Disadvantages Of Using Geoboards, Rosie Marcel Biography, Articles A

Question #19 of 48Question ID: 606826 Usually the term "annuity" relates to a contract between an individual and a life insurance company. 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 return on a variable annuity is not guaranteed; it is determined by the underlying portfolio's value. Guaranteed Lifetime Annuity: How They Work, When They Pay You, This is also generally true of retirement plans. The investor purchased accumulation units. A) Age 56, available cash to invest, makes the maximum retirement plan contributions to an existing IRA and 401(k) plan D)Joint and last survivor annuity. B) the number of annuity units is fixed, and their value remains fixed. D)Dow Jones Industrial Average. A)accumulation shares. A) defined contribution plans. All of the following investment strategies offer either fully or partially tax-deductible contributions to individuals who meet eligibility requirements EXCEPT: They are also riddled with fees, which can cut into profits. An annuity factor is taken from the annuity table, which considers, for example, the investor's sex and age. b. C) I and IV. A) II and IV. Reference: 12.1.2 in the License Exam. Variable annuities operate in similar ways to . 111. If the annuitant dies during the accumulation period, his/her beneficiary will receive the promised annuity payments. Your customer in his early 30s has received a modest inheritance from a relative. A)IPO. 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. B)mutual fund units. 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. *Universal variable life policies are insurance company products that should be purchased primarily for the insurance features they offer rather than as an investment. An accumulation unit in a variable annuity contract is: D) variable annuities may only be sold by registered representatives. A) 2800. A)100% tax free. B)changes in common stock prices tend to be more closely related to changes in the cost of living than changes in bond prices. must be filed with FINRA. C) value of underlying securities held in the separate account. Reference: 12.2.1 in the License Exam. C)II and IV. Generally, a life-only contract pays the most per month because payments cease at the annuitant's death. In March, the actual net return to the separate account was 8%. This describes which of the following annuities? If one purchases an annuity for a set price, the issuing company would invest the funds and hold them until they are supposed to be disbursed, generally based on the owner's age. D) a variable annuity contract is subject to fluctuating values due to market fluctuations of the underlying separate accounts. A client has purchased a nonqualified variable annuity from a commercial insurance company. A customer has a nonqualified variable annuity. externalities. At the end of the year your account has a value of 10750. The value of an annuity unit varies from month to month according to the performance of the separate account in comparison to the assumed interest rate. 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. B)I and IV. Question #25 of 48Question ID: 606819 If your 60-year-old customer purchases a nonqualified variable annuity and withdraws some of her funds before the contract is annuitized, what are the consequences of this action? C) none of these. B) a variable annuity contract is not required to be sold by prospectus because it is an insurance contract PGIM Fixed Income has over $900 billion in assets under management across a broad array of fixed . Once a customer annuitizes a variable annuity, which of the following statements are TRUE? The value of the separate account is now $30,000. A)variable annuities may only be sold by registered representatives. B) fixed payments for 10 years, followed by variable payments for life. C) Life annuity with period certain. Once a variable annuity has been annuitized: *Accumulation units represent units of ownership in a life insurance company's separate account when the contract is in the accumulation stage. 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. If the data is normally distributed with standard deviation$198, find the percent of vacationers who spent less than $1,200 per day. A 3 Spartan Technology Services and Solutions Private Limited is a subsidiary of IBM (International Business Machines) Corporation. D) tax free. who needs access to the sum invested at later time. C) value of underlying securities held in the separate account. Once the contract is annuitized, monthly payments to the customer are: What Are the Distribution Options for an Inherited Annuity? *The minimum guaranteed death benefit is provided by that portion of the payment invested in the insurance company's general account. The fees on variable annuities can be quite hefty. If the account is annuitized, the investor has chosen a payout option. If an insurance holder dies sooner than expected, the insurance company will have to pay the death benefit sooner. D) I and IV. Variable annuity Which of the following is characteristic of fixed annuities? In deciding whether to put money into a variable annuity versus some other type of investment, its worth weighing these pros and cons. The fixed payment that the annuitant receives loses purchasing power over time as a result of inflation. All of the following are accurate statements to make to the client EXCEPT Distribution can take place before or during any solicitation for sale. 8 annuities provide a guaranteed rate of return, whereas annuities provide conservative to aggressive investments whose rates of return are not guaranteed. D) II and III. D) Any time before the accumulation period. An annuity is an insurance product that promises to pay out income at a future date based on invested funds. A variable annuity is just a tax-deferred annuity in which you get to choose how the value of the annuity is invested. A)I and IV. 