You can tailor the income stream to suit your needs. A) mortality guarantee. Once annuitized, the number of annuity units does not vary. When the contract is annuitized, the annuitant is credited with a fixed number of annuity units. B) payment guarantee. d. Each month the payment will increase, decrease, or remain the same as the previous month's payment . C) There is no tax as the withdrawal is considered return of capital. Chapter 6-Classification Annuities Flashcards | Quizlet a variable annuity does not guarantee an earnings rate of return. *A variable annuity does not guarantee an earnings rate because earnings will depend on the performance of the separate account. PGIM Fixed Income has over $900 billion in assets under management across a broad array of fixed . A prospectus for a variable annuity contract: Of the four client profiles below which might be the best suited for a variable annuity recommendation? must precede every sales presentation. B) The entire $10,000 is taxable as ordinary income. For this potential advantage, the investor, rather than the insurance company, assumes the investment risk. U.S. Securities and Exchange Commission. C) the yield is always higher than bond yields. On any device & OS. If the data is normally distributed with standard deviation$198, find the percent of vacationers who spent less than $1,200 per day. The number of annuity units rises once annuitization begins. Question #29 of 48Question ID: 606831 B)Two-thirds of the withdrawal is taxable as ordinary income. D) III and IV. 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 . For an investor, which of the following is the most important factor in determining the suitability of a variable annuity investment? A 45-year-old investor takes a lump-sum distribution from a nonqualified variable annuity. The funds are not liquid due to the surrender fees, and there is also a 10% penalty on withdrawals before age 59-. Based on the clients profile which of the following would be the best recommendation? A) II and IV. As of March 03, 2023, had a relative dividend yield of % compared to the industry median of %. EEO IS THE LAW . Find the per-day expense for one of these travelers who had a z-score of -1.6. c. A Bargain Times Vacation Blog writer claimed to have done this vacation for a cost of$710 per person. Question #42 of 48Question ID: 606830 Variable Annuity Advantages and Disadvantages, Guide to Annuities: What They Are, Types, and How They Work. A) I and IV. a life insurance holder dies sooner than expected. Spartan Technology Services and Solutions Private Limited is a subsidiary of IBM (International Business Machines) Corporation. Instructions\textsf{\textcolor{#4257b2}{Instructions}}Instructions B) taxed as ordinary income. Explain what is meant by positive and negative C) Life annuity with period certain. D) I and III. The $30,000 contract value represents $10,000 of contributions and $20,000 of earnings. Essential Characteristics: The payout compared to last month's payout. Shortening the Securities Transaction Settlement Cycle C)III and IV A) Age 56, available cash to invest, makes the maximum retirement plan contributions to an existing IRA and 401(k) plan The Project Gutenberg eBook of Memoirs of Extraordinary Popular D) I and II. GuranteedExamLife Flashcards by Gabriel Martinez | Brainscape an annuitant lives longer than expected. A)II and IV. When may a variable annuity account be surrendered? A)equity funds. And, unlike a fixed annuity, variable annuities do not provide any guarantee that you will earn a return on your investment. If an investor has a fixed-annuity contract with an insurance company, which of the following risks is assumed by the investor? The amount taxed is the amount of the lump-sum payment minus the deceased's cost basis in the investment. & \underline{\underline{\$1,014,000}} & \hspace{10pt} \text{U.S. savings bonds} & 30,420\\ When the annuitization option is selected, each payment represents both capital and earnings. 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. A Variable Annuity has which of the following characteristics? The income was deferred from tax over the plan's life, so it is taxable as ordinary income once distributed. A variable annuity's separate account is: A separate account will invest in a number of different securities. C)I and IV. Simple and general annuities problems with solutions The value of the separate account is now $30,000. "Variable Annuities: What You Should Know," Pages 67. The accumulation unit's value is used to calculate the total value of the account. 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. Fixed annuities are not considered securities as return is guaranteed by the insurance company issuer. D) I and IV. Question #36 of 48Question ID: 606805 C) It will stay the same. IBM is a global brand and has its presence in 170 countries and operates . A prospectus for a variable annuity contract: A) Joint tenants annuity. C)Money market fund. B) I and IV. The owner of a life annuity with 10-year period certain will receive payments for life, subject to a minimum of 10 years. The tax on this is $2,800 ($10,000 x 28%). A) II and IV. When the second party dies, all payments cease. An immediate annuity is designed to pay an income one time-period after the immediate annuity is bought. Reference: 12.2.1 in the License Exam. Distribution of dividends occurs during the accumulation period. Question #32 of 48Question ID: 606815 C)earnings only and taxable D)the rate of return is determined by the underlying portfolio's value. IV. A)defined contribution plans. A 3 B) The death benefit cannot ever be more than the guaranteed benefit. 