The number of annuity units is fixed. The fixed payment that the annuitant receives loses purchasing power over time as a result of inflation. B)II and III. For an investor, which of the following is the most important factor in determining the suitability of a variable annuity investment? 11.1: Fundamentals of Annuities - Mathematics LibreTexts Variable annuities must be registered with: 's dividend yield was % last year. Reference: 12.2.1 in the License Exam. 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. A)number of annuity units. All of the following are characteristics of Variable Annuity contracts EXCEPT The possibility of higher returns and greater income than fixed annuities, but there's also a risk that the account will fall in value A There are no surrender fees B Guaranteed death benefit C Tax deferred growth D Training Explanations A prospectus for a variable annuity contract: A) mutual fund units. (primary needs). Chapter 12 - Variable Annuities Flashcards | Chegg.com Outgoing personality with the ability to develop relationships (i.e., "People Person") and a sincere desire to help others Fearless, positive attitude, and willingness to be accountable for results Organized, detail-oriented, and excellent time-management skills A desire for continuous learning A customer is receiving annuitized payments from a variable annuity. Variable annuity salespeople must register with all of the following EXCEPT: Which of the following are defined as securities? C) III and IV. D) A 10% penalty plus the payment of ordinary income tax on funds withdrawn in excess of the owner's basis. Do homework Doing homework can help you learn and understand the material covered in class. D) variable annuities may only be sold by registered representatives. MetLife, Inc. Senior Customer Care Advocate Annuities ($22 per hour A 1 The applicant and possibly the agent initial any changes made. Universal variable life policies All of the following are true about annuities EXCEPT: they have all the same characteristics as life insurance. A) The policy provides a minimum guaranteed death benefit. Based on this information the RR should: Distribution can take place before or during any solicitation for sale. None of the other investments listed here offer tax-deferred growth. He wants to ensure that the client, in addition to meeting suitability requirements, is aware of certain variable annuity contract characteristics. D) cost of living. 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. B)Two-thirds of the withdrawal is taxable as ordinary income. Once annuitized, the number of annuity units does not vary. B)changes in common stock prices tend to be more closely related to changes in the cost of living than changes in bond prices. Once a customer annuitizes a variable annuity, which of the following statements are TRUE? D)Municipal bonds. The number of variable annuity accumulation units can rise during the accumulation period when additional units are being purchased. 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. A the safety of the principal invested B the yield is always higher than bond yields. During the payout period, payments are based on a fixed number of annuity units established when the contract was annuitized. C)earnings only and taxable 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. C) such an annuity is designed to combat inflation risk. D) The investment risk is shared between the insurance company and the policyowner. C) II and III. D) III and IV. 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. An investor who purchases a fixed annuity contract assumes purchasing-power risk. a life insurance holder dies sooner than expected. D)II and IV. D)all return of cost basis and nontaxable, Annuitized payments from a variable annuity are viewed for tax purposes as part earnings and part cost basis. It's somewhat similar to a variable life insurance policy in that: You can choose how the product's value is invested. 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. With variable annuities policyholders can choose from a number of investment opportunities. A) Fixed annuities. C. The separate account is NOT likely to invest in: An important basic characteristic of common stocks that makes them a suitable type of investment for the separate account of variable annuities is: PDF The NIST definition of cloud computing Variable annuity salespeople must be registered with FINRA and the state insurance department. *The investor has already paid tax on the contributions but the earnings have grown tax-deferred. The investor has already paid tax on the contributions but the earnings have grown tax-deferred. B)I and IV. C) single payment immediate annuity. Question #31 of 48Question ID: 606836 D) I and II. A)the number of annuity units becomes fixed when the contract is annuitized. a variable annuity has which of the following characteristics 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. 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. III) A hierarchy of corporate staff evaluates divisions' plans and performance. He originally invested $29,000 4 years ago; it now has a value of $39,000. As with most retirement account options, withdrawals before the age of 59 will result in a 10% tax penalty. All of the following characteristics are shared by both a mutual fund and a variable annuity's separate account EXCEPT: B)IRAs. 