C) 10 years of variable payments. C) Age 40, currently unemployed A) The fact that the annuity payment may increase or decrease. Your 65-year-old client owns a nonqualified variable annuity. Question #15 of 48Question ID: 606804 Question #40 of 48Question ID: 606800 C)3800. A 32-year-old with a company-sponsored 401k plan who will need a lump sum soon to finance graduate school tuition *Since this is a nonqualified annuity (with no tax deduction), the client pays taxes only on the growth portion or, in this case, $10,000. What Are the Distribution Options for an Inherited Annuity? 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. IV. D) II and IV. B)I and III. A)the number of annuity units becomes fixed when the contract is annuitized. What is her total tax liability? C) II and IV The fees on variable annuities can be quite hefty. A) changes in common stock prices tend to be more closely related to changes in the cost of living than changes in bond prices. A)2800. Distributions from such an annuity are computed on a LIFO basis with the income taxed first. *Contributions to a nonqualified variable annuity are not tax deductible. The wage for applicants for this position is $45,979.00 per year. Reference: 12.3.2.4 in the License Exam. However, they are protected by state guaranty associations in the event that the insurance company providing the product goes out of business. All of the following are accurate statements to make to the client EXCEPT D) variable annuities may only be sold by registered representatives. *A variable annuity does not guarantee an earnings rate because earnings will depend on the performance of the separate account. (primary needs). Changes in payments on a variable annuity correspond most closely to fluctuations in the: B)I and III. D) 4500. B) I and IV. B) with guaranteed minimum withdrawal benefits (GMWBs) the periodic payments can be monthly, quarterly or annually B)I and II A)II and IV. III) A hierarchy of corporate staff evaluates divisions' plans and performance. C)Money market fund. The tax on this is $2,800 ($10,000 x 28%). B) The entire $10,000 is taxable as ordinary income. Though there is no beneficiary designation during the annuitization, this is not an issue for this annuitant. A) The entire amount is taxed as ordinary income, because it is not life insurance. Variable annuity salespeople must register with all of the following EXCEPT: A) FINRA. They can be classified by: Nature of the underlying investment - fixed or variable A 10% penalty applies only if distributions begin before age 59-. If the owner of a variable annuity dies during the accumulation period, any death benefit will: A)the state banking commission. must be filed with FINRA. B)Value of each annuity unit each month. C) value of underlying securities held in the separate account. Listing tax-deferred growth as an objective for retirement income, which of the following investments is most suitable? Reference: 12.1.2 in the License Exam, Question #21 of 48Question ID: 606812 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. B) variable annuities. D) Joint and last survivor annuity. 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. The growth portion is subject to a 10% penalty. A client has purchased a nonqualified variable annuity from a commercial insurance company. a variable annuity does not guarantee an earnings rate of return. B) Life annuity. D) a variable annuity contract is subject to fluctuating values due to market fluctuations of the underlying separate accounts. A customer has a nonqualified variable annuity. During the payout period, payments are based on a fixed number of annuity units established when the contract was annuitized. D)A 10% penalty plus the payment of ordinary income tax on funds withdrawn in excess of the owner's basis. All of the following are true about annuities EXCEPT: they have all the same characteristics as life insurance. C) The insurance company. Before buying a variable annuity, investors should carefully read the prospectus to try to understand the expenses, risks, and formulas for calculating investment gains or losses. Based on this information the RR should: That can adversely affect your returns over the long term, compared with other types of investments. A) waiver of premium 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. Question #26 of 48Question ID: 606811 Life Insurance vs. Annuity: What's the Difference? If an investor has a fixed-annuity contract with an insurance company, which of the following risks is assumed by the investor? Suppose that 20%20 \%20% of their users are United States users who log on daily. a. The separate account is NOT likely to invest in: 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. Post navigation Transcribed image text: 6. C) A 10% penalty plus the payment of ordinary income tax on all of the funds withdrawn. How to Rollover a Variable Annuity Into an IRA. D)Dow Jones Industrial Average. A variable annuity is a type of annuity contract in which the value can vary based on the performance of an u . A variable annuity is a contract between you and an insurance company, under which the insurer agrees to make periodic pay- ments to you, beginning either immediately or at some future date. 