a variable annuity has which of the following characteristics
A prospectus for a variable annuity contract: It was a lump-sum purchase. Income that cannot be outlived by the owner An investor who has purchased a nonqualified variable annuity has the right to: Reference: 12.1.2 in the License Exam, Question #39 of 48Question ID: 721469 Licensed to sell Variable Annuities in the following state(s): FL, TX . Question #16 of 48Question ID: 606807 B) single payment deferred annuity. When the second party dies, all payments cease. Contributions to an IRA may be tax deductible, depending on the individual's earnings and participation in a company-sponsored qualified retirement plan. The value of these units varies with the performance of the separate account. A variable annuity has two phases: an accumulation phase and a payout (annuitization) phase. Reasonable accommodations may be made to enable individuals with disabilities to perform the essential functions. Home; About. C)I and IV. C) Tax-free municipal bonds D) a minimum of 10 years of variable payments, followed by additional variable payments for life This factor is used to establish the dollar amount of the first annuity payment. A client has purchased a nonqualified variable annuity from a commercial insurance company. An ordinary simple annuity has the following characteristics: For example, most car loans are ordinary simple annuities where payments are. Every annuity has some characteristics in common. Reference: 12.1.4.1 in the License Exam. When money is deposited into the annuity, it is purchasing accumulation units. A) I and III. Can I Borrow from My Annuity for a House Down Payment? Do whatever you want with a Learn About Annuities and Their Myths - F&G: fill, sign, print and send online instantly. Inflation-hedging, using both tax deferral combined with market growth potential, is made possible by variable annuities #. A variable annuity is a type of annuity contract in which the value can vary based on the performance of an u . C)the SEC. A) a variable annuity contract will provide a fluctuating monthly check upon the annuitization of the contract C)complete all paper work to purchase the annuity contract and obtain the clients signature immediately. Of the answer choices given the best would be to reevaluate the recommendation based on the new information tendered by the client. *Under the mortality guarantee, the insurance company assumes mortality risk by guaranteeing payments for life, though the amount of each payment is not guaranteed. B) 0. As with most retirement account options, withdrawals before the age of 59 will result in a 10% tax penalty. Skylar Clarine is a fact-checker and expert in personal finance with a range of experience including veterinary technology and film studies. A 10% penalty applies only if distributions begin before age 59-. The value of a variable annuity is based on the performance of an underlying portfolio of sub accounts selected by the annuity owner. Distributions to the annuitant will fluctuate during the payout period. D) the yield is always higher than mortgage yields. The income was deferred from tax over the plan's life, so it is taxable as ordinary income once distributed. Variable annuities were introduced in the 1950s as an alternative to fixed annuities, which offer a guaranteedbut often lowpayout during the annuitization phase. D)II and IV. A) I and II. IV. \hspace{10pt} State unemployment (employer only), 3.8%3.8\%3.8% A)contact the issuer of the clients existing VA contract to facilitate the clients surrender of the contract. A trend makes considerable influence or impact. C) value of underlying securities held in the separate account. B)corporate stock. A)not suitable The entire amount is taxed as ordinary income. As part of the registration requirements, a prospectus must be filed and distributed to prospective investors. He originally invested $29,000 4 years ago; it now has a value of $39,000. A variable annuity is a combination of 2 products: an insurance contract and a mutual fund. The value of the separate account is now $30,000. All of the following investment strategies offer either fully or partially tax-deductible contributions to individuals who meet eligibility requirements EXCEPT: The original investment has grown to a value of $60,000. D)an accounting measure used to determine payments to the owner of the variable annuity. In addition, if the customer is not at least 59-, there will be a tax penalty of an additional 10%. As part of his profile he stresses that he has had uncomfortable experiences in the past with the stock market and is not inclined to invest in anything that is based on stock market performance and would opt for principal protection instead. A customer has an investment objective of keeping pace with inflation while assuming moderate risk. A)II and III. 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. The earnings are taxable but the cost basis is returned tax free. C) none of these. A registered representative recommends a variable annuity with an income rider to a client. Because the client is older than age 59-, he does not pay 10% premature distribution penalty tax. D)suggest to the client that perhaps a loan or refinancing his vacation home might be a better way to fund the contract purchase. An important basic characteristic of common stocks that makes them a suitable type of investment for the separate account of variable annuities is: Many variable annuities invest the separate account in mutual funds. vote for the investment adviser. 