner of a variable annuity has all of the following rights EXCEPT They are also not considered suitable for anyone who anticipates needing a lump sum within a short time frame to fund other endeavors. A)variable annuities will protect an investor against capital loss. Life income riders are best suited for those who anticipate a lengthy retirement and are generally not yet retired when making the VA purchase. Unit 12: Variable Annuities Flashcards | Chegg.com C) taxed as ordinary income only to the extent of earnings. Your customer in his early 30s has received a modest inheritance from a relative. C)III and IV. B) the state insurance department. For example, when paying rent, the rent payment (PMT) A) Dow Jones Industrial Average. The figure below illustrates a six-month annuity with monthly payments. If at all you go deeper, then you will find a wide range of annuity products from a variety of companies. What are the characteristics of fixed annuities? - InsuranceQnA C)The entire $10,000 is taxable as ordinary income. C)suitable due to the death benefit features of a variable annuity. a. A variable annuity does not guarantee an earnings rate because earnings will depend on the performance of the separate account. However, at the end of the period certain the payments to the named beneficiary (the spouse) will stop. Final answer. A)exempt from taxes Reference: 12.3.2.1 in the License Exam. A the safety of the principal invested B the yield is always higher than bond yields. a variable annuity has which of the following characteristics Contributions to an IRA may be tax deductible, depending on the individual's earnings and participation in a company-sponsored qualified retirement plan. A)II and IV. Needs - are goal-directed forces that people experience. However, it does guarantee payments for life (mortality). A) partially a tax-free return of capital and partially taxable. Which of the following statements regarding variable annuities are TRUE? The number of annuity units rises once annuitization begins. A) 4000. Surrender fees and penalties for early withdrawal. D) a variable annuity contract is subject to fluctuating values due to market fluctuations of the underlying separate accounts. C)It will be higher. Contributions to a nonqualified annuity are made with the owner's after-tax dollars. If an investor has a fixed-annuity contract with an insurance company, which of the following risks is assumed by the investor? A) I and III. The correct answer was: partially a tax-free return of capital and partially taxable. Of the answer choices given the best would be to reevaluate the recommendation based on the new information tendered by the client. All of the following are characteristics of Variable Annuity contracts EXCEPT The possibility of higher returns and greater income than fixed annuities, but there's also a risk that the account will fall in value A There are no surrender fees B Guaranteed death benefit C Tax deferred growth D Training Explanations If an investor has a fixed-annuity contract with an insurance company, which of the following risks is assumed by the investor? Life Insurance vs. Annuity: What's the Difference? Reference: 12.3.3 in the License Exam. B) allow customers to opt out of sharing of financial information with certain nonaffiliated firms. The earnings are taxable but the cost basis is returned tax free. A) partially a tax-free return of capital and partially taxable. Licensed to sell Variable Annuities in the following state(s): FL, TX . B)part earnings and part cost basis Variable annuities operate in similar ways to . D)suitable due to the relative safety of the investment. D)Variable annuity. *Universal variable life policies are insurance company products that should be purchased primarily for the insurance features they offer rather than as an investment. *The accumulation period of a variable annuity may continue for many years.