IBM is a global brand and has its presence in 170 countries and operates . 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. Reference: 12.1.1 in the License Exam. If the separate account of a variable annuity with an AIR of 4% had actual net earnings of 8% in March, the April payment will be higher than the March payment. An ordinary simple annuity has the following characteristics: For example, most car loans are ordinary simple annuities where payments are. B) accumulation units. C) III and IV. These contracts come with high surrender charges. \hspace{7pt} b. December 303030, to record the employers payroll taxes on the payroll to be paid on December 313131. How is the distribution taxed? B) variable annuities are classified as insurance products. C) 3800. The value of the customer's account is converted into annuity units if and when the customer decides to annuitize the contract. Reference: 12.1.4.1 in the License Exam. Universal variable life policies The value of the customer's account is converted into annuity units if and when the customer decides to annuitize the contract. Life income riders are best suited for those who anticipate a lengthy retirement and are generally not yet retired when making the VA purchase. B) Municipal bonds. B) I and III. D)I and IV. A the safety of the principal invested B the yield is always higher than bond yields. 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. Based only on these facts, the variable annuity recommendation is C)with guaranteed minimum withdrawal benefits (GMWBs) the periodic payments can be monthly, quarterly or annually D) Variable annuity. Diagnosis is made by punch biopsy. D)the state insurance department. Often used for retirement planning purposes, it is meant to provide a regular (monthly, quarterly, annual) income stream, starting at some point in the future. D) I and II. Generally, a life-only contract pays the most per month because payments cease at the annuitant's death. D) a minimum of 10 years of variable payments, followed by additional variable payments for life. A registered representative recommends a variable annuity with an income rider to a client. If the contract holder dies before the period expires, the remaining payments are made to the beneficiary. He makes several statements regarding the contract. A)I and IV. B)reevaluate whether the recommendation for the VA contract is still suitable based on the clients proposed funding of the investment. a variable annuity does not guarantee an earnings rate of return. Consequently, the client pays taxes only on the growth portion of the withdrawal ($10,000). Question #45 of 48Question ID: 606795 For an investor, which of the following is the most important factor in determining the suitability of a variable annuity investment? C) a variable annuity contract does not guarantee any type of return An annuity factor is taken from the annuity table, which considers, for example, the investor's sex and age. She may choose to receive monthly payments for the rest of her life. A) variable annuities offer the investor protection against capital loss. 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. While there is no guarantee on how investments in the separate account will perform, depending on its investment performance, the separate account could provide for a larger death benefit than the minimum guaranteed amount. A) I and II. Your customer in his early 30s has received a modest inheritance from a relative. Because common stocks are not fixed dollar investments, they have the opportunity to keep pace with inflation. Future annuity payments will vary according to the separate account's performance. a variable annuity does not guarantee payments for life. Usually the term "annuity" relates to a contract between an individual and a life insurance company. The owner of a variable annuity has all of the following rights EXCEPT the right to vote: a. for the Board of Trustees b. to change the separate account's investment objective c. for distributing income and capital gains d. for dissolutions of the trust for distributing income and capital gains. Reference: 12.1.4.1 in the License Exam. A) I and IV. B) the state insurance department. B)fixed in value until the holder retires. Which of the following is not a characteristic of a program module? externalities. What Are the Risks of Annuities in a Recession? B) The policyowner. Question #28 of 48Question ID: 606821 D) Life annuity with 10-year period certain. A) number of annuity units. B)4200. Payments from a variable annuity depend on the securities' value in the separate account's underlying investment portfolio. Question #11 of 48Question ID: 606816 For this potential advantage, the investor, rather than the insurance company, assumes the investment risk. Practice all cards. A) It will be higher. As part of the registration requirements, a prospectus must be filed and distributed to prospective investors. Are Variable Annuities Subject to Required Minimum Distributions? B) 0. An annuity is a continuous stream of equal periodic payments from one party to another for a specified period of time to fulfill a financial obligation. PGIM Fixed Income has over $900 billion in assets under management across a broad array of fixed . Her intent was to use the funds for the down payment on a house after graduation. B)a majority vote from the shareholders is required to change the investment objectives. B) I and IV. In the case of deferred annuities, this is often referred to as the accumulation phase. You can learn more about the standards we follow in producing accurate, unbiased content in our. *A joint life with last survivor contract covers multiple annuitants and ceases payments at the death of the last surviving annuitant. Vaccine has decreased the incidence. An investor who purchases a fixed annuity contract assumes purchasing-power risk. A variable annuity is both an insurance and a securities product. B) II and IV. A) A variable annuity B)variable annuities are classified as insurance products. B)corporate stock. 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. "Variable Annuities: What You Should Know," Page 6. C) value of underlying securities held in the separate account. Following the transition to T+1 in the U.S. markets, Commission staff will continue to work with industry leaders, public interest advocates, investors and other regulators to assess the future feasibility of a T+0 settlement standard cycle, and seek to identify ways to overcome the challenges associated with such a move, as articulated in the . Bear in mind that between the numerous feessuch as investment management fees,mortality fees, and administrative feesand charges for any additional riders, a variable annuitysexpenses can quickly add up. 