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. The value of a variable annuity is based on the performance of an underlying portfolio of sub accounts selected by the annuity owner. Which of the following is NOT associated with characteristics of shares MetLife, Inc. Senior Customer Care Advocate Annuities ($22 per hour IBM Noida, Uttar Pradesh, India4 weeks agoBe among the first 25 applicantsSee who IBM has hired for this roleNo longer accepting applications. D) Variable annuities. These contracts come with high surrender charges. If a 42-year-old customer has been depositing money in a variable annuity for 5 years, and he plans to stop investing but has no intention of withdrawing any funds for at least 20 years, he is holding: The value of accumulation and annuity units varies with the investment performance of the separate account. C) During the annuity period. Variable Annuities Flashcards | Quizlet There is no clear answer to this. 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. Though there is no beneficiary designation during the annuitization, this is not an issue for this annuitant. Reference: 12.3.2.1 in the License Exam. The time period depends on how often the income is to be paid. A) waiver of premium Distributions to the annuitant will fluctuate during the payout period. A) I and III. A)the state banking commission. A) There is no risk in a variable annuity. PDF The NIST definition of cloud computing ($5,000) to a stock fund. An annuitant assumes the investment risk of a variable annuity and is not protected byt he insurance company from capital losses. Annuities | FINRA.org B)Tax-free municipal bonds She may choose to receive monthly payments for the rest of her life. Reference: 12.1.1 in the License Exam. A) partially a tax-free return of capital and partially taxable. Reference: 12.2.1 in the License Exam, Question #48 of 48Question ID: 606835 A) a minimum rate of return is guaranteed. Determine whether the following events are independent or dependent. D) II and III. When a partial withdrawal is made from an annuity, the earnings are considered to be taken out first for tax purposes (or LIFO). Try B) variable annuities. 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. 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 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. An ordinary simple annuity has the following characteristics: For example, most car loans are ordinary simple annuities where payments are. II. On withdrawals from a nonqualified annuity, taxes are paid only on the amount that exceeds cost basis (the amount paid into the annuity). B) 10% penalty plus payment of ordinary income tax on all funds withdrawn. Question #15 of 48Question ID: 606804 The annuity unit's value represents a guaranteed return. Variable annuities involve underlying equity investments in a separate account. A)II and IV. Reference: 12.1.2.1.1. in the License Exam. If the account is annuitized, the investor has chosen a payout option. B) II and IV. D) Any time before the accumulation period. Universal variable life policies C)It will be higher. Her agent recommended she choose a variable annuity as a safe haven for the funds. D) not suitable because a lifetime income rider is only for someone who is already retired. C) Mutual fund portfolio consisting of blue chip stocks B) II and IV. If an investor has purchased an immediate variable annuity, which of the following statements best describe the investment? Portfolio Compliance Risk Analyst Job in Newark, NJ at Prudential The upside was the possibility of higher returns during the accumulation phase and a larger income during the payout phase. Reference: 12.3.4 in the License Exam. Because the client is older than age 59-, he does not pay 10% premature distribution penalty tax. 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. When a variable annuity contract is annuitized, the number of annuity units is fixed. Single payment deferred annuity. have investment risk that is assumed by the investor They are also riddled with fees, which can cut into profits. C)complete all paper work to purchase the annuity contract and obtain the clients signature immediately. A) III and IV. Reference: 12.3.4 in the License Exam, Chapter 16: U.S. Government and State Rules a, Chapter 17: Other SEC and SRO Rules and Regul, Chapter 15: Ethics, Recommendations, and Taxa, Chapter 13: Direct Participation Programs, Fundamentals of Financial Management, Concise Edition, Joe B. Hoyle, Thomas F. Schaefer, Timothy S. Doupnik, Carl Warren, James M Reeve, Jonathan E. Duchac. C)insurance companies keep variable annuity funds in separate accounts from other insurance products. B) II and IV. Question #14 of 48Question ID: 606823 In a variable life annuity with 10-year period certain, a contract holder receives: She may choose to receive monthly payments for the rest of her life. For a retired person, which of the following investments would provide the greatest protection against inflation? Question #24 of 48Question ID: 606806 Universal variable life policies The paper publication will not be rereleased. C) taxed as ordinary income only to the extent of earnings. "Variable Annuities: What You Should Know," Page 6. Distribution can take place before or during any solicitation for sale. B)II and III. Variable annuities gave buyers a chance to benefit from rising markets by investing in a menu of mutual funds offered by the insurer. 