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. Because the client is older than age 59-, he does not pay 10% premature distribution penalty tax. Your customer in his early 30s has received a modest inheritance from a relative. A)equity funds. Fixed annuities, on the other hand, provide a guaranteed return. Universal variable life policies EEO IS THE LAW . MetLife offers a comprehensive benefits program, including healthcare benefits, life insurance, retirement benefits, parental leave, legal plan services and paid time off. D) II and III. For example, when paying rent, the rent payment (PMT) . approve changes in the plan portfolio. A) I and III. If you die before the payout phase, your beneficiaries may receive a. A) Money market fund. B) The death benefit cannot ever be more than the guaranteed benefit. If your customer invests in a variable annuity and chooses to annuitize at age 65, which of the following statements are TRUE? D)II and III. A) an accounting measure used to determine payments to the owner of the variable annuity. This customer has no spouse or dependents, which negates the value of the death benefit. Upon John's death during the accumulation period, Sue takes a lump-sum payment. C) II and IV. *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)II and III Herpes Zoster has all of the following characteristics except: Group of answer choices. Universal variable life policies Guaranteed Lifetime Annuity: How They Work, When They Pay You, This is also generally true of retirement plans. A 45-year-old investor takes a lump-sum distribution from a nonqualified variable annuity. For this potential advantage, the investor, rather than the insurance company, assumes the investment risk. II. A 58-year-old individual near retirement who is in good health and anticipates a lengthy retirement Reference: 12.1.2 in the License Exam, Question #23 of 48Question ID: 901858 She will receive the annuity's entire value in a lump-sum payment. The number of annuity units is fixed at the time of annuitization. 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. C)none of these. Diagnosis is made by punch biopsy. All of the following investment strategies offer either fully or partially tax-deductible contributions to individuals who meet eligibility requirements EXCEPT: 2019 Ted Fund Donors *A variable annuity payout is determined by comparing account performance with AIR, and this month's payout with last month's payout. D) minimum guaranteed death benefit. B)fixed in value until the holder retires. The number of annuity units varies. D) the number of annuity units becomes fixed when the contract is annuitized. Investopedia requires writers to use primary sources to support their work. Reference: 12.1.2 in the License Exam. A)number of annuity units. The value of accumulation and annuity units varies with the investment performance of the separate account. "Variable Annuities: What You Should Know," Page 3. When the second party dies, all payments cease. A)IPO. II) It has an internal capital market wherein each division competes for funds. A)an accounting measure used to determine the contract owner's interest in the separate account. Are Variable Annuities Subject to Required Minimum Distributions? As with most retirement account options, withdrawals before the age of 59 will result in a 10% tax penalty. Insurance companies introduced the variable annuity as an opportunity to keep pace with inflation. B) I and II. The accumulation unit's value is used to calculate the total value of the account. *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 universal variable life policy should be purchased primarily for its insurance features, not its investment features. B)II and III. Sub accounts and mutual funds are conceptually identical, but sub accounts don't have ticker symbols that investors can easily type into a fund tracker for research purposes. He makes the following four statements, all of which are true EXCEPT There are also immediate annuities, which begin paying income right away. C)100% tax deferred. D) reevaluate whether the recommendation for the VA contract is still suitable based on the clients proposed funding of the investment. Question #18 of 48Question ID: 606827 Consequently, the client pays taxes only on the growth portion of the withdrawal ($10,000). Reference: 12.1.1 in the License Exam. used to escrow late or otherwise delinquent premium payments. d) What is the probability that a user is from the United States, given that he or she logs on every day? A) I and IV. These contracts come with high surrender charges. Surrender fees and penalties for early withdrawal. How is the distribution taxed? B) I and III. A customer has an investment objective of keeping pace with inflation while assuming moderate risk. B) I and II. The number of variable annuity accumulation units can rise during the accumulation period when additional units are being purchased. *Variable annuity contracts must be sold by prospectus due to the characterization of the separate accounts as securities, which must be registered under the Securities Act of 1933 and the Investment Company Act of 1940. A) waiver of premium &&& \underline{\underline{\$341,718}} 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. can be sold by someone with only an insurance license Your customer in his early 30s has received a modest inheritance from a relative. When the second party dies, all payments cease. B)Universal variable life policy. He originally invested $29,000 4 years ago; it now has a value of $39,000. A) II and IV. *The return on a variable annuity is not guaranteed; it is determined by the underlying portfolio's value. an annuitant lives longer than expected. For example, if the income is monthly, the first payment comes one month after the immediate annuity is bought. 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. Can I Borrow from My Annuity for a House Down Payment? A) There is no risk in a variable annuity. No, annuities are not FDIC-insured as they are not bank products. All of the following investment strategies offer either fully or partially tax-deductible contributions to individuals who meet eligibility requirements EXCEPT: B)I and III. C) It will stay the same. B) The entire $10,000 is taxable as ordinary income. Word bank:Fixed, Variable Fixedannuities provide a guaranteed rate of return, whereas Variableannuities provide conservative to aggressive investments whose rates of return are not guaranteed. Given that all of the current retirement investments are subject to market risk, the customer wants these new funds to have no market risk exposure. 