B) taxed as ordinary income. 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. Variable annuities involve underlying equity investments in a separate account. Simple and general annuities problems with solutions 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 trend makes considerable influence or impact. Which of the following are defined as securities? D) an accounting measure used to determine the contract owner's interest in the separate account. Distributed along a dermatome. *BEST Suited for VA-Age 56, available cash to invest, maxes out IRA and 401(k) plan VA will be supplemental income, would not be suitable for cust. C) value of underlying securities held in the separate account. His objective is monthly income that he can receive after he retires to supplement his small pension and social security benefits. All of the following statements about variable annuities are true EXCEPT: A) Any tax due is deferred. As part of the registration requirements, a prospectus must be filed and distributed to prospective investors. D) the payout plans provide the client income for life. B) accumulation units. The value of these units varies with the performance of the separate account. Facebook reports that 70%70 \%70% of their users are from outside the United States and that 50%50 \%50% of their users log on to Facebook daily. \hspace{10pt} Social security, 6%6\%6% on first $100,000\$100,000$100,000 of employee annual earnings Many variable annuities invest the separate account in mutual funds. **Because common stocks are not fixed dollar investments, they have the opportunity to keep pace with inflation. Because this is not guaranteed, the policyowner bears the investment risk. This includes transportation, food, lodging, and entertainment. 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 . Reference: 12.3.2.1 in the License Exam. Once annuitized, the number of annuity units does not vary. In March, the actual net return to the separate account was 8%. A 45-year-old investor takes a lump-sum distribution from a nonqualified variable annuity. If this client is in the payout phase, how would his April payment compare to his March payment? A)100% tax free. Often used for retirement planning purposes, it is meant to provide a regular (monthly, quarterly, annual) income stream, starting at some point in the future. They are also riddled with fees, which can cut into profits. A guaranteed lifetime annuity promises to pay the owner an income for the rest of their life. *The most important consideration in purchasing a variable annuity is to be aware that benefit payments will fluctuate with the investment performance of the separate account. D) I and III. The entire amount is taxed as ordinary income. 7 - Annuities Flashcards | Quizlet C) a variable annuity contract does not guarantee any type of return It is innate and universal. The fixed payment that the annuitant receives loses purchasing power over time as a result of inflation. C) insurance guarantee. Sample problems from Chapter 9 . B)FINRA. Question #40 of 48Question ID: 606800 Annuities | FINRA.org Owners of variable annuities, like owners of mutual fund shares, may vote on changes in investment policy and for an investment adviser. D)the safety of the principal invested. A) II and III. B)part earnings and part cost basis An investor owning which of the following variable annuity contracts would hold accumulation units? This compensation may impact how and where listings appear. The entire amount is taxed as ordinary income. The accumulation unit's value is used to calculate the total value of the account. The separate account performance compared to an assumed interest rate. No, annuities are not FDIC-insured as they are not bank products. D) Variable annuity. The most popular type of variable annuity is a deferred annuity. C) The investor's concerns about taxes. Portfolio Compliance Risk Analyst Job in Newark, NJ at Prudential The annuity unit's value represents a guaranteed return. All of the following are accurate statements to make to the client EXCEPT Herpes Zoster has all of the following characteristics except: Are Variable Annuities Subject to Required Minimum Distributions? 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. 6102..55.001) is being updated on an ongoing basis. \hspace{10pt} \text{Sales salaries} & \$\hspace{5pt} 670,000 & \hspace{10pt} \text{Income tax withheld} & \$198,744\\ For an investor, which of the following is the most important factor in determining the suitability of a variable annuity investment? Reference: 12.3.3 in the License Exam. The annuitant may not contribute and withdraw simultaneously. D)I and III. D)suggest to the client that perhaps a loan or refinancing his vacation home might be a better way to fund the contract purchase. All of the following statements about variable annuities are true EXCEPT: A customer has a nonqualified variable annuity. Your 55-year-old client invested $50,000 four years ago in a nonqualified variable annuity. Inflation-hedging, using both tax deferral combined with market growth potential, is made possible by variable annuities #. A) There is no risk in a variable annuity. A prospectus for a variable annuity contract: a) What percentage of Facebook's users are from the United States? Question #42 of 48Question ID: 606830 I. a variable annuity has which of the following characteristics 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. Variable annuity salespeople must register with all of the following EXCEPT: Which of the following are defined as securities? The correct answer was: partially a tax-free return of capital and partially taxable. 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. Any withdrawals you make prior to the age of 59 may also be subject to a 10% tax penalty. Before the contract is annuitized, your client, currently age 60, withdraws some funds for personal purposes. 