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. What is the taxable consequence of this withdrawal to your client? Job Classification: Corporate - Legal and Compliance. Contributions to an IRA may be tax deductible, depending on the individual's earnings and participation in a company-sponsored qualified retirement plan. C) single payment immediate annuity. If an investor has a fixed-annuity contract with an insurance company, which of the following risks is assumed by the investor? A) II and IV. C)III and IV. B) 10% penalty plus payment of ordinary income tax on all funds withdrawn. Fixed annuities. B)a lifetime withdrawal benefit (LWB) or lifetime income benefit will make a periodic payment even if the account balance falls to zero 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. A) There is no risk in a variable annuity. An accumulation unit in a variable annuity contract is: C) 3000. Listing tax-deferred growth as an objective for retirement income, which of the following investments is most suitable? Variable annuity salespeople must register with all of the following EXCEPT: Which of the following are defined as securities? B) single payment deferred annuity. The amount of the purchase payments that go into the account may be less than you paid because fees were taken out of the purchase payments. Question #38 of 48Question ID: 606798 C)II and IV. a variable annuity does not guarantee an earnings rate of return. B) Ordinary income taxation on the earnings withdrawn until reaching the owner's cost basis. Question #37 of 48Question ID: 606817 is required by the Securities Act of 1933. A security is any investment for profit with management performed by a third party. Annual depreciation on the machine is$12,000, and the tax rate of the company is 25%. The client agrees to purchase the contract and informs the RR that he will be cashing out a VA he purchased 2 years ago to fund the new contract and will forward the check as soon as he receives it. A) defined contribution plans. C) taxed as ordinary income only to the extent of earnings. A trend makes considerable influence or impact. Question #27 of 48Question ID: 606818 A)an accounting measure used to determine the contract owner's interest in the separate account. 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 The separate account performance compared to last month's performance. B)part earnings and part cost basis The investor has already paid tax on the contributions but the earnings have grown tax-deferred. With regard to a variable annuity, all of the following may vary EXCEPT: D)accumulation units. As of March 03, 2023, had a relative dividend yield of % compared to the industry median of %. A) complete all paper work to purchase the annuity contract and obtain the clients signature immediately. The correct answer was: partially a tax-free return of capital and partially taxable. If an investor has a fixed-annuity contract with an insurance company, which of the following risks is assumed by the investor? The growth portion is subject to a 10% penalty. D) expense guarantee. To comply with Regulation SP, a brokerage firm is required to do all of the following EXCEPT: A) deliver an annual notice of its information collecting and sharing policies to all customers. Determine whether the following events are independent or dependent. Though there is no beneficiary designation during the annuitization, this is not an issue for this annuitant. What is her total tax liability? Immediate annuities purchase annuity units directly. The owner of a life annuity with 10-year period certain will receive payments for life, subject to a minimum of 10 years. Each of the remaining statements are true. IBM Noida, Uttar Pradesh, India1 month agoBe among the first 25 applicantsSee who IBM has hired for this roleNo longer accepting applications. Policyholders . *Payments from a variable annuity depend on the securities' value in the separate account's underlying investment portfolio. She will receive the annuity's entire value in a lump-sum payment. A) Any tax due is deferred. The value of the separate account is now $30,000. I. *The investor has already paid tax on the contributions but the earnings have grown tax-deferred. U.S. Securities and Exchange Commission. When a partial withdrawal is made from an annuity, the earnings are considered to be taken out first for tax purposes (or LIFO). *An immediate annuity has no accumulation period. Question #36 of 48Question ID: 606805 B) with guaranteed minimum withdrawal benefits (GMWBs) the periodic payments can be monthly, quarterly or annually The number of accumulation units can rise during the accumulation period. A single lump-sum investment is made, and payments begin immediately, since the investor has purchased annuity units. Your 55-year-old client invested $50,000 four years ago in a nonqualified variable annuity. A guaranteed lifetime annuity promises to pay the owner an income for the rest of their life. FINRA. Reference: 12.1.2 in the License Exam, Question #21 of 48Question ID: 606812 B) the number of annuity units is fixed, and their value remains fixed. One of the following would achieve that objective but a suitability discussion regarding it's risk should also occur. C) payments continue for a pre-determined period of time. B) the client may vote for the board of directors or board of managers. D)It cannot be determined until the April return is calculated. B)I and IV. Variable annuities offer the possibility of higher returns and greater income than fixed annuities, but theres also a risk that the account will fall in value. must be filed with FINRA. Reference: 12.3.3 in the License Exam. The growth portion is taxed as ordinary income. For a nonqualified variable annuity, cost basis for the annuitant would use the after-tax dollars contributed. C) annuity units. Question #12 of 48Question ID: 606814 Distribution can take place before or during any solicitation for sale. Based on this information the RR should: The separate account performance compared to an assumed interest rate. Complete a blank sample electronically to save yourself