a variable annuity has which of the following characteristics a variable annuity has which of the following characteristics

Variable annuities involve underlying equity investments in a separate account. A variable annuity's separate account is: A separate account will invest in a number of different securities. Securely download your document with other editable templates, any time, with PDFfiller. Variable annuity salespeople must register with all of the following EXCEPT: A) FINRA. \text{Salaries:} && \text{Deductions:}\\ a variable annuity does not guarantee payments for life. How is the distribution taxed? An investor who purchases a fixed annuity contract assumes purchasing-power risk. As part of the registration requirements, a prospectus must be filed and distributed to prospective investors. This guideline has been prepared for use by Federal agencies. Qualified Longevity Annuity Contract (QLAC): Definition, Taxes, and Example, Present Value of an Annuity: Meaning, Formula, and Example, Future Value of an Annuity: What Is It, Formula, and Calculation, Calculating Present and Future Value of Annuities, Present Value Interest Factor of Annuity (PVIFA) Formula, Tables. Variable Annuity Advantages and Disadvantages, Guide to Annuities: What They Are, Types, and How They Work. B) IPO. D) II and IV. D) the payout plans provide the client income for life. When a partial withdrawal is made from an annuity, the earnings are considered to be taken out first for tax purposes (or LIFO). In March, the actual net return to the separate account was 8%. The number of accumulation units can rise during the accumulation period. Question #35 of 48Question ID: 606810 However, it does guarantee payments for life (mortality). The money paid in will be returned tax free, but the earnings portion will be taxed as ordinary income. Question #11 of 48Question ID: 606816 A) Money market fund. If an insurance holder dies sooner than expected, the insurance company will have to pay the death benefit sooner. Question #45 of 48Question ID: 606795 B) Ordinary income taxation on the earnings withdrawn until reaching the owner's cost basis. 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: 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. Ideally they should be funded with readily available cash rather than using funds liquidated from existing investments. Consequently, the client pays taxes only on the growth portion of the withdrawal ($10,000). C) the yield is always higher than bond yields. *The investor has already paid tax on the contributions but the earnings have grown tax-deferred. Once the contract is annuitized, monthly payments to the customer are: D) II and III. B) Life annuity. The number of annuity units is fixed. B)IRAs. You can learn more about the standards we follow in producing accurate, unbiased content in our. B)II and III. What will this transaction provide? 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. Reference: 12.1.2 in the License Exam, Question #21 of 48Question ID: 606812 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. In a variable life annuity with 10-year period certain, a contract holder receives: John is the annuitant in a variable plan, and Sue is the beneficiary. Which is it? Your 55-year-old client invested $50,000 four years ago in a nonqualified variable annuity. 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 does not guarantee an earnings rate of return. Skylar Clarine is a fact-checker and expert in personal finance with a range of experience including veterinary technology and film studies. 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 . A variable annuity is both an insurance and a securities product. When the contract is annuitized, the annuitant is credited with a fixed number of annuity units. A customer is receiving annuitized payments from a variable annuity. Reference: 12.3.1 in the License Exam. They are more suitable for individuals who can fund the annuity with cash, want to supplement existing retirement benefits they have already funded, are comfortable with the market risk associated with a VA separate account portfolio and anticipate a long retirement. What Are the Biggest Disadvantages of Annuities? Registration with FINRA is de facto registration with the SEC; no registration is required by the state banking commission. A) Any tax due is deferred. A)II and IV. Describe. D)the rate of return is determined by the underlying portfolio's value. Reference: 12.1.2.1.2 in the License Exam. C)Life annuity. B)I and III. variable An immediate annuity consists of a Single Premium T has an annuity that guarantees an income payment for the rest of his life. Suggesting that loans or drawing equity from a home to fund VA contracts have also been targeted as abusive sales practices. D) II and IV. Guaranteed Lifetime Annuity: How They Work, When They Pay You, This is also generally true of retirement plans. Both products typically have a wide range of options across equities, bonds and money market instruments. Reference: 12.3.4 in the License Exam. D) variable annuities may only be sold by registered representatives. The work environment characteristics are normal office conditions. D) I and III national origin, genetics, disability, age, veteran status, or any other characteristic protected by law. B) 100% taxable. Variable annuities operate in similar ways to . Life income riders are best suited for those who anticipate a lengthy retirement and are generally not yet retired when making the VA purchase. These contracts come with high surrender charges. He makes several statements regarding the contract. A) two people are covered and payments continue until the second death. Of the 4 client profiles below, which might be the best suited for a variable annuity recommendation? D)A 10% penalty plus the payment of ordinary income tax on funds withdrawn in excess of the owner's basis. D)Municipal bonds. guarantees payments for a certain period of time. When the annuitization option is selected, each payment represents both capital and earnings. B) II and III MetLife offers a comprehensive benefits program, including healthcare benefits, life insurance, retirement benefits, parental leave, legal plan services and paid time off. B)I and IV. B) a variable annuity contract is not required to