B)Variable annuities. A registered representative's (RR) customer is speaking of a variable life insurance contract he owns. B) During the accumulation period. The following information about the payroll for the week ended December 303030 was obtained from the records of Vienna Co.: Salaries:Deductions:Salessalaries$670,000Incometaxwithheld$198,744Warehousesalaries110,000Socialsecuritytaxwithheld51,714Officesalaries234,000Medicaretaxwithheld15,210$1,014,000U.S. A) waiver of premium B) The death benefit cannot ever be more than the guaranteed benefit. A) changes in common stock prices tend to be more closely related to changes in the cost of living than changes in bond prices. Your client has a large sum of money to invest from the proceeds of the sale of his home. This role is also eligible for annual short-term incentive compensation. B) Life annuity. . 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? Therefore, variable annuities must be registered with the state insurance commission and the Securities and Exchange Commission. The investor has already paid tax on the contributions but the earnings have grown tax-deferred. C) a variable annuity contract does not guarantee any type of return D)Any tax due is deferred. 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)III and IV. C) value of underlying securities held in the separate account. C) 10 years of variable payments. A)There is no tax as the withdrawal is considered return of capital. D) periodic payment deferred annuity. withdraw funds without any tax consequences. can be sold by someone with only an insurance license If the data is normally distributed with standard deviation$198, find the percent of vacationers who spent less than $1,200 per day. C) II and III. Deferred Annuity Definition, Types, How They Work, What Is a Fixed Annuity? Question #13 of 48Question ID: 606822 A customer is receiving annuitized payments from a variable annuity. Determine whether the following events are independent or dependent. 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 dissolutions of the trust for distributing income and capital gains. C)I and IV. C) suggest to the client that perhaps a loan or refinancing his vacation home might be a better way to fund the contract purchase. Before the contract is annuitized, your client, currently age 60, withdraws some funds for personal purposes. Over the past five years, 's dividend yield has averaged % per year. 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. Diagnosis is made by punch biopsy. Listing tax-deferred growth as an objective for retirement income, which of the following investments is most suitable? During the accumulation phase, the number of accumulation units will increase as additional money is invested. B) II and III. A) I and III. B) Municipal bonds. A) mortality guarantee. A) complete all paper work to purchase the annuity contract and obtain the clients signature immediately. Frequently Asked Questions Anti-Money Laundering Program and Suspicious During payout, distributions will fluctuate due to performance in the separate account. Variable annuities are designed to combat inflation risk. A)exempt from taxes Rolling two 222s followed by one 666 on three tosses of a fair die, Use the table 1 and table 2 to complete the table 3 B)Two-thirds of the withdrawal is taxable as ordinary income. 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. C)III and IV. A variable annuity is both an insurance and a securities product. A) a lifetime withdrawal benefit (LWB) or lifetime income benefit will make a periodic payment even if the account balance falls to zero If an investor has a fixed-annuity contract with an insurance company, which of the following risks is assumed by the investor? D) an accounting measure used to determine the contract owner's interest in the separate account. 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: Once the contract is annuitized, monthly payments to the customer are: All of the following statements about variable annuities are true EXCEPT: Question #42 of 48Question ID: 606830 When a variable annuity contract is annuitized, the number of annuity units is fixed. Both products typically have a wide range of options across equities, bonds and money market instruments. A)I 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. FINRA. B) Exchange traded Funds (ETFs) or Exchange traded Notes (ETNs) B)suitable regardless of funding sources B)reevaluate whether the recommendation for the VA contract is still suitable based on the clients proposed funding of the investment. A)IPO. A) I and II. 6102..55.001) is being updated on an ongoing basis. The income was deferred from tax over the plan's life, so it is taxable as ordinary income once distributed. 11.1: Fundamentals of Annuities - Mathematics LibreTexts On withdrawals from a nonqualified annuity, taxes are paid only on the amount that exceeds cost basis (the amount paid into the annuity). savingsbondsGroupinsurance$198,74451,71415,21030,42045,630$341,718, Tax rates assumed: They are also not considered suitable for anyone who anticipates needing a lump sum within a short time frame to fund other endeavors. C) Universal variable life policy. C)complete all paper work to purchase the annuity contract and obtain the clients signature immediately. It is innate and universal. The amount taxed is the amount of the lump-sum payment minus the deceased's cost basis in the investment. A joint life with last survivor annuity: Transcribed image text: 6. B)Fixed annuity contract with a discussion regarding timing risk C)A 10% penalty plus the payment of ordinary income tax on all of the funds withdrawn. A) I and III. Sas#8-psy 002 - Organizational Behavior \end{array} Periodic payment deferred annuity. D) a variable annuity contract is subject to fluctuating values due to market fluctuations of the underlying separate accounts. a variable annuity has which of the following characteristics Which of the following is NOT associated with characteristics of shares Simple and general annuities problems with solutions C) single payment immediate annuity. IV. One of the following would achieve that objective but a suitability discussion regarding it's risk should also occur. D) There is no guarantee regarding the investment results of the separate account. 