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 . All of the following statements concerning a variable annuity are correct EXCEPT: Reference: 12.3.2.4 in the License Exam. A trend is formed from non-repetitive actions of people. D) payments continue until age 70-. Contributions to a nonqualified variable annuity are not tax deductible. The accumulation unit's value is used to calculate the total value of the account. B)variable annuities are classified as insurance products. If this client is in the payout phase, how would his April payment compare to his March payment? A) taxed at a reduced rate. *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. *Only variable annuities have payout plans that provide the client income for life. B)mutual fund units. C) value of underlying securities held in the separate account. B)Fixed annuity contract with a discussion regarding timing risk *Contributions to a nonqualified annuity are made with the owner's after-tax dollars. 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. Periodic payment deferred annuity. The creation of an estate. This factor is used to establish the dollar amount of the first annuity payment. Since , has paid out quarterly dividends ranging from $0.00 to $0.00 per share. A client has purchased a nonqualified variable annuity from a commercial insurance company. C) a variable annuity contract does not guarantee any type of return A)Fixed annuities. 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 *The number of variable annuity accumulation units can rise during the accumulation period when additional units are being purchased. Which Earns More: Variable or Fixed Annuities? 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. C)none of these. Solved The following are characteristics of a public | Chegg.com Question #45 of 48Question ID: 606795 Simple and general annuities problems with solutions Do homework Doing homework can help you learn and understand the material covered in class. B)Capital gains taxation on the earnings withdrawn in excess of the owner's basis. *The investor has already paid tax on the contributions but the earnings have grown tax-deferred. do not have a separate account If an insurance holder dies sooner than expected, the insurance company will have to pay the death benefit sooner. However, because the client is not yet age 59- when making the withdrawal, he also pays a 10% penalty, or $1,000. When money is deposited into the annuity, it is purchasing accumulation units. C) 3000. D)separate account may consist of mutual funds. A variable annuity is a type of annuity contract in which the value can vary based on the performance of an u . Chapter 7: Annuities Flashcards | Quizlet A variable annuity is both an insurance and a securities product. Your 65-year-old client owns a nonqualified variable annuity. Once a customer annuitizes a variable annuity, which of the following statements are TRUE? 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) II and III. Reference: 12.1.2 in the License Exam, Question #23 of 48Question ID: 901858 Fixed annuities. D)Dow Jones Industrial Average. B)I and IV. All of the following are accurate statements to make to the client EXCEPT Any withdrawals you make prior to the age of 59 may also be subject to a 10% tax penalty. B) I and II. \text{Salaries:} && \text{Deductions:}\\ Simple and general annuities problems with solutions A customer has contributed $1,000 a year for 10 years to his tax-deferred nonqualified variable annuity. Senior Customer Care Advocate Annuities ($22 per hour) in Warwick A. Fixed Annuity: A fixed annuity is a type of annuity contract that allows for the accumulation of capital on a tax-deferred basis. Your customer in his early 30s has received a modest inheritance from a relative. A joint life with last survivor contract covers multiple annuitants and ceases payments at the death of the last surviving annuitant. No Hibernation for Issuers of Index-Linked Variable Annuities and Index *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. You can buy an annuity with either a lump sum or a series of payments, and the accounts value will grow accordingly. For a nonqualified variable annuity, cost basis for the annuitant would use the after-tax dollars contributed. Question #38 of 48Question ID: 606798 a variable annuity has which of the following characteristics Contributions to an IRA may be tax deductible, depending on the individual's earnings and participation in a company-sponsored qualified retirement plan. Variable Annuities Flashcards - Cram.com For example, if the income is monthly, the first payment comes one month after the immediate annuity is bought. Therefore, ordinary income taxes will apply to the entire $10,000. The following are the characteristics or the hierarchy of a trend except A. Gigatrends C. Megatrends B. Macrotrends D. Nanotrends _____11. Question #40 of 48Question ID: 606800 Distributions from such an annuity are computed on a LIFO basis with the income taxed first. The growth portion is taxed as a capital gain. A)exempt from taxes D)A 10% penalty plus the payment of ordinary income tax on funds withdrawn in excess of the owner's basis. C) II and IV. PDF Prudential IncomeFlex Target Vanguard Balanced Index Fund Changes in payments on a variable annuity correspond most closely to fluctuations in the: What type of annuity has a cash value that is based upon the performance of it's underlying investment funds? Drives - are hardwired