A) A variable annuity B) During the accumulation period. Usually the term "annuity" relates to a contract between an individual and a life insurance company. A) changes in common stock prices tend to be more closely related to changes in the cost of living than changes in bond prices. The wage for applicants for this position is $45,979.00 per year. The entire amount is taxed as ordinary income. An annuitant assumes the investment risk of a variable annuity and is not protected byt he insurance company from capital losses. Periodic payment deferred annuity. a variable annuity does not guarantee an earnings rate of return. 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Tax deferred growth D Training Explanations C)A 10% penalty plus the payment of ordinary income tax on all of the funds withdrawn. A 32-year-old with a company-sponsored 401k plan who will need a lump sum soon to finance graduate school tuition C) payments continue for a pre-determined period of time. PDF The NIST definition of cloud computing B) life income A variable annuity is just a tax-deferred annuity in which you get to choose how the value of the annuity is invested. 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 . When a variable contract is annuitized (distributed in regular payments, not as a lump sum), the number of accumulation units is multiplied by the unit value to arrive at the account's current value. B) The policyowner. Trends Networks and Critical Thinking Module 2 B) The policyowner. D) II and IV. When a partial withdrawal is made from an annuity, the earnings are considered to be taken out first for tax purposes (or LIFO). C) The investor's concerns about taxes. Reference: 12.1.4.1 in the License Exam. 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) cost of living. D) It cannot be determined until the April return is calculated. GuranteedExamLife Flashcards by Gabriel Martinez | Brainscape The number of accumulation units can rise during the accumulation period. 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) be returned to the separate account. A) The policy provides a minimum guaranteed death benefit. The holder of a variable annuity receives the largest monthly payments under which of the following payout options? C) IRAs. *As contributions are made with after-tax dollars, only the earnings generated are taxed on withdrawal. Ted's Bio; Fact Sheet; Hoja Informativa Del Ted Fund; Ted Fund Board 2021-22; 2021 Ted Fund Donors; Ted Fund Donors Over the Years. 's dividend yield was % last year. Of the answer choices given the best would be to reevaluate the recommendation based on the new information tendered by the client. The number of accumulation units is always fixed throughout the accumulation period. Contributions to an IRA may be tax deductible, depending on the individual's earnings and participation in a company-sponsored qualified retirement plan. 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. Which Earns More: Variable or Fixed Annuities? The correct answer was: partially a tax-free return of capital and partially taxable. Variable Annuities Flashcards | Quizlet Question #27 of 48Question ID: 606818 A) Fixed annuities. Once a variable annuity has been annuitized: C) II and IV. The customer, in the accumulation stage of the annuity, is holding accumulation units. A. B)I and III. B) II and III D) expense guarantee. FINRA. 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? C) Mutual fund portfolio consisting of blue chip stocks Reference: 12.1.2 in the License Exam, Question #23 of 48Question ID: 901858 B) the client may vote for the board of directors or board of managers. C) such an annuity is designed to combat inflation risk. When the first party dies, the annuity payment is made to the survivor. Reference: 12.1.2 in the License Exam, Question #21 of 48Question ID: 606812 However, because the client is not yet age 59- when making the withdrawal, he also pays a 10% penalty, or $1,000. What is the taxable consequence of this withdrawal to your client? All of the following characteristics are shared by both a mutual fund and a variable annuity's separate account EXCEPT: Your 55-year-old client invested $50,000 four years ago in a nonqualified variable annuity. B)IRAs. This role is also eligible for annual short-term incentive compensation. A variable annuity is a type of annuity contract in which the value can vary based on the performance of an u . vote for the investment adviser. a variable annuity guarantees payments for life. An ordinary simple annuity has the following characteristics: For example, most car loans are ordinary simple annuities where payments are. Random withdrawals do not guarantee how long the money will last because large withdrawals can deplete the funds before the annuitant dies. are purchased primarily for their insurance features C)earnings only and taxable What Are the Biggest Disadvantages of Annuities? *Variable annuities offer tax-deferred growth and are suitable for achieving supplemental retirement income. savingsbonds30,420Groupinsurance45,630$341,718\begin{array}{lrlr} B)4200. 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. A variable annuity is a combination of 2 products: an insurance contract and a mutual fund. Question #16 of 48Question ID: 606807 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. A) defined contribution plans. The fees on variable annuities can be quite hefty. An annuity factor is taken from the annuity table, which considers, for example, the investor's sex and age. B) variable annuities. C)the number of annuity units is fixed, and their value remains fixed. C) I and IV. When a partial withdrawal is made from an annuity, the earnings are considered to be taken out first for tax purposes (or LIFO). The value of the separate account is now $30,000. 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. Unit 12: Variable Annuities Flashcards | Chegg.com III. A)equity funds. Reference: 12.3.2.1 in the License Exam. A) not suitable II. The most popular type of variable annuity is a deferred annuity. The funds in an annuity are off-limits to creditors and other debt collectors. C) insurance companies keep variable annuity funds in separate accounts from other insurance products. The number of variable annuity accumulation units can rise during the accumulation period when additional units are being purchased. The second phase is triggered when the annuity owner asks the insurer to start the flow of income, often referred to as the payout phase. The $30,000 contract value represents $10,000 of contributions and $20,000 of earnings. Investopedia does not include all offers available in the marketplace. If the owner of a variable annuity dies during the accumulation period, any death benefit will: III. Deferred Annuity Definition, Types, How They Work, What Is a Fixed Annuity? b. D) Age 27, saving for first home. Though there is no beneficiary designation during the annuitization, this is not an issue for this annuitant. What type of annuity has a cash value that is based upon the performance of it's underlying investment funds? C)The entire $10,000 is taxable as ordinary income. D)A 10% penalty plus the payment of ordinary income tax on funds withdrawn in excess of the owner's basis. Distributions to the annuitant will fluctuate during the payout period. 