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 IV. A customer has an investment objective of keeping pace with inflation while assuming moderate risk. III. 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. For example, when paying rent, the rent payment (PMT) Variable annuities are designed to combat inflation risk. vote on proposed changes in investment policy. The remainder of the premium is invested in the separate account. Question #47 of 48Question ID: 606813 C) the client assumes the investment risk. And, unlike a fixed annuity, variable annuities do not provide any guarantee that you will earn a return on your investment. C) insurance guarantee. The number of annuity units becomes fixed when the contract is annuitized; it is the value of each unit that fluctuates. A)II and IV. Based only on these facts, the variable annuity recommendation is savingsbonds30,420Groupinsurance45,630$341,718\begin{array}{lrlr} Variable annuities gave buyers a chance to benefit from rising markets by investing in a menu of mutual funds offered by the insurer. 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. A customer has contributed $1,000 a year for 10 years to his tax-deferred nonqualified variable annuity. Of the four client profiles below which might be the best suited for a variable annuity recommendation? This describes which of the following annuities? C) annuity units. For an investor, which of the following is the most important factor in determining the suitability of a variable annuity investment? Registration with FINRA is de facto registration with the SEC; no registration is required by the state banking commission. Reference: 12.2.1 in the License Exam, Question #48 of 48Question ID: 606835 A registered person recommends the purchase of a variable annuity to one of his clients. With regard to a variable annuity, all of the following may vary EXCEPT: The investor purchased accumulation units. The growth portion is taxed as a capital gain. Once a variable annuity has been annuitized: Travel Times Journal found that the average per person cost of a 10-day trip along the Pacific coast, per person, is $1,015. *An immediate annuity has no accumulation period. The number of annuity units rises once annuitization begins. Which of the following is characteristic of variable annuities? IBM is a global brand and has its presence in 170 countries and operates . All of the following statements about variable annuities are true EXCEPT: A registered representative explaining variable annuities to a customer would be CORRECT in stating that: In addition, an element of risk must be present. Licensed to sell Variable Annuities in the following state(s): FL, TX . The payout compared to last month's payout. A)value of underlying securities held in the separate account. B) II and III. During payout, distributions will fluctuate due to performance in the separate account. An accumulation unit in a variable annuity contract is: If the customer takes a withdrawal of $10,000, what are the tax consequences? \hspace{10pt} State unemployment (employer only), 3.8%3.8\%3.8% A) Joint tenants annuity. *Payments from a variable annuity depend on the securities' value in the separate account's underlying investment portfolio. D) 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. How to Navigate Market Volatility While Saving for Retirement, Variable Annuity: Definition and How It Works, Vs. *The investor has already paid tax on the contributions but the earnings have grown tax-deferred. C) each annuity unit's value and the number of annuity units vary with time. D)value of accumulation units. 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. Periodic payments are not a consideration because normally the payments into an annuity are level or in a lump sum. *Accumulation units represent units of ownership in a life insurance company's separate account when the contract is in the accumulation stage. Spartan Technology Services and Solutions Private Limited is a subsidiary of IBM (International Business Machines) Corporation. III. Distributions from nonqualified variable annuities are: These contracts come with high surrender charges. The following changes have been incorporated into Special Publication 800145, as of the date indicated - . Annual depreciation on the machine is$12,000, and the tax rate of the company is 25%. *Only variable annuities have payout plans that provide the client income for life. What is the taxable consequence of this withdrawal to your client? C)It will be higher. VAs, blue chip mutual fund portfolios, ETFs and ETNs are all tied to market performance in some way and have risk characteristics that would not align in terms of suitability for this client. *Variable annuity contracts were devised to help investors keep pace with inflation. P=525p2+65,326p185,000E=326p+185,000P=-525 p^{2}+65,326 p-185,000 \quad E=-326 p+185,000P=525p2+65,326p185,000E=326p+185,000. D) II and IV. C)III and IV Listing tax-deferred growth as an objective for retirement income, which of the following investments is most suitable? For an insurance company, mortality risk turns out unfavorably if: In a variable annuity contract, the provision that guarantees the annuitant payments for life is called the: This role is also eligible for annual short-term incentive compensation. A)exempt from taxes B) II and III C)Corporate bonds. Dividing the funds available so as to fund 2 separate contracts, whether they be joint with last survivor or life income, would not be cost efficient for spouses. A. However, if you take a withdrawal during the contractssurrender period, which can be as long as 15 years, youll generally have to pay a surrender fee. C) payments continue for a pre-determined period of time. This would not align with the couple's criteria for coverage as long as they both live. The $30,000 contract value represents $10,000 of contributions and $20,000 of earnings. D)I and III. D) the payout plans provide the client income for life. Question #46 of 48Question ID: 606796 The beneficiary is taxed at ordinary income rates during the year the lump sum is received. Fixed interest rates during the payout period The value of each accumulation unit varies: Daily Variable annuities have Variable interest rates and benefits All of the following statements are true regarding the interest rate guarantees of fixed annuities, EXCEPT: The company's well-known Rock symbol is an icon of strength, stability, expertise and innovation that has stood the test of time. When the contract is annuitized, the annuitant is credited with a fixed number of annuity units. Reference: 12.1.4.1 in the License Exam. 