time and money. required to be located off of the company's premises. The remainder of the premium is invested in the separate account. All of the following investment strategies offer either fully or partially tax-deductible contributions to individuals who meet eligibility requirements EXCEPT: The customer, in the accumulation stage of the annuity, is holding accumulation units. D) minimum guaranteed death benefit. & \underline{\underline{\$1,014,000}} & \hspace{10pt} \text{U.S. savings bonds} & 30,420\\ Distributions from nonqualified variable annuities are: The tax on this is $2,800 ($10,000 x 28%). B) a variable annuity contract is not required to be sold by prospectus because it is an insurance contract C) value of underlying securities held in the separate account. Contributions to an IRA may be tax deductible, depending on the individual's earnings and participation in a company-sponsored qualified retirement plan. *Only variable annuities have payout plans that provide the client income for life. 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 *A variable annuity does not guarantee an earnings rate because earnings will depend on the performance of the separate account. Consequently, the client pays taxes only on the growth portion of the withdrawal ($10,000). 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. continues payments as long as one annuitant is alive. Do homework Doing homework can help you learn and understand the material covered in class. The number of accumulation units can rise during the accumulation period. C) be returned to the separate account. A) I and IV. The downside was that the buyer was exposed to market risk, which could result in losses. A) I and II The trial of the assassins commenced on the following day; and the evidence being so clear, they were both found guilty, and condemned, to be broken alive on the wheel. If the contract holder dies before the period expires, the remaining payments are made to the beneficiary. Variable annuities are designed to combat inflation risk. The $30,000 contract value represents $10,000 of contributions and $20,000 of earnings. C)Variable annuity contract with a discussion regarding interest rate risk Question #47 of 48Question ID: 606813 In deciding whether to put money into a variable annuity versus some other type of investment, its worth weighing these pros and cons. \hspace{10pt} Social security, 6%6\%6% on first $100,000\$100,000$100,000 of employee annual earnings B)cost of living. Variable annuities provide protection from inflation because their monthly income can increase depending on the separate account's performance. The number of annuity units is fixed at the time of annuitization. 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. Skylar Clarine is a fact-checker and expert in personal finance with a range of experience including veterinary technology and film studies. C) Life annuity with period certain. Question #31 of 48Question ID: 606836 can be sold by someone with only an insurance license D)I and III. C) with guaranteed minimum withdrawal benefits (GMWBs) a lifetime of periodic payments is guaranteed A) I and II. A variable annuity is a long term investment issued by an insurance company that can help you grow your money, take income in retirement and pass on your wealth. B) prime rate. A) Money market fund. For a retired person, which of the following investments would provide the greatest protection against inflation? C)such an annuity is designed to combat inflation risk. "Variable Annuities: What You Should Know," Pages 67. C)number of accumulation units. Of the answer choices given the best would be to reevaluate the recommendation based on the new information tendered by the client. He originally invested $29,000 4 years ago; it now has a value of $39,000. Ideally they should be funded with readily available cash rather than using funds liquidated from existing investments. A)II and III. C) During the annuity period. They offer broad diversification in the securities market and potential growth, all while using the power of tax deferral. A) The fact that the annuity payment may increase or decrease. Contributions to a nonqualified annuity are made with the owner's after-tax dollars. Of the 4 client profiles below, which might be the best suited for a variable annuity recommendation? A customer is receiving annuitized payments from a variable annuity. D) I and IV. A) Fixed Annuity A) II and III. Question #15 of 48Question ID: 606804 Question #20 of 48Question ID: 606808 II. B)Life annuity with period certain. This recommendation is: D) unsuitable because her situation exposes her to surrender charges and early withdrawal penalties in exchange for insufficient benefits. A) I and III. A) 2800. While there is no guarantee on how investments in the separate account will perform, depending on its investment performance, the separate account could provide for a larger death benefit than the minimum guaranteed amount. D) Keogh plans. A) 2800. Reference: 12.1.2.1.1 in the License Exam. C) number of accumulation units. These contracts come with high surrender charges. Therefore, variable annuities must be registered with the state insurance commission and the Securities and Exchange Commission. 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. Reference: 12.1.2.1.1. in the License Exam. B) The entire $10,000 is taxable as ordinary income. C)municipal bonds. B)unsuitable because her situation exposes her to surrender charges and early withdrawal penalties in exchange for insufficient benefits. The payout compared to the initial payout upon annuitization. Explain what is meant by positive and negative A) Ordinary income tax on earnings exceeding basis. A customer has contributed $1,000 a year for 10 years to his tax-deferred nonqualified variable annuity. The growth portion is taxed as ordinary income. Question #17 of 48Question ID: 606802 C)Growth mutual funds C) There is no tax as the withdrawal is considered return of capital. Question #22 of 48Question ID: 606803 D) reevaluate whether the recommendation for the VA contract is still suitable based on the clients proposed funding of the investment. Reference: 12.3.1 in the License Exam. A) Ordinary income tax on earnings exceeding basis. C) early annuity phase-in b. The separate account is used for both variable life insurance and variable annuity investments.
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