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: 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 dissolution of the trust c. for distributing income and capital gains. All of the following are true about annuities EXCEPT: they have all the same characteristics as life insurance. A) 4000. A)defined contribution plans. Variable annuities gave buyers a chance to benefit from rising markets by investing in a menu of mutual funds offered by the insurer. The tax on this amount is $3,000. Which of the following statements regarding variable annuities are TRUE? B) allow customers to opt out of sharing of financial information with certain nonaffiliated firms. C)number of accumulation units. A) I and IV. Do homework Doing homework can help you learn and understand the material covered in class. He makes the following four statements, all of which are true EXCEPT Francisco R. - Financial Professional - Prudential Financial | LinkedIn Skylar Clarine is a fact-checker and expert in personal finance with a range of experience including veterinary technology and film studies. C) II and III. Policyholders . During the accumulation phase, the number of accumulation units will increase as additional money is invested. When a variable annuity contract is annuitized, the number of annuity units is fixed. *A variable annuity may only be surrendered during the accumulation period. I. A client has purchased a nonqualified variable annuity from a commercial insurance company. 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. 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 . C) taxed as ordinary income only to the extent of earnings. These include white papers, government data, original reporting, and interviews with industry experts. 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. B)variable annuities are classified as insurance products. variable An immediate annuity consists of a Single Premium T has an annuity that guarantees an income payment for the rest of his life. D) I and II. 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. *Fixed income instruments, like bonds and fixed annuities, are subject to purchasing power risk. the state banking commission. 10.1 This chapter addresses a number of ABS statistics relating to the economically active population which were not discussed elsewhere. B) The death benefit cannot ever be more than the guaranteed benefit. A trend is formed from non-repetitive actions of people. A) It will be higher. a variable annuity has which of the following characteristics *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 variable annuity does not guarantee an earnings rate because earnings will depend on the performance of the separate account. Flashcards - Securities and Tax - FreezingBlue If your client, who is in the 28% tax bracket, makes a lump-sum withdrawal of $15,000, what tax liability results from the withdrawal? D) each annuity unit's value varies with time, but the number of annuity units is fixed. D) 4500. \hspace{7pt} a. December 303030, to record the payroll. Reference: 12.3.2.1 in the License Exam. The annuity unit's value represents a guaranteed return. C) 10% penalty plus payment of ordinary income tax on all funds withdrawn exceeding basis. Designed to protect against inflation. Similarly, CDs are insured, thereby eliminating risk and guaranteeing a return. PGIM Fixed Income has over $900 billion in assets under management across a broad array of fixed . When the second party dies, all payments cease. D) each annuity unit's value varies with time, but the number of annuity units is fixed. 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. \hspace{10pt} \text{Sales salaries} & \$\hspace{5pt} 670,000 & \hspace{10pt} \text{Income tax withheld} & \$198,744\\ What Are Ordinary Annuities, and How Do They Work (With Example)? A universal variable life policy should be purchased primarily for its insurance features, not its investment features. C. A) waiver of premium At the end of the year, your account has a value of $10,750 ($5,500 in the stock fund and $5,250 in the bond fund), minus fees and charges. Therefore, variable annuities must be registered with the state insurance commission and the Securities and Exchange Commission. required to be located off of the company's premises. D)suggest to the client that perhaps a loan or refinancing his vacation home might be a better way to fund the contract purchase. D) II and IV. A customer has contributed $1,000 a year for 10 years to his tax-deferred nonqualified variable annuity. Uses in Investing, Pros, and Cons, Indexed Annuity: Definition, How It Works, Yields, and Caps. An investor who has purchased a nonqualified variable annuity has the right to: Deal with mathematic Math is all about solving equations and finding the right answer. *Under the mortality guarantee, the insurance company assumes mortality risk by guaranteeing payments for life, though the amount of each payment is not guaranteed. C)I and IV. B) a variable annuity contract is not required to be sold by prospectus because it is an insurance contract Diagnosis is made by punch biopsy. The value of the annuity units is fixed. C)III and IV 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 C) There is no tax as the withdrawal is considered return of capital. A) I and IV. B) I and III. During the . B) single payment deferred annuity. a. 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. D)the state insurance department. As part of the registration requirements, a prospectus must be filed and distributed to prospective investors. *Payments from a variable annuity depend on the securities' value in the separate account's underlying investment portfolio. D)accumulation units. B) II and III. Drives - are hardwired characteristics of the brain that correct deficiencies or maintain an internal equilibrium by producing emotions to energize individuals. A variable annuity is a security and must be registered with the SEC, not FINRA. D)Dow Jones Industrial Average. B) 100% taxable. Reference: 12.1.4.2 in the License Exam. How is the distribution taxed? *Annuity death benefits are generally paid in a lump sum. B) I and IV. Carefully look at your options when choosing an annuity. D) III and IV. An annuity is an insurance product that promises to pay out income at a future date based on invested funds. *The investor has already paid tax on the contributions but the earnings have grown tax-deferred. Life Insurance vs. Annuity: What's the Difference? \hspace{10pt} Social security, 6%6\%6% on first $100,000\$100,000$100,000 of employee annual earnings

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