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 joint life with last survivor contract covers multiple annuitants and ceases payments at the death of the last surviving annuitant. B) a variable annuity contract is not required to be sold by prospectus because it is an insurance contract Reference: 12.2.1 in the License Exam. Immediate life annuity. *Variable annuities offer tax-deferred growth and are suitable for achieving supplemental retirement income. This includes transportation, food, lodging, and entertainment. A 60-year-old individual, nearing retirement who has both IRAs and a 401k in place, is comfortable with market risk associated with the stock market, and has a lump sum in cash available to fund the annuity B) Age 78, retired for 20 years, lives comfortably and wants to leave all liquid assets to children Reference: 12.3.3 in the License Exam. Anthony Battle is a CERTIFIED FINANCIAL PLANNER professional. A) changes in common stock prices tend to be more closely related to changes in the cost of living than changes in bond prices. U.S. Securities and Exchange Commission. guarantees payments for a certain period of time. Among annuities, variable annuities differ from fixed annuities, which provide a specific and guaranteed return. A variable annuity is a tax-deferred retirement vehicle that allows you to choose from a selection of investments and then pays you a level of income in retirement that is determined by the performance of the investments you choose. If an investor has purchased an immediate variable annuity, which of the following statements best describe the investment? What type of annuity has a cash value that is based upon the performance of it's underlying investment funds? Reference: 12.3.3 in the License Exam. You have 4 clients each expressing interest in a variable annuity contract. Clusters of vesicles in various stages. e) Are From the United States and Log on every day independently? Do homework Doing homework can help you learn and understand the material covered in class. B) I and III. Changes in payments on a variable annuity correspond most closely to fluctuations in the: Because common stocks are not fixed dollar investments, they have the opportunity to keep pace with inflation. A 45-year-old investor takes a lump-sum distribution from a nonqualified variable annuity. B)fixed in value until the holder retires. The return on a variable annuity is not guaranteed; it is determined by the underlying portfolio's value. Variable annuities are designed to combat inflation risk. Reference: 12.3.4 in the License Exam. C) II and III. D) each annuity unit's value varies with time, but the number of annuity units is fixed. 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? && \hspace{10pt}\text{Group insurance} & \underline{45,630}\\ B) The policyowner. B)variable annuities are classified as insurance products. C)the yield is always higher than bond yields. Ideally they should be funded with readily available cash rather than using funds liquidated from existing investments. C)number of accumulation units. Question #36 of 48Question ID: 606805 C)earnings only and taxable C) II and IV. 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. 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. who needs access to the sum invested at later time. The number of annuity units becomes fixed when the contract is annuitized; it is the value of each unit that fluctuates. The downside was that the buyer was exposed to market risk, which could result in losses. D)variable annuities offer the investor protection against capital loss. \text{Salaries:} && \text{Deductions:}\\ B) 0. 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. D) the payout plans provide the client income for life. A) A variable annuity When the contract is annuitized, the annuitant is credited with a fixed number of annuity units. On an annual basis, the machine will produce 20,000 units with an expected selling price of $10, prime costs of$6 per unit, and a fixed cost allocation of $3 per unit. If the data is normally distributed with standard deviation$198, find the percent of vacationers who spent less than $1,200 per day. The value of accumulation and annuity units varies with the investment performance of the separate account. You can buy an annuity with either a lump sum or a series of payments, and the accounts value will grow accordingly. B) accumulation units. When a variable annuity contract is annuitized, the number of annuity units is fixed. D)separate account may consist of mutual funds. A)defined contribution plans. D)the rate of return is determined by the underlying portfolio's value. C. Question #20 of 48Question ID: 606808 C)with guaranteed minimum withdrawal benefits (GMWBs) the periodic payments can be monthly, quarterly or annually The entire amount is taxed as ordinary income. The features of variable deferred annuities are many. A) I and III. C)prime rate. C)I and IV. D) I and II. Contributions to a nonqualified variable annuity are not tax deductible. B) The policyowner. A variable annuity is a security and must be registered with the SEC, not FINRA. ($5,000) to a stock fund. 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.

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