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. B) the rate of return is determined by the underlying portfolio's value. a variable annuity does not guarantee an earnings rate of return. She will receive the annuity's entire value in a lump-sum payment. What is the annual cash flow generated from the new machine? D) I and IV. D) 4200. Determine the revenue equation given the profit and expense equations. B)I and III. a variable annuity has which of the following characteristics a. C) Tax-free municipal bonds D) Two-thirds of the withdrawal is taxable as ordinary income. IBM Noida, Uttar Pradesh, India1 month agoBe among the first 25 applicantsSee who IBM has hired for this roleNo longer accepting applications. The number of annuity units is fixed at the time of annuitization. *VAs are less suitable for individuals who have not yet made maximum contributions to other retirement accounts such as IRAs and 401ks. B) IPO. Life income riders are best suited for those who anticipate a lengthy retirement and are generally not yet retired when making the VA purchase. View full document. Listing tax-deferred growth as an objective for retirement income, which of the following investments is most suitable? Drives - are hardwired characteristics of the brain that correct deficiencies or maintain an internal equilibrium by producing emotions to energize individuals. *A variable annuity does not guarantee an earnings rate because earnings will depend on the performance of the separate account. B)Tax-free municipal bonds Designed to protect against inflation. Annuity units are units of ownership when the contract is in the payout stage. A variable annuity is both an insurance and a securities product. A) II and IV. \hspace{10pt} \text{Warehouse salaries} & 110,000 & \hspace{10pt} \text{Social security tax withheld} & 51,714\\ When a variable annuity contract is annuitized, the number of annuity units is fixed. Reference: 12.1.4.1 in the License Exam. An annuity is an agreement for one person or organization to pay another a series of payments. D) I and IV. Contributions to an IRA may be tax deductible, depending on the individual's earnings and participation in a company-sponsored qualified retirement plan. The holder of a variable annuity receives the largest monthly payments under which of the following payout options? \hspace{7pt} a. December 303030, to record the payroll. If your customer invests in a variable annuity and chooses to annuitize at age 65, which of the following statements are TRUE? B) The entire $10,000 is taxable as ordinary income. MetLife, Inc. Senior Customer Care Advocate Annuities ($22 per hour Distributions from nonqualified variable annuities are: Question #33 of 48Question ID: 606832 A) each annuity unit's value is fixed, but the number of annuity units varies with time. Periodic payments are not a consideration because normally the payments into an annuity are level or in a lump sum. Withdrawals from a nonqualified variable annuity are made on a LIFO basis, so the taxable earnings are considered taken out before principal. a variable annuity guarantees an earnings rate of return. 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. B)I and III. Question #14 of 48Question ID: 606823 A 32-year-old with a company-sponsored 401k plan who will need a lump sum soon to finance graduate school tuition A)II and III. A) Life-only annuity Reference: 12.3.2.1 in the License Exam. Can I Borrow from My Annuity for a House Down Payment? B. In March, the actual net return to the separate account was 8%. Based on this information the RR should: a life insurance holder lives longer than expected. All of the following investment strategies offer either fully or partially tax-deductible contributions to individuals who meet eligibility requirements EXCEPT: The number of accumulation units can rise during the accumulation period. B) The proceeds minus John's cost basis taxed as ordinary income at Sue's tax rate. \hspace{7pt} a. December 303030, to record the payroll. A rider or statement of condition that allows a variable life insured to maintain policy coverage after becoming disabled is a benefit known as If an investor has purchased an immediate variable annuity, which of the following statements best describe the investment? IV. Vaccine has decreased the incidence. Chapter 6-Classification Annuities Flashcards | Quizlet A) Fixed 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 following are the characteristics or the hierarchy of a trend except A. Gigatrends C. Megatrends B. Macrotrends D. Nanotrends _____11. A) 4000. A. 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. C)not suitable because a lifetime income rider is only for someone who is already retired A)Fixed annuities. Lifetime vs. fixed period annuities *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. Do homework Doing homework can help you learn and understand the material covered in class. If in the following year, the S&P 500 declined by 5%, the annuities value would remain at $107,000 because gains are locked in each year. C) number of accumulation units. a variable annuity guarantees an earnings rate of return. C) Life annuity with period certain. The AG49-A Revisions variable annuity without paying tax at the time of the transfer. D) Any time before the accumulation period. However, at the end of the period certain the payments to the named beneficiary (the spouse) will stop. The value of accumulation and annuity units varies with the investment performance of the separate account. You have 4 clients each expressing interest in a variable annuity contract. An important basic characteristic of common stocks that makes them a suitable type of investment for the separate account of variable annuities is: Once the contract is annuitized, monthly payments to the customer are: withdraw funds without any tax consequences. Which is it? regulated under both securities and insurance laws. C)insurance companies keep variable annuity funds in separate accounts from other insurance products. B) value of annuity units. The return on a variable annuity is not guaranteed; it is determined by the underlying portfolio's value. II) It has an internal capital market wherein each division competes for funds. a variable annuity does not guarantee payments for life. C)II and IV. The figure below illustrates a six-month annuity with monthly payments. 