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 . Insurance companies introduced the variable annuity as an opportunity to keep pace with inflation. If an investor has a fixed-annuity contract with an insurance company, which of the following risks is assumed by the investor? A) a variable annuity contract will provide a fluctuating monthly check upon the annuitization of the contract 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. Premiums made into the annuity purchase accumulation units. B) Life annuity with period certain Supplemental income stream for retirement, not preservation of capital should be the catalyst to consider a VA and for anyone who may need access to the sum invested for any reason a VA would not be considered a suitable recommendation. MetLife offers a comprehensive benefits program, including healthcare benefits, life insurance, retirement benefits, parental leave, legal plan services and paid time off. D) Life annuity with 10-year period certain. C) Corporate bonds. B) Life annuity. Question #16 of 48Question ID: 606807 B) Ordinary income taxation on the earnings withdrawn until reaching the owner's cost basis. a variable annuity does not guarantee an earnings rate of return. A 45-year-old investor takes a lump-sum distribution from a nonqualified variable annuity. Only variable annuities have payout plans that provide the client income for life. Job Classification: Corporate - Legal and Compliance. Upon John's death during the accumulation period, Sue takes a lump-sum payment. III. & \underline{\underline{\$1,014,000}} & \hspace{10pt} \text{U.S. savings bonds} & 30,420\\ A guaranteed death benefit guarantees that the beneficiary will receive a death benefit if the annuitant dies before the annuity begins paying benefits. D) I and III. *As contributions are made with after-tax dollars, only the earnings generated are taxed on withdrawal. Reference: 12.3.3 in the License Exam. D) Variable annuities. B)Capital gains taxation on the earnings withdrawn in excess of the owner's basis. A)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 Suppose that 20%20 \%20% of their users are United States users who log on daily. Life income riders are best suited for those who anticipate a lengthy retirement and are generally not yet retired when making the VA purchase. A)the state banking commission. A) complete all paper work to purchase the annuity contract and obtain the clients signature immediately. These include white papers, government data, original reporting, and interviews with industry experts. Variable annuities are designed to combat inflation risk. In a joint-and-last-survivor option, the annuity payment is made jointly to both parties while both are alive. How to Navigate Market Volatility While Saving for Retirement, Variable Annuity: Definition and How It Works, Vs. Based on the information given in the question, the VA recommendation would not be suitable. Universal variable life policies You can tailor the income stream to suit your needs. This cloud model is composed of five essential characteristics, three service models, and four deployment models. Question #24 of 48Question ID: 606806 C) IRAs. A) I and III. His objective is monthly income that he can receive after he retires to supplement his small pension and social security benefits. 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. Sample problems from Chapter 9. . The paper publication will not be rereleased. A) be paid to a designated beneficiary. D)partially a tax-free return of capital and partially taxable. Each of the remaining statements are true. Round to the nearest hundredth of a percent. When a variable annuity contract is annuitized, the number of annuity units is fixed. D) Age 27, saving for first home. can be sold by someone with only an insurance license Question #15 of 48Question ID: 606804 \hspace{7pt} a. December 303030, to record the payroll. *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. Contributions to an IRA may be tax deductible, depending on the individual's earnings and participation in a company-sponsored qualified retirement plan. The annuity unit's value represents a guaranteed return. C) The ordinary income on the proceeds over the cost basis plus 10% of the net gain (if any) if Sue is younger than 59- years old. 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. There are also immediate annuities, which begin paying income right away. A registered representative recommends a variable annuity with an income rider to a client. C)II and IV. The money paid in will be returned tax free, but the earnings portion will be taxed as ordinary income. Do homework Doing homework can help you learn and understand the material covered in class. C) suitable regardless of funding sources D) reevaluate whether the recommendation for the VA contract is still suitable based on the clients proposed funding of the investment. 