B)I and II C) Universal variable life policy. Insurance companies introduced the variable annuity as an opportunity to keep pace with inflation. 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. Question #43 of 48Question ID: 606809 A trend makes considerable influence or impact. B)Universal variable life policy. 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. An annuity payment is the dollar amount of the equal periodic payment in an annuity environment. C) Tax-free municipal bonds A universal variable life policy should be purchased primarily for its insurance features, not its investment features. the SEC. B) 10% penalty plus payment of ordinary income tax on all funds withdrawn. This would not align with the couple's criteria for coverage as long as they both live. *BEST Suited for VA-Age 56, available cash to invest, maxes out IRA and 401(k) plan VA will be supplemental income, would not be suitable for cust. *Payments from a variable annuity depend on the securities' value in the separate account's underlying investment portfolio. 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 B) IPO. D) tax free. C) early annuity phase-in \hspace{10pt} \text{Warehouse salaries} & 110,000 & \hspace{10pt} \text{Social security tax withheld} & 51,714\\ The payout compared to the initial payout upon annuitization. Fixed annuities. *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. do not have a separate account 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. C) The portion of the premium invested in the insurance company's general account is used to provide for the minimum guaranteed amount of the death benefit. Question #25 of 48Question ID: 606819 Reference: 12.3.1 in the License Exam. B) single payment deferred annuity. This recommendation is: D) unsuitable because her situation exposes her to surrender charges and early withdrawal penalties in exchange for insufficient benefits. Variable annuities gave buyers a chance to benefit from rising markets by investing in a menu of mutual funds offered by the insurer. The funds in an annuity are off-limits to creditors and other debt collectors. A customer has a nonqualified variable annuity. B)I and III. A)the yield is always higher than mortgage yields. Similarly, CDs are insured, thereby eliminating risk and guaranteeing a return. Listing tax-deferred growth as an objective for retirement income, which of the following investments is most suitable? When the annuitization option is selected, each payment represents both capital and earnings. can be sold by someone with only an insurance license John is the annuitant in a variable plan, and Sue is the beneficiary. Variable annuities provide protection from inflation because their monthly income can increase depending on the separate account's performance. Reference: 12.3.3 in the License Exam. 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 . Try A) each annuity unit's value is fixed, but the number of annuity units varies with time. This cloud model is composed of five essential characteristics, three service models, and four deployment models. C)complete all paper work to purchase the annuity contract and obtain the clients signature immediately. Reference: 12.1.1 in the License Exam. II. A 1 The applicant and possibly the agent initial any changes made. C)I and III. C)earnings only and taxable A rider or statement of condition that allows a variable life insured to maintain policy coverage after becoming disabled is a benefit known as (primary needs). D) None, because it is the proceeds from a life insurance company. The owner of a life annuity with 10-year period certain will receive payments for life, subject to a minimum of 10 years. IV. must precede every sales presentation. A)the state banking commission. A guaranteed lifetime annuity promises to pay the owner an income for the rest of their life. C)none of these. D) I and III. A)100% tax free. D) It cannot be determined until the April return is calculated. D)II and IV. A) changes in common stock prices tend to be more closely related to changes in the cost of living than changes in bond prices. Life with period certain will produce a smaller check for life because the insurance company will guarantee payments to a beneficiary for a certain period of time designated in the contract should the annuitant die within that period. Variable annuity salespeople must register with all of the following EXCEPT: Reference: 12.1.4.1 in the License Exam. How to Rollover a Variable Annuity Into an IRA. 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) I and III. D) accumulation shares. Herpes Zoster has all of the following characteristics except: Group of answer choices. The value of accumulation and annuity units varies with the investment performance of the separate account. Complete a blank sample electronically to save yourself time and money. Over the following year, the stock fund has a 10% return, and the bond fund has a 5% return. EEO IS THE LAW . The investor purchased accumulation units. 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. B) The proceeds minus John's cost basis taxed as ordinary income at Sue's tax rate. is required by the Securities Act of 1933. However, the web version (cat. Deal with mathematic Math is all about solving equations and finding the right answer. can be sold by someone with only an insurance license Reference: 12.2.1 in the License Exam. When a partial withdrawal is made from an annuity, the earnings are considered to be taken out first for tax purposes (or LIFO). Based on this information the RR should: A) a minimum rate of return is guaranteed. C) single payment immediate annuity. Needs - are goal-directed forces that people experience. Question #17 of 48Question ID: 606802 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. must provide full and fair disclosure. U.S. Securities and Exchange Commission. Which of the following is characteristic of variable annuities? B) I and IV. All of the following characteristics are shared by both a mutual fund and a variable annuity's separate account EXCEPT: 222. Based on the information given in the question, the VA recommendation would not be suitable. A) partially a tax-free return of capital and partially taxable. B) variable annuities. 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. A)II and IV. C)Corporate bonds. A registered representative recommends a variable annuity with an income rider to a client. Assuming that the payroll for the last week of the year is to be paid on January 444 of the following fiscal year, journalize the following entries: The holder of a variable annuity receives the largest monthly payments under which of the following payout options? D) an accounting measure used to determine the contract owner's interest in the separate account. View full document. Her agent recommended she choose a variable annuity as a safe haven for the funds. When money is deposited into the annuity, it is purchasing accumulation units. D)Variable annuity. C) 100% tax free. 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. The payout compared to last month's payout. 