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. *A variable annuity may only be surrendered during the accumulation period. D) Capital gains tax on earnings exceeding basis. B) During the accumulation period. B)unsuitable because her situation exposes her to surrender charges and early withdrawal penalties in exchange for insufficient benefits. *When money is deposited into the annuity, it is purchasing accumulation units. Full-Time. The investor has already paid tax on the contributions but the earnings have grown tax-deferred. When the contract is annuitized, the annuitant is credited with a fixed number of annuity units. B)each annuity unit's value varies with time, but the number of annuity units is fixed. Upon John's death during the accumulation period, Sue takes a lump-sum payment. C)Corporate bonds. Complete a blank sample electronically to save yourself time and money. B)reevaluate whether the recommendation for the VA contract is still suitable based on the clients proposed funding of the investment. How Variable Life Insurance Works: Pros and Cons - ValuePenguin Simple and general annuities problems with solutions D)A 10% penalty plus the payment of ordinary income tax on funds withdrawn in excess of the owner's basis. 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. D)I and IV, 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 investor purchased accumulation units. Sas#8-psy 002 - Organizational Behavior 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. A variable annuity is a combination of 2 products: an insurance contract and a mutual fund. D)Municipal bonds. A)II and IV. Spartan Technology Services and Solutions Private Limited is a subsidiary of IBM (International Business Machines) Corporation. All of the following investment strategies offer either fully or partially tax-deductible contributions to individuals who meet eligibility requirements EXCEPT: A)Corporate debt securities B)II and III. Shortening the Securities Transaction Settlement Cycle For an insurance company, mortality risk turns out unfavorably if: If a customer is about to buy a variable annuity contract and wants to select an annuity with a payout option providing the largest possible monthly payment, which of the following payout options would be most suitable? *The number of variable annuity accumulation units can rise during the accumulation period when additional units are being purchased. 10.1 This chapter addresses a number of ABS statistics relating to the economically active population which were not discussed elsewhere. The value of the separate account is now $30,000. Accumulation Period of Fixed Annuities During this period, premiums are credited with interest which accumulates on a yearly basis. However, it does guarantee payments for life (mortality). When the annuitization option is selected, each payment represents both capital and earnings. Refinancing a home to draw out equity has been identified by FINRA as an abusive sales tactic regarding the sales of VAs. B)suitable regardless of funding sources Since the client is older than 59 at the time of distribution, the additional 10% penalty tax is not incurred. 111. D) III and IV. If the separate account of a variable annuity with an AIR of 4% had actual net earnings of 8% in March, the April payment will be higher than the March payment. Though there is no beneficiary designation during the annuitization, this is not an issue for this annuitant. Annuities due are a type of annuity where payments are made at the beginning of each payment period. D)Investment risk. used for the investment of funds paid by contract holders. The fixed annuities, indexed annuities, and variable annuities are some of the major types of annuities, of which one may find immediate annuities and deferred annuities. D)II and III. D)partially a tax-free return of capital and partially taxable. Once the cost basis is reached, any further withdrawals are a nontaxable return of principal. "Variable Annuities: What You Should Know," Page 10. D)an accounting measure used to determine payments to the owner of the variable annuity. An individual who purchases a Life annuity is given protection against: the risk of living longer than expected The type of annuity that can be purchased with one monetary deposit is called a (n) Immediate annuity N purchases an annuity by making payments in an amount no less than $100 quarterly. John is the annuitant in a variable plan, and Sue is the beneficiary. 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. Listing tax-deferred growth as an objective for retirement income, which of the following investments is most suitable? B) I and IV. C) II and III. D)Dow Jones Industrial Average. Reference: 12.1.4.2 in the License Exam. Future annuity payments will vary according to the separate account's performance. A 45-year-old investor takes a lump-sum distribution from a nonqualified variable annuity. An ordinary simple annuity has the following characteristics: For example, most car loans are ordinary simple annuities where payments are. The value of accumulation and annuity units varies with the investment performance of the separate account. Reference: 12.2.1 in the License Exam. B)cost of living. Universal variable life policies C)such an annuity is designed to combat inflation risk. Reference: 12.1.1 in the License Exam. C) I and III. Question #35 of 48Question ID: 606810 A fixed annuity is an insurance contract that pays a guaranteed rate of interest on the owner's contributions and later provides a guaranteed income. Your customer in his early 30s has received a modest inheritance from a relative.