characteristics of the brain that correct deficiencies or maintain an internal equilibrium by producing emotions to energize individuals. *Payments from a variable annuity depend on the securities' value in the separate account's underlying investment portfolio. For this potential advantage, the investor, rather than the insurance company, assumes the investment risk. A) The fact that the annuity payment may increase or decrease. B) be paid to any legal heirs as recognized by the annuitant's state of domicile. Variable annuities should be considered long-term investments due to the limitations on withdrawals. The separate account is used for both variable life insurance and variable annuity investments. b) What probability is the 20%20 \%20% mentioned above? The value of accumulation and annuity units varies with the investment performance of the separate account. A) I and II. Which of the following recommendations would best meet the customer profile? The entire amount is taxed as ordinary income. Describe. A) I and II. A) A variable annuity Reference: 12.1.4.1 in the License Exam. *Variable annuity contracts were devised to help investors keep pace with inflation. D)partially a tax-free return of capital and partially taxable. *During the payout period, payments are based on a fixed number of annuity units established when the contract was annuitized. Variable Annuities Flashcards | Quizlet The number of annuity units is fixed at the time of annuitization. Distribution can take place before or during any solicitation for sale. A customer has a nonqualified variable annuity. B)IRAs. C) II and III. B)reevaluate whether the recommendation for the VA contract is still suitable based on the clients proposed funding of the investment. Reference: 12.1.2 in the License Exam. 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. 2019 Ted Fund Donors d) What is the probability that a user is from the United States, given that he or she logs on every day? C) Universal variable life policy. A) number of annuity units. A) variable payments for 10 years, followed by fixed payments for life. C)prime rate. Changes in payments on a variable annuity correspond most closely to fluctuations in the: This recommendation is: B) The proceeds minus John's cost basis taxed as ordinary income at Sue's tax rate. The investor has already paid tax on the contributions but the earnings have grown tax-deferred. Question #19 of 48Question ID: 606826 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. C) The investor's concerns about taxes. A) number of annuity units. an annuitant dies sooner than expected. C) IRAs. B)suitable regardless of funding sources An annuity is an insurance product that promises to pay out income at a future date based on invested funds. If this client is in the payout phase, how would his April payment compare to his March payment? During the accumulation phase, the number of accumulation units will increase as additional money is invested. A)variable annuities may only be sold by registered representatives. The annuitized payments are viewed for tax purposes as An ordinary simple annuity has the following characteristics: For example, most car loans are ordinary simple annuities where payments are. D)suggest to the client that perhaps a loan or refinancing his vacation home might be a better way to fund the contract purchase. When a variable annuity contract is annuitized, the number of annuity units is fixed. Reference: 12.3.1 in the License Exam, Question #30 of 48Question ID: 606833 Investopedia does not include all offers available in the marketplace. A registered person recommends the purchase of a variable annuity to one of his clients. the state banking commission. a. it performs a single task b. it is self-contained and independent of other modules c. it is relatively short d. all of the above are chamcleristics of a program module 7. Variable annuities are designed to combat inflation risk. His objective is monthly income that he can receive after he retires to supplement his small pension and social security benefits. Underlying equity investments T, age 70, withdraws cash from a profit-sharing plan and purchases a Straight Life Annuity. A life with period certain contract guarantees payments for a specified number of years to a named beneficiary if the annuitant dies during that time. B) During the accumulation period. D) Keogh plans. A 1 The applicant and possibly the agent initial any changes made. A)II and III. used to escrow late or otherwise delinquent premium payments. *The owner of a life annuity with 10-year period certain will receive payments for life, subject to a minimum of 10 years. D)Variable annuity. This chapter was updated on 15 December, 2005. savingsbondsGroupinsurance$198,74451,71415,21030,42045,630$341,718, Tax rates assumed: Based on this information the RR should: B) fixed payments for 10 years, followed by variable payments for life. D)Variable annuity contract with a discussion regarding legislative risk, A VA with its investments in the separate account subject to market risk would not align with the customer's objective. 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) III and IV. The earnings on dollars invested into a variable annuity accumulate tax deferred, which is why variable annuities are popular products for retirement accumulation. Which of the following is NOT an accurate statement concerning a variable life insurance contract? Consequently, the client pays taxes only on the growth portion of the withdrawal ($10,000).