be sold by prospectus because it is an insurance contract A)Purchasing power risk. U.S. Securities and Exchange Commission. A) I and III. Fixed annuities typically earn at a lower, stable rate. B)II and III. C)Money market fund. *A variable annuity is a security and must be registered with the SEC, not FINRA. *A variable annuity does not guarantee an earnings rate because earnings will depend on the performance of the separate account. During the payout period, payments are based on a fixed number of annuity units established when the contract was annuitized. B)FINRA. the state insurance commission. C)II and IV. What is the taxable consequence of this withdrawal to your client? Immediate life annuity. \hspace{10pt} Medicare, 1.5%1.5\%1.5% D) the payout plans provide the client income for life. a. B) The entire $10,000 is taxable as ordinary income. An individual retirement annuity is an investment vehiclesimilar to an individual retirement accountthat is offered by insurance companies. C)earnings only and taxable Distribution can take place before or during any solicitation for sale. Because they have a separate account in which the investor assumes the investment risk, they can only be sold by individuals with both insurance and securities licenses. 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. B)mutual fund units. Before the contract is annuitized, your client, currently age 60, withdraws some funds for personal purposes. A) two people are covered and payments continue until the second death. How to Navigate Market Volatility While Saving for Retirement, Variable Annuity: Definition and How It Works, Vs. *The minimum guaranteed death benefit is provided by that portion of the payment invested in the insurance company's general account. Options. A)accumulation shares. B) the safety of the principal invested. C) be returned to the separate account. Since the client is older than 59 at the time of distribution, the additional 10% penalty tax is not incurred. A)Joint tenants annuity. C) During the annuity period. Reference: 12.1.2 in the License Exam. D) II and III. D) III and IV. \hspace{7pt} b. December 303030, to record the employers payroll taxes on the payroll to be paid on December 313131. A variable annuity is a type of annuity contract, the value of which can vary based on the performance of an underlying portfolio of sub accounts. D) Variable annuities. the SEC. IBM is a global brand and has its presence in 170 countries and operates . \hspace{10pt} \text{Sales salaries} & \$\hspace{5pt} 670,000 & \hspace{10pt} \text{Income tax withheld} & \$198,744\\ Though its stated return might not be as high as the other choices potential returns, only a fixed annuity fits the objective and risk averse traits of this client. must precede every sales presentation. A) II and IV. Inflation-hedging, using both tax deferral combined with market growth potential, is made possible by variable annuities #. Instructions\textsf{\textcolor{#4257b2}{Instructions}}Instructions Reference: 12.3.3 in the License Exam. On any device & OS. Question #12 of 48Question ID: 606814 Variable annuities gave buyers a chance to benefit from rising markets by investing in a menu of mutual funds offered by the insurer. b. D) I and II. Who assumes the investment risk in a variable annuity contract? D) I and III. D) I and IV. Which of the following is not a characteristic of a program module? In a joint-and-last-survivor option, the annuity payment is made jointly to both parties while both are alive. A)It will stay the same. The fees on variable annuities can be quite hefty. The funds are not liquid due to the surrender fees, and there is also a 10% penalty on withdrawals before age 59-. IBM Noida, Uttar Pradesh, India1 month agoBe among the first 25 applicantsSee who IBM has hired for this roleNo longer accepting applications. A variable annuity is just a tax-deferred annuity in which you get to choose how the value of the annuity is invested. vote on proposed changes in investment policy. Fixed annuities. e) Are From the United States and Log on every day independently? A) mortality guarantee. C)Corporate bonds. A universal variable life policy should be purchased primarily for its insurance features, not its investment features. \hspace{10pt} Social security, 6%6\%6% on first $100,000\$100,000$100,000 of employee annual earnings D) an accounting measure used to determine the contract owner's interest in the separate account. \hspace{7pt} a. December 303030, to record the payroll. D) Variable annuity. An accumulation unit in a variable annuity contract is: A)an accounting measure used to determine the contract owner's interest in the separate account. *Accumulation units represent units of ownership in a life insurance company's separate account when the contract is in the accumulation stage. D) a minimum of 10 years of variable payments, followed by additional variable payments for life During the accumulation phase, you make purchase payments. Variable annuity Which of the following is characteristic of fixed annuities? . Every annuity has some characteristics in common. Investopedia requires writers to use primary sources to support their work. However, a discussion should occur regarding the risks that are associated with a fixed annuity; purchasing power risk. What percentile is represented by $710? The growth portion is taxed as a capital gain. Question #24 of 48Question ID: 606806 *When money is deposited into the annuity, it is purchasing accumulation units. He earned the Chartered Financial Consultant designation for advanced financial planning, the Chartered Life Underwriter designation for advanced insurance specialization, the Accredited Financial Counselor for Financial Counseling and both the Retirement Income Certified Professional, and Certified Retirement Counselor designations for advance retirement planning. C) Life annuity with period certain. Your 65-year-old client owns a nonqualified variable annuity. If the contract holder dies before the period expires, the remaining payments are made to the beneficiary. Question #32 of 48Question ID: 606815 The separate account performance compared to an assumed interest rate. Reference: 12.3.1 in the License Exam, Question #30 of 48Question ID: 606833 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?