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. C) Tax-free municipal bonds B)I and II D) the payout plans provide the client income for life. A) two people are covered and payments continue until the second death. EEO IS THE LAW . In addition, if the customer is not at least 59-, there will be a tax penalty of an additional 10%. The second phase is triggered when the annuity owner asks the insurer to start the flow of income, often referred to as the payout phase. Periodic payment deferred annuity. savingsbonds30,420Groupinsurance45,630$341,718\begin{array}{lrlr} A) waiver of premium As of March 03, 2023, had a relative dividend yield of % compared to the industry median of %. A) It will be higher. Ideally they should be funded with readily available cash rather than using funds liquidated from existing investments. B) I and IV. C) It will stay the same. *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. Then find the probability of the event. D) There is no guarantee regarding the investment results of the separate account. I. C) III and IV. Question #40 of 48Question ID: 606800 B)unsuitable because her situation exposes her to surrender charges and early withdrawal penalties in exchange for insufficient benefits. B) a variable annuity contract is not required to be sold by prospectus because it is an insurance contract This customer has no spouse or dependents, which negates the value of the death benefit. A registered representative explaining variable annuities to a customer would be CORRECT in stating that: D) I and IV. As with most retirement account options, withdrawals before the age of 59 will result in a 10% tax penalty. A) taxed at a reduced rate. Once a variable annuity has been annuitized: A security is any investment for profit with management performed by a third party. 10.1 This chapter addresses a number of ABS statistics relating to the economically active population which were not discussed elsewhere. B) A 30 year old construction worker recently unemployed who wants to invest his severance pay amounting to 9 months salary. Anthony Battle is a CERTIFIED FINANCIAL PLANNER professional. This guideline has been prepared for use by Federal agencies. Changes in payments on a variable annuity correspond most closely to fluctuations in the: A) Dow Jones Industrial Average. Ideally they should be funded with readily available cash rather than using funds liquidated from existing investments. 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. U.S. Securities and Exchange Commission. The tax on this is $2,800 ($10,000 x 28%). The growth portion is taxed as a capital gain. D) Variable annuity. Based only on these facts, the variable annuity recommendation is The payout compared to last month's payout. A rider or statement of condition that allows a variable life insured to maintain policy coverage after becoming disabled is a benefit known as Before the contract is annuitized, your client, currently age 60, withdraws some funds for personal purposes. D) Growth mutual funds. D)I and III. D) I and III. A) The policy provides a minimum guaranteed death benefit. B) Ordinary income taxation on the earnings withdrawn until reaching the owner's cost basis. Designed to protect against inflation. Of the four client profiles below which might be the best suited for a variable annuity recommendation? 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. With regard to a variable annuity, all of the following may vary EXCEPT: The separate account performance compared to an assumed interest rate. How to Rollover a Variable Annuity Into an IRA. 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. For example, when paying rent, the rent payment (PMT) And, unlike a fixed annuity, variable annuities do not provide any guarantee that you will earn a return on your investment. A) 2800. approve changes in the plan portfolio. Therefore, ordinary income taxes will apply to the entire $10,000. The value of an annuity unit varies from month to month according to the performance of the separate account in comparison to the assumed interest rate. D) III and IV. An annuity is an agreement for one person or organization to pay another a series of payments. *The number of variable annuity accumulation units can rise during the accumulation period when additional units are being purchased. 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 A)contact the issuer of the clients existing VA contract to facilitate the clients surrender of the contract. do not have a separate account D)variable annuities. The separate account is NOT likely to invest in: The value of the customer's account is converted into annuity units if and when the customer decides to annuitize the contract. B) the state insurance department. B) II and III. It was a lump-sum purchase. You have 4 clients each expressing interest in a variable annuity contract. When a partial withdrawal is made from an annuity, the earnings are considered to be taken out first for tax purposes (or LIFO). If this client is in the payout phase, how would his April payment compare to his March payment? Question #45 of 48Question ID: 606795 The original investment has grown to a value of $60,000. A variable annuity is a type of annuity contract in which the value can vary based on the performance of an u . D) Capital gains tax on earnings exceeding basis. One of the following would achieve that objective but a suitability discussion regarding it's risk should also occur. Variable annuities gave buyers a chance to benefit from rising markets by investing in a menu of mutual funds offered by the insurer. All of the following statements about variable annuities are true EXCEPT: Universal variable life policies Single payment deferred annuity. For a retired person, which of the following investments would provide the greatest protection against inflation? In the case of deferred annuities, this is often referred to as the accumulation phase. 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. *An immediate annuity has no accumulation period. 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.