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. Changes in payments on a variable annuity correspond most closely to fluctuations in the: The downside was that the buyer was exposed to market risk, which could result in losses. Reference: 12.3.1 in the License Exam, Question #30 of 48Question ID: 606833 *The most important consideration in purchasing a variable annuity is to be aware that benefit payments will fluctuate with the investment performance of the separate account. A Variable Annuity has which of the following characteristics? A variable annuity is a combination of 2 products: an insurance contract and a mutual fund. *The customer, in the accumulation stage of the annuity, is holding accumulation units. D) periodic payment deferred annuity. D)A variable annuity, Variable annuities offer tax-deferred growth and are suitable for achieving supplemental retirement income. B)each annuity unit's value varies with time, but the number of annuity units is fixed. A) variable annuities offer the investor protection against capital loss. C) insurance companies keep variable annuity funds in separate accounts from other insurance products. However, it does guarantee payments for life (mortality). The separate account is used for both variable life insurance and variable annuity investments. He makes the following four statements, all of which are true EXCEPT The tax on this is $2,800 ($10,000 x 28%). B) the number of annuity units is fixed, and their value remains fixed. 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. An important basic characteristic of common stocks that makes them a suitable type of investment for the separate account of variable annuities is: Clusters of vesicles in various stages. C) 3000. The growth portion is taxed as a capital gain. They are also not considered suitable for anyone who anticipates needing a lump sum within a short time frame to fund other endeavors. 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. 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. B)a majority vote from the shareholders is required to change the investment objectives. 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. C)III and IV. A) changes in common stock prices tend to be more closely related to changes in the cost of living than changes in bond prices. B) a variable annuity contract is not required to be sold by prospectus because it is an insurance contract A client has purchased a nonqualified variable annuity from a commercial insurance company. 111. What Are the Distribution Options for an Inherited Annuity? Though there is no beneficiary designation during the annuitization, this is not an issue for this annuitant. *A variable annuity may only be surrendered during the accumulation period. Based on this information the RR should: C) II and IV. Reference: 12.3.2.1 in the License Exam. C)suitable due to the death benefit features of a variable annuity. D) I and II. What is the taxable consequence of this withdrawal to your client? Periodic payment deferred annuity. *Variable annuity contracts were devised to help investors keep pace with inflation. a variable annuity does not guarantee payments for life. A) Life-only annuity D) Variable annuities. Reference: 12.3.4 in the License Exam, Chapter 16: U.S. Government and State Rules a, Chapter 17: Other SEC and SRO Rules and Regul, Chapter 15: Ethics, Recommendations, and Taxa, Chapter 13: Direct Participation Programs, Fundamentals of Financial Management, Concise Edition, Joe B. Hoyle, Thomas F. Schaefer, Timothy S. Doupnik, Carl Warren, James M Reeve, Jonathan E. Duchac. b. The return on a variable annuity is not guaranteed; it is determined by the underlying portfolio's value. *The owner of a life annuity with 10-year period certain will receive payments for life, subject to a minimum of 10 years. B) The death benefit cannot ever be more than the guaranteed benefit. This role is also eligible for annual short-term incentive compensation. D)It cannot be determined until the April return is calculated. A variable annuity is a security and must be registered with the SEC, not FINRA. D) Keogh plans. The holder of a variable annuity receives the largest monthly payments under which of the following payout options? When a variable contract is annuitized (distributed in regular payments, not as a lump sum), the number of accumulation units is multiplied by the unit value to arrive at the account's current value. B)unsuitable because her situation exposes her to surrender charges and early withdrawal penalties in exchange for insufficient benefits. Reference: 12.1.2 in the License Exam. C) payments continue for a pre-determined period of time. The most popular type of variable annuity is a deferred annuity. Then find the probability of the event. D)suggest to the client that perhaps a loan or refinancing his vacation home might be a better way to fund the contract purchase. How does an indexed annuity differ from a fixed annuity? No, annuities are not FDIC-insured as they are not bank products. His objective is monthly income that he can receive after he retires to supplement his small pension and social security benefits. && \hspace{10pt}\text{Group insurance} & \underline{45,630}\\ D)variable annuities offer the investor protection against capital loss. A single lump-sum investment is made, and payments begin immediately, since the investor has purchased annuity units. Reference: 12.1.2 in the License Exam, Question #23 of 48Question ID: 901858 It is the starting point of motivation because they generate emotions. A) Only during the payout period. Reference: 12.1.4.1 in the License Exam. Therefore, variable annuities must be registered with the state insurance commission and the Securities and Exchange Commission. The number of accumulation units can rise during the accumulation period. D) the payout plans provide the client income for life. D)I and IV. An ordinary simple annuity has the following characteristics: For example, most car loans are ordinary simple annuities where payments are. The income was deferred from tax over the plan's life, so it is taxable as ordinary income once distributed. With regard to a variable annuity, all of the following may vary EXCEPT: D) III and IV. This guideline has been prepared for use by Federal agencies. B)Two-thirds of the withdrawal is taxable as ordinary income. 8 annuities provide a guaranteed rate of return, whereas annuities provide conservative to aggressive investments whose rates of return are not guaranteed. 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. Annuities due are a type of annuity where payments are made at the beginning of each payment period. Question #12 of 48Question ID: 606814 C) Age 40, currently unemployed The most suitable option and one considered effective for married couples is a single joint and last survivor contract. Transcribed image text: 6. Your client has a large sum of money to invest from the proceeds of the sale of his home. A)2800. Reference: 12.1.4.2 in the License Exam. An individual retirement annuity is an investment vehiclesimilar to an individual retirement accountthat is offered by insurance companies. None of the other investments listed here offer tax-deferred growth. The anti-money laundering rules for insurance companies highlight that each insurance company - like other financial institutions subject to anti-money laundering program requirements - must develop a risk-based anti-money laundering program that identifies, assesses, and mitigates any risks of money laundering, terrorist financing, and other Investopedia requires writers to use primary sources to support their work. Question #14 of 48Question ID: 606823 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.

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