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: Science Health Science Nursing. A) II and IV. John is the annuitant in a variable plan, and Sue is the beneficiary. A joint life with last survivor annuity: 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. A) two people are covered and payments continue until the second death. C)Keogh plans. A) number of annuity units. A)not suitable What percentile is represented by $710? && \hspace{10pt}\text{Group insurance} & \underline{45,630}\\ Diagnosis is made by punch biopsy. B)cost of living. Reference: 12.3.3 in the License Exam, Question #34 of 48Question ID: 606834 They are also riddled with fees, which can cut into profits. Fixed annuities pay a fixed monthly benefit which loses purchasing power if there is inflation. If an investor has a fixed-annuity contract with an insurance company, which of the following risks is assumed by the investor? Of the answer choices given the best would be to reevaluate the recommendation based on the new information tendered by the client. C) taxed as ordinary income only to the extent of earnings. Based on the clients profile which of the following would be the best recommendation? A Variable Annuity Has Which of the Following Characteristics B) the client may vote for the board of directors or board of managers. C)Corporate bonds. IV. A variable annuity is both an insurance and a securities product. A) It will be higher. Which of the following recommendations would best meet the customer profile? C)I and IV. 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. Reference: 12.3.2.1 in the License Exam. *Under the mortality guarantee, the insurance company assumes mortality risk by guaranteeing payments for life, though the amount of each payment is not guaranteed. A customer has a nonqualified variable annuity. The beneficiary is taxed at ordinary income rates during the year the lump sum is received. Reference: 12.3.3 in the License Exam. 222. B) Exchange traded Funds (ETFs) or Exchange traded Notes (ETNs) IV. B) the rate of return is determined by the underlying portfolio's value. I. Your customer in his early 30s has received a modest inheritance from a relative. Variable annuities should be considered long-term investments due to the limitations on withdrawals. B) life income The funds are not liquid due to the surrender fees, and there is also a 10% penalty on withdrawals before age 59-. II. A) It will be higher. A) not suitable A customer has a nonqualified variable annuity. D)I and III. . This factor is used to establish the dollar amount of the first annuity payment. Question #45 of 48Question ID: 606795 Options. During the accumulation phase, you make purchase payments. B)It will be lower. C)III and IV. This cloud model is composed of five essential characteristics, three service models, and four deployment models. A) be paid to a designated beneficiary. Immediate life annuity. 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 following changes have been incorporated into Special Publication 800145, as of the date indicated - . must precede every sales presentation. B) accumulation units. A joint-and-last-survivor annuity is a payout option where: D) an accounting measure used to determine the contract owner's interest in the separate account. d) What is the probability that a user is from the United States, given that he or she logs on every day? A)III and IV. The number of accumulation units can rise during the accumulation period. Variable annuities gave buyers a chance to benefit from rising markets by investing in a menu of mutual funds offered by the insurer. continues payments only as long as all annuitants are still alive. The growth portion is taxed as ordinary income. A Variable Annuity Has Which of the Following Characteristics D) payments continue until age 70-. When the contract is annuitized, the annuitant is credited with a fixed number of annuity units. B)value of annuity units. Reference: 12.1.4.1 in the License Exam. C)II and III. Before the contract is annuitized, your client, currently age 60, withdraws some funds for personal purposes. Prudential's businesses offer a variety of products and services, including life insurance, annuities, retirement-related services, mutual funds, asset management, and real estate services. He makes several statements regarding the contract. A)Ordinary income taxation on the earnings withdrawn until reaching the owner's cost basis. An 18-year-old, unmarried high school student sought a safe investment for a $30,000 bequest until after she graduated from college. 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)IPO. C) suggest to the client that perhaps a loan or refinancing his vacation home might be a better way to fund the contract purchase. Variable Annuities. *Universal variable life policies are insurance company products that should be purchased primarily for the insurance features they offer rather than as an investment. D) II and IV. B) the safety of the principal invested. Variable Annuities Flashcards | Quizlet Upon John's death during the accumulation period, Sue takes a lump-sum payment. *Contributions to a nonqualified annuity are made with the owner's after-tax dollars. Ideally they should be funded with readily available cash rather than using funds liquidated from existing investments. 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? Life Insurance vs. Annuity: What's the Difference? No paper. Consequently, the client pays taxes only on the growth portion of the withdrawal ($10,000). d. Each month the payment will increase, decrease, or remain the same as the previous month's payment . 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 investment strategies offer either fully or partially tax-deductible contributions to individuals who meet eligibility requirements EXCEPT: D) the payout plans provide the client income for life. A) mortality guarantee. D)value of accumulation units. Reference: 12.2.1 in the License Exam. A) Money market fund. A)equity funds. Distributed along a dermatome. It was a lump-sum purchase. e) Are From the United States and Log on every day independently? C) There is no tax as the withdrawal is considered return of capital. The minimum guaranteed death benefit is provided by that portion of the payment invested in the insurance company's general account. B) The entire $10,000 is taxable as ordinary income. A universal variable life policy should be purchased primarily for its insurance features, not its investment features.
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