a variable annuity does not guarantee an earnings rate of return. His objective is monthly income that he can receive after he retires to supplement his small pension and social security benefits. A) number of annuity units. A) It will be higher. D) Age 27, saving for first home. b. 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. savingsbondsGroupinsurance$198,74451,71415,21030,42045,630$341,718, Tax rates assumed: With regard to a variable annuity, all of the following may vary EXCEPT: EEO IS THE LAW . Surrender fees and penalties for early withdrawal. C)Variable annuity contract with a discussion regarding interest rate risk B) The death benefit cannot ever be more than the guaranteed benefit. A 45-year-old investor takes a lump-sum distribution from a nonqualified variable annuity. B)corporate stock. Reference: 12.3.2.4 in the License Exam. C)the number of annuity units is fixed, and their value remains fixed. B)Universal variable life policy. Skylar Clarine is a fact-checker and expert in personal finance with a range of experience including veterinary technology and film studies. a variable annuity guarantees payments for life. Reference: 12.1.2 in the License Exam, Question #21 of 48Question ID: 606812 As of March 03, 2023, had a relative dividend yield of % compared to the industry median of %. Annuities due are a type of annuity where payments are made at the beginning of each payment period. The customer, in the accumulation stage of the annuity, is holding accumulation units. C) suitable regardless of funding sources For example, when paying rent, the rent payment (PMT) *Payments from a variable annuity depend on the securities' value in the separate account's underlying investment portfolio. The remainder of the premium is invested in the separate account. What type of annuity has a cash value that is based upon the performance of it's underlying investment funds? D) I and IV. Dividing the funds available so as to fund 2 separate contracts, whether they be joint with last survivor or life income, would not be cost efficient for spouses. The number of annuity units varies. The offers that appear in this table are from partnerships from which Investopedia receives compensation. 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. Therefore, ordinary income taxes will apply to the entire $10,000. Single payment deferred annuity. Universal variable life policies The company's well-known Rock symbol is an icon of strength, stability, expertise and innovation that has stood the test of time. must provide full and fair disclosure. Reference: 12.3.3 in the License Exam. Spartan Technology Services and Solutions Private Limited is a subsidiary of IBM (International Business Machines) Corporation. *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. He originally invested $29,000 4 years ago; it now has a value of $39,000. A customer has contributed $1,000 a year for 10 years to his tax-deferred nonqualified variable annuity. But again, the need to designate beneficiaries is not an issue for this annuitant. A variable annuity is both an insurance and a securities product. B) allow customers to opt out of sharing of financial information with certain nonaffiliated firms. used for the investment of funds paid by contract holders. D)II and III. B) I and III. C) During the annuity period. C) insurance guarantee. Reference: 12.1.2 in the License Exam. All of the following are accurate statements to make to the client EXCEPT There are two interest rates under fixed annuities. If the annuitant should die during that time, any death benefit would be paid to a beneficiary designated by the annuitant at the time the annuity was purchased. B) Corporate debt securities This role is also eligible for annual short-term incentive compensation. C) IRAs. The amount taxed is the amount of the lump-sum payment minus the deceased's cost basis in the investment. 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. Complete a blank sample electronically to save yourself time and money. A) There is no risk in a variable annuity. regulated under both securities and insurance laws. A) II and IV. A) A variable annuity Her agent recommended she choose a variable annuity as a safe haven for the funds. D) Growth mutual funds. Then find the probability of the event. *The