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. C) annuity units. Reference: 12.1.2 in the License Exam. A customer has an investment objective of keeping pace with inflation while assuming moderate risk. Question #43 of 48Question ID: 606809 The entire amount is taxed as ordinary income. 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 The funds in an annuity are off-limits to creditors and other debt collectors. A) I and IV. PDF Prudential IncomeFlex Target Vanguard Balanced Index Fund *Annuity death benefits are generally paid in a lump sum. A)II and IV. Then find the probability of the event. Once the contract is annuitized, monthly payments to the customer are: Question #41 of 48Question ID: 606801 \hspace{7pt} a. December 303030, to record the payroll. \hspace{7pt} a. December 303030, to record the payroll. This recommendation is: How is the distribution taxed? Therefore, ordinary income taxes will apply to the entire $10,000. D)the state insurance department. When a partial withdrawal is made from an annuity, the earnings are considered to be taken out first for tax purposes (or LIFO). A) It will be higher. In a joint-and-last-survivor option, the annuity payment is made jointly to both parties while both are alive. With regard to a variable annuity, all of the following may vary EXCEPT: e) Are From the United States and Log on every day independently? Question: The following are characteristics of a public conglomerate: I) It is designed to operate various divisions for the long run. 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. Life Insurance vs. Annuity: What's the Difference? Of the answer choices given the best would be to reevaluate the recommendation based on the new information tendered by the client. Licensed to sell Variable Annuities in the following state(s): FL, TX . A) waiver of premium 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. For example, if the income is monthly, the first payment comes one month after the immediate annuity is bought. C) Life annuity with period certain. C) Age 40, currently unemployed Essential Characteristics: D) Joint and last survivor annuity. When the contract is annuitized, the annuitant is credited with a fixed number of annuity units. Variable annuities operate in similar ways to . D)I and IV. A) I and II the state insurance commission. An investor who has purchased a nonqualified variable annuity has the right to: Variable annuities must be registered with: All of the following statements concerning a variable annuity are correct EXCEPT: D) variable annuities will protect an investor against capital loss. C) such an annuity is designed to combat inflation risk. C)Mortality risk. Science Health Science Nursing. \hspace{10pt} Medicare, 1.5%1.5\%1.5% D) None, because it is the proceeds from a life insurance company. "Variable Annuities: What You Should Know," Page 6. 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. *Universal variable life policies are insurance company products that should be purchased primarily for the insurance features they offer rather than as an investment. A)Fixed annuities. B) I and III. If the annuitant dies during the accumulation period, his/her beneficiary will receive the promised annuity payments. Because the client is older than age 59-, he does not pay 10% premature distribution penalty tax. Reference: 12.2.1 in the License Exam. 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. A) each annuity unit's value is fixed, but the number of annuity units varies with time. D) 4200. *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. If the contract holder dies before the period expires, the remaining payments are made to the beneficiary. a variable annuity does not guarantee payments for life. Question #37 of 48Question ID: 606817 D) I and II. 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. How to Rollover a Variable Annuity Into an IRA. Hire Velocity hiring Customer Escalation Agent in Tampa, Florida A Variable Annuity Has Which of the Following Characteristics You can tailor the income stream to suit your needs. This guideline has been prepared for use by Federal agencies. The $30,000 contract value represents $10,000 of contributions and $20,000 of earnings. On withdrawals from a nonqualified annuity, taxes are paid only on the amount that exceeds cost basis (the amount paid into the annuity). B) It will be lower. a. 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 company's well-known Rock symbol is an icon of strength, stability, expertise and innovation that has stood the test of time. D) the payout plans provide the client income for life. A) I and IV. If you need to withdraw money from the account because of a financial emergency, you may face surrender fees. C)the yield is always higher than bond yields. D) a minimum of 10 years of variable payments, followed by additional variable payments for life B)each annuity unit's value varies with time, but the number of annuity units is fixed. A) There is no risk in a variable annuity. The most popular type of variable annuity is a deferred annuity. For this potential advantage, the investor, rather than the insurance company, assumes the investment risk. B) The policyowner. Refinancing a home to draw out equity has been identified by FINRA as an abusive sales tactic regarding the sales of VAs. A) Age 56, available cash to invest, makes the maximum retirement plan contributions to an existing IRA and 401(k) plan Which Earns More: Variable or Fixed Annuities? The annuitant may not contribute and withdraw simultaneously. An annuity is an insurance product that promises to pay out income at a future date based on invested funds. A)100% tax free. 