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 45-year-old investor takes a lump-sum distribution from a nonqualified variable annuity. B)I and II 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. MetLife offers a comprehensive benefits program, including healthcare benefits, life insurance, retirement benefits, parental leave, legal plan services and paid time off. Variable annuities grow tax-deferred, so you dont have to pay taxes on any investment gains until you begin receiving income or make a withdrawal. However, they are protected by state guaranty associations in the event that the insurance company providing the product goes out of business. D)an accounting measure used to determine payments to the owner of the variable annuity. C) taxed as ordinary income only to the extent of earnings. B) with guaranteed minimum withdrawal benefits (GMWBs) the periodic payments can be monthly, quarterly or annually Variable annuity salespeople must register with all of the following EXCEPT: *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. Reference: 12.2.1 in the License Exam, Question #48 of 48Question ID: 606835 A) Fixed annuities. Single payment deferred annuity. D)Any tax due is deferred. D) reevaluate whether the recommendation for the VA contract is still suitable based on the clients proposed funding of the investment. A) mutual fund units. B) Life annuity. b. Consequently, the client pays taxes only on the growth portion of the withdrawal ($10,000). *The investor has already paid tax on the contributions but the earnings have grown tax-deferred. Typically, they allow one withdrawal each year during the accumulation phase. D) 100% tax deferred. The number of accumulation units is always fixed throughout the accumulation period. If the client, who is in a 30% tax bracket, makes a random withdrawal of $15,000, what will the tax liability to the IRS be? is required by the Securities Act of 1933. The number of annuity units is fixed. When a partial withdrawal is made from an annuity, the earnings are considered to be taken out first for tax purposes (or LIFO). The downside was that the buyer was exposed to market risk, which could result in losses. A customer has contributed $1,000 a year for 10 years to his tax-deferred nonqualified variable annuity. The time period depends on how often the income is to be paid. c) Construct a contingency table showing all the joint and marginal probabilities. 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. For example, when paying rent, the rent payment (PMT) . Random withdrawals do not guarantee how long the money will last because large withdrawals can deplete the funds before the annuitant dies. Fixed annuities, on the other hand, provide a guaranteed return. C)II and III. The value of accumulation and annuity units varies with the investment performance of the separate account. D) payments continue until age 70-. D)suitable due to the relative safety of the investment. Expert Answer. During the accumulation phase, the number of accumulation units will increase as additional money is invested. A variable annuity is a security and must be registered with the SEC, not FINRA. 2019 Ted Fund Donors On withdrawals from a nonqualified annuity, taxes are paid only on the amount that exceeds cost basis (the amount paid into the annuity). Question #27 of 48Question ID: 606818 The value of accumulation and annuity units varies with the investment performance of the separate account. used to escrow late or otherwise delinquent premium payments. In addition, an element of risk must be present. must precede every sales presentation. 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) 100% tax free. There is a guaranteed minimum interest rate, normally amounting to between 1 and 3 percent. Once a variable annuity has been annuitized: 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. A)defined contribution plans. B) II and III B) taxed as ordinary income. D) tax free. B) accumulation units. If this client is in the payout phase, how would his April payment compare to his March payment? can be sold by someone with only an insurance license Because common stocks are not fixed dollar investments, they have the opportunity to keep pace with inflation. C)II and IV. A 45-year-old investor takes a lump-sum distribution from a nonqualified variable annuity. no. 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: an annuitant dies sooner than expected. A registered representative explaining variable annuities to a customer would be CORRECT in stating that: A)I and IV. *Of the four customer profiles the individual already making the maximum retirement account contributions available to him and wanting to minimize the tax consequences of being in a high income tax bracket would be most suitable for a VA recommendation. Universal variable life policies Classifying annuities There are many categories of annuities. B. 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. P=525p2+65,326p185,000E=326p+185,000P=-525 p^{2}+65,326 p-185,000 \quad E=-326 p+185,000P=525p2+65,326p185,000E=326p+185,000. A)Joint tenants annuity. order now. B)I and IV. Then find the probability of the event. Designed to protect against inflation. If the account is annuitized, the investor has chosen a payout option. Fixed Annuity, Retirement Annuities: Know the Pros and Cons. The work environment characteristics are normal office conditions. These contracts come with high surrender charges. B) I and III. Usually the term "annuity" relates to a contract between an individual and a life insurance company. D) III and IV. A) 2800. 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. B) the rate of return is determined by the underlying portfolio's value. The number of accumulation units is always fixed throughout the accumulation period. C)with guaranteed minimum withdrawal benefits (GMWBs) the periodic payments can be monthly, quarterly or annually D) I and III. D) None, because it is the proceeds from a life insurance company. Variable annuities are riskier than fixed annuities because the underlying investments may lose value. Distributions from nonqualified variable annuities are: C) 10% penalty plus payment of ordinary income tax on all funds withdrawn exceeding basis. *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. C) III and IV. Reference: 12.3.2.1 in the License Exam. The return on a variable annuity is not guaranteed; it is determined by the underlying portfolio's value. A) a minimum rate of return is guaranteed. U.S. Securities and Exchange Commission.