A 58-year-old individual near retirement who is in good health and anticipates a lengthy retirement The number of annuity units rises once annuitization begins. If the owner of a variable annuity dies during the accumulation period, any death benefit will: Policyholders . C) with guaranteed minimum withdrawal benefits (GMWBs) a lifetime of periodic payments is guaranteed A) A 75 year old women, who is a former executive retired for over ten years who wants to preserve as much capital as she can to leave to her two grandchildren. A)contact the issuer of the clients existing VA contract to facilitate the clients surrender of the contract. D) Keogh plans. Assuming that the payroll for the last week of the year is to be paid on January 444 of the following fiscal year, journalize the following entries: A) I and II They are also riddled with fees, which can cut into profits. B) accumulation units. Her agent recommended she choose a variable annuity as a safe haven for the funds. III. 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? An annuity is an insurance product that promises to pay out income at a future date based on invested funds. Your client owns a variable annuity contract with an AIR of 4%. *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. Reference: 12.1.4.1 in the License Exam. C)A 10% penalty plus the payment of ordinary income tax on all of the funds withdrawn. B) suitable if she has enough equity in the home to fund the variable annuity without cashing out the other VA contract D) reevaluate whether the recommendation for the VA contract is still suitable based on the clients proposed funding of the investment. C) with guaranteed minimum withdrawal benefits (GMWBs) a lifetime of periodic payments is guaranteed B) Exchange traded Funds (ETFs) or Exchange traded Notes (ETNs) C)Corporate bonds. B) variable annuities. A) two people are covered and payments continue until the second death. a variable annuity does not guarantee an earnings rate of return. As the name implies, the investment performance of a variable annuity's portfolio (separate account) can vary, and the investor bears the risk of any potential decline in its value. B) Ordinary income taxation on the earnings withdrawn until reaching the owner's cost basis. C)earnings only and taxable *A periodic payment immediate annuity is a contradiction in terms. C) such an annuity is designed to combat inflation risk. Fixed Annuity, Retirement Annuities: Know the Pros and Cons. The investor purchased accumulation units. The annuitized payments are viewed for tax purposes as C)the invested money will be professionally managed according to the issuers' investment objectives. 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. e) Are From the United States and Log on every day independently? B) II and III. This factor is used to establish the dollar amount of the first annuity payment. C)3800. Refinancing a home to draw out equity has been identified by FINRA as an abusive sales tactic regarding the sales of VAs. These contracts come with high surrender charges. A) periodic payment immediate annuity. B) Ordinary income taxation on the earnings withdrawn until reaching the owner's cost basis. D) I and II. Question #38 of 48Question ID: 606798 Try C) insurance guarantee. A universal variable life policy should be purchased primarily for its insurance features, not its investment features. You can buy an annuity with either a lump sum or a series of payments, and the accounts value will grow accordingly. C)insurance companies keep variable annuity funds in separate accounts from other insurance products. a. Paraplanner / Marketing Support Specialist Job in Austin, TX c) Construct a contingency table showing all the joint and marginal probabilities. 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? A) periodic payment immediate annuity. The accumulation period of a variable annuity may continue for many years. A) The policy provides a minimum guaranteed death benefit. must precede every sales presentation. The features of variable deferred annuities are many. 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. 222. Based on the clients profile which of the following would be the best recommendation? *Universal variable life policies are insurance company products that should be purchased primarily for the insurance features they offer rather than as an investment. In addition, if the customer is not at least 59-, there will be a tax penalty of an additional 10%. Reference: 12.3.2.4 in the License Exam. This guideline has been prepared for use by Federal agencies. IBM Noida, Uttar Pradesh, India4 weeks agoBe among the first 25 applicantsSee who IBM has hired for this roleNo longer accepting applications. D)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. That can adversely affect your returns over the long term, compared with other types of investments. The earnings are taxable but the cost basis is returned tax free. B)Capital gains taxation on the earnings withdrawn in excess of the owner's basis. 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. The investor has already paid tax on the contributions but the earnings have grown tax-deferred. Once annuitized, the number of annuity units does not vary. I. Financial Sales Professional Job in Fort Worth, TX at New York Life B)Value of each annuity unit each month. are purchased primarily for their insurance features Question #41 of 48Question ID: 606801 D) There is no guarantee regarding the investment results of the separate account. *Variable annuity contracts were devised to help investors keep pace with inflation. Reference: 12.2.1 in the License Exam. 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 . Based on this information the RR should: A 45-year-old employed individual with no other retirement accounts in place C) each annuity unit's value and the number of annuity units vary with time. You can tailor the income stream to suit your needs. A)There is no tax as the withdrawal is considered return of capital. Reference: 12.1.2.1.1. in the License Exam. If one purchases an annuity for a set price, the issuing company would invest the funds and hold them until they are supposed to be disbursed, generally based on the owner's age. guarantees payments for a certain period of time. Annuities basics | III A) waiver of premium He makes the following four statements, all of which are true EXCEPT What percentile is represented by $710? A)equity funds. Typically, they allow one withdrawal each year during the accumulation phase. *A variable annuity payout is determined by comparing account performance with AIR, and this month's payout with last month's payout. IBM is a global brand and has its presence in 170 countries and operates . the state insurance commission. 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) A 10% penalty plus the payment of ordinary income tax on all of the funds withdrawn. A) It will be higher. D) II and IV. 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? C) value of underlying securities held in the separate account. *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. Question #20 of 48Question ID: 606808 The money paid in will be returned tax free, but the earnings portion will be taxed as ordinary income. A registered representative explaining variable annuities to a customer would be CORRECT in stating that: C) II and III. Can I Borrow from My Annuity for a House Down Payment? \hspace{10pt} Social security, 6%6\%6% on first $100,000\$100,000$100,000 of employee annual earnings 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 Your client has $50,000 to invest. B) The death benefit cannot ever be more than the guaranteed benefit. vote on proposed changes in investment policy. A joint-and-last-survivor annuity is a payout option where: The payout of an annuitized variable annuity account changes from month to month in a manner determined by which of the following? Your 55-year-old client invested $50,000 four years ago in a nonqualified variable annuity. An annuitant assumes the investment risk of a variable annuity and is not protected by the insurance company from capital losses. Simple and general annuities problems with solutions A) number of annuity units. Describe. 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 company's well-known Rock symbol is an icon of strength, stability, expertise and innovation that has stood the test of time. a variable annuity does not guarantee payments for life. *A variable annuity may only be surrendered during the accumulation period. A 3 C) I and III. who needs access to the sum invested at later time. There is no clear answer to this. A 1 The applicant and possibly the agent initial any changes made. Which of the following is characteristic of variable annuities? D) periodic payment deferred annuity. An individual retirement annuity is an investment vehiclesimilar to an individual retirement accountthat is offered by insurance companies. During the accumulation phase, you make purchase payments. &&& \underline{\underline{\$341,718}} Cashing out life insurance policies or VAs where steep surrender charges are likely to exist, particularly in the earlier years of those contracts, is also considered abusive. Once the cost basis is reached, any further withdrawals are a nontaxable return of principal. 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. Reference: 12.1.4.1 in the License Exam. Reference: 12.1.4.2 in the License Exam. A) mortality guarantee. Which is it? Question #17 of 48Question ID: 606802 Many variable annuities invest the separate account in mutual funds. All of the following are accurate statements to make to the client EXCEPT 5 Q All of the following are characteristics of variable whole life EXCEPT the premium is level there is no guaranteed cash value there is no guaranteed minimum death benefit. B)suitable regardless of funding sources B) Corporate debt securities Only variable annuities have payout plans that provide the client income for life. The figure below illustrates a six-month annuity with monthly payments. 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. \hspace{10pt} \text{Sales salaries} & \$\hspace{5pt} 670,000 & \hspace{10pt} \text{Income tax withheld} & \$198,744\\ How Variable Life Insurance Works: Pros and Cons - ValuePenguin a. Annuities due are a type of annuity where payments are made at the beginning of each payment period. For a retired person, which of the following investments would provide the greatest protection against inflation? PDF Variable Annuities: What You Should Know - SEC Is F&G Annuities & Life Inc (FG) a Good Dividend Stock? | AAII The value of the annuity units varies. A)defined contribution plans. A variable annuity's separate account is: A) used for the investment of monies paid by variable annuity contract holders B) separate from the insurance company's general investments C) operated in a manner similar to an investment company D) as much a security as it is an insurance product All of the above *During the payout period, payments are based on a fixed number of annuity units established when the contract was annuitized. A variable annuity is both an insurance and a securities product. Variable annuities must be registered with: Question #46 of 48Question ID: 606796 C)complete all paper work to purchase the annuity contract and obtain the clients signature immediately. Are Variable Annuities Subject to Required Minimum Distributions? B)4200. Following the transition to T+1 in the U.S. markets, Commission staff will continue to work with industry leaders, public interest advocates, investors and other regulators to assess the future feasibility of a T+0 settlement standard cycle, and seek to identify ways to overcome the challenges associated with such a move, as articulated in the . *The investor has already paid tax on the contributions but the earnings have grown tax-deferred. Which Earns More: Variable or Fixed Annuities? A variable annuity is both an insurance and a securities product. The funds are not liquid due to the surrender fees, and there is also a 10% penalty on withdrawals before age 59-. Immediate life annuity with 10-year period certain. A)Joint tenants annuity. Therefore, ordinary income taxes will apply to the entire $10,000. C) Mutual fund portfolio consisting of blue chip stocks A guaranteed lifetime annuity promises to pay the owner an income for the rest of their life. Based on the information given in the question, the VA recommendation would not be suitable. 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. A) Joint tenants annuity. A)II and III. D) a minimum of 10 years of variable payments, followed by additional variable payments for life A)Ordinary income taxation on the earnings withdrawn until reaching the owner's cost basis. The value of accumulation and annuity units varies with the investment performance of the separate account. During payout, distributions will fluctuate due to performance in the separate account. This describes which of the following annuities? To comply with Regulation SP, a brokerage firm is required to do all of the following EXCEPT: A) deliver an annual notice of its information collecting and sharing policies to all customers. *VAs are less suitable for individuals who have not yet made maximum contributions to other retirement accounts such as IRAs and 401ks. b. She will receive the annuity's entire value in a lump-sum payment. Salaries:SalessalariesWarehousesalariesOfficesalaries$670,000110,000234,000$1,014,000Deductions:IncometaxwithheldSocialsecuritytaxwithheldMedicaretaxwithheldU.S. A customer has a nonqualified variable annuity. D) Life annuity with 10-year period certain. A) be paid to a designated beneficiary. While there is no guarantee on how investments in the separate account will perform, depending on its investment performance, the separate account could provide for a larger death benefit than the minimum guaranteed amount. B) The investor's marital status. D) I and III. C) Corporate bonds. An investor who has purchased a nonqualified variable annuity has the right to: D)I and III. Fixed income instruments, like bonds and fixed annuities, are subject to purchasing power risk. A joint life with last survivor annuity: B)FINRA. A) each annuity unit's value is fixed, but the number of annuity units varies with time. If an insurance holder dies sooner than expected, the insurance company will have to pay the death benefit sooner. Question #43 of 48Question ID: 606809 The tax on this is $2,800 ($10,000 x 28%). Reference: 12.3.3 in the License Exam. "Variable Annuities: What You Should Know," Pages 67. Job Classification: Corporate - Legal and Compliance. How Are Nonqualified Variable Annuities Taxed? D)the safety of the principal invested. A) Dow Jones Industrial Average. D) II and III. B)Variable annuities. Chapter 4: Annuities Flashcards | Chegg.com All of the following statements concerning a variable annuity are correct EXCEPT: During the . \hspace{7pt} b. January 444, to record the employers payroll taxes on the payroll to be paid on January 444. B) the rate of return is determined by the underlying portfolio's value. The growth portion is taxed as ordinary income. Sample problems from Chapter 9 . The $30,000 contract value represents $10,000 of contributions and $20,000 of earnings. D)A variable annuity, Variable annuities offer tax-deferred growth and are suitable for achieving supplemental retirement income. 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. *Only variable annuities have payout plans that provide the client income for life. Deferred Annuity Definition, Types, How They Work, What Is a Fixed Annuity? B) value of annuity units. In a variable life annuity with 10-year period certain, a contract holder receives: C) During the annuity period. D) be paid to the issuing company to complete the plan. On withdrawals from a nonqualified annuity, taxes are paid only on the amount that exceeds cost basis (the amount paid into the annuity). The number of annuity units is fixed. A 10% penalty applies only if distributions begin before age 59-. GuranteedExamLife Flashcards by Gabriel Martinez | Brainscape C)number of accumulation units. 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. variable annuity without paying tax at the time of the transfer. D)I and III. Since the client is older than 59 at the time of distribution, the additional 10% penalty tax is not incurred. 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. Reference: 12.3.3 in the License Exam. Reference: 12.1.1 in the License Exam. vote for the investment adviser. 8 annuities provide a guaranteed rate of return, whereas annuities provide conservative to aggressive investments whose rates of return are not guaranteed. She will receive the annuity's entire value in a lump-sum payment. D) the number of annuity units becomes fixed when the contract is annuitized. The holder of a variable annuity receives the largest monthly payments under which of the following payout options? Suggesting that loans or drawing equity from a home to fund VA contracts have also been targeted as abusive sales practices. Diagnosis is made by punch biopsy. C) none of these. Variable Annuities Flashcards - Cram.com Contributions to a nonqualified annuity are made with the owner's after-tax dollars. Complete a blank sample electronically to save yourself time and money. In the case of deferred annuities, this is often referred to as the accumulation phase. Contributions to an IRA may be tax deductible, depending on the individual's earnings and participation in a company-sponsored qualified retirement plan. Nicks Enterprises has purchased a new machine tool that will allow the company to improve the efficiency of its operations. He makes several statements regarding the contract.