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. Table1. What percentile is represented by $710? All of the following are accurate statements to make to the client EXCEPT Spartan Technology Services and Solutions Private Limited is a subsidiary of IBM (International Business Machines) Corporation. PDF The NIST definition of cloud computing Variable annuities provide protection from inflation because their monthly income can increase depending on the separate account's performance. B)II and III. However, it does guarantee payments for life (mortality). Spartan Technology Services and Solutions Private Limited is a subsidiary of IBM (International Business Machines) Corporation. Variable annuities involve underlying equity investments in a separate account. C) II and III. *A joint life with last survivor contract covers multiple annuitants and ceases payments at the death of the last surviving annuitant. *A variable annuity is a security and must be registered with the SEC, not FINRA. A) A variable annuity *Fixed income instruments, like bonds and fixed annuities, are subject to purchasing power risk. Since the client is older than 59 at the time of distribution, the additional 10% penalty tax is not incurred. Similarly, CDs are insured, thereby eliminating risk and guaranteeing a return. It's somewhat similar to a variable life insurance policy in that: You can choose how the product's value is invested. Reference: 12.1.4.1 in the License Exam. Carefully look at your options when choosing an annuity. C) Corporate bonds. A 45-year-old investor takes a lump-sum distribution from a nonqualified variable annuity. Ideally they should be funded with readily available cash rather than using funds liquidated from existing investments. Life income riders are best suited for those who anticipate a lengthy retirement and are generally not yet retired when making the VA purchase. B) IPO. D) I and IV. This factor is used to establish the dollar amount of the first annuity payment. D)variable annuities offer the investor protection against capital loss. Changes in payments on a variable annuity correspond most closely to fluctuations in the: D)the safety of the principal invested. A) I and II B) I and III. The growth portion is taxed as a capital gain. The wage for applicants for this position is $45,979.00 per year. What Are the Biggest Disadvantages of Annuities? \hspace{10pt} \text{Office salaries} & \underline{234,000} & \hspace{10pt} \text{Medicare tax withheld} & 15,210\\ 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. D) II and III. B) payment guarantee. Contributions to a nonqualified variable annuity are not tax deductible. Which is it? During the . B)II and 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. An 18-year-old, unmarried high school student sought a safe investment for a $30,000 bequest until after she graduated from college. Changes in payments on a variable annuity correspond most closely to fluctuations in the: If this client is in the payout phase, how would his April payment compare to his March payment? 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. B)fixed in value until the holder retires. Fixed Annuity: A fixed annuity is a type of annuity contract that allows for the accumulation of capital on a tax-deferred basis. Variable annuities provide protection from inflation because their monthly income can increase depending on the separate account's performance. D)A variable annuity, Variable annuities offer tax-deferred growth and are suitable for achieving supplemental retirement income. Reference: 12.1.2.1.1 in the License Exam. A)not suitable A) variable annuities offer the investor protection against capital loss. B)Universal variable life policy. B) A 30 year old construction worker recently unemployed who wants to invest his severance pay amounting to 9 months salary. \hspace{10pt} Social security, 6%6\%6% on first $100,000\$100,000$100,000 of employee annual earnings We also reference original research from other reputable publishers where appropriate. B) II and III. A) Ordinary income tax on earnings exceeding basis. a life insurance holder lives longer than expected. The number of annuity units is fixed at the time of annuitization. This includes transportation, food, lodging, and entertainment. A) The policy provides a minimum guaranteed death benefit. B) variable annuities are classified as insurance products. A)number of annuity units. A) defined contribution plans. D) I and III D)accumulation units. A Variable Annuity Has Which of the Following Characteristics D) Variable annuities. B) variable annuities. B) suitable if she has enough equity in the home to fund the variable annuity without cashing out the other VA contract The growth portion is subject to a 10% penalty. A) two people are covered and payments continue until the second death. A joint-and-last-survivor annuity is a payout option where: C) the yield is always higher than bond yields. For example, when paying rent, the rent payment (PMT) . D)suitable if she has enough equity in the home to fund the variable annuity without cashing out the other VA contract, Based on the information given in the question, the VA recommendation would not be suitable. A) Fixed Annuity externalities. a variable annuity guarantees payments for life. B)I and IV. He originally invested $29,000 4 years ago; it now has a value of $39,000. C) III and IV. Reference: 12.3.2.1 in the License Exam. are purchased primarily for their insurance features *The return on a variable annuity is not guaranteed; it is determined by the underlying portfolio's value. Reference: 12.1.4.1 in the License Exam. Which of the following recommendations would best meet the customer profile? A joint life with last survivor contract covers multiple annuitants and ceases payments at the death of the last surviving annuitant. C) II and IV. This recommendation is: D) unsuitable because her situation exposes her to surrender charges and early withdrawal penalties in exchange for insufficient benefits. D) I and IV. The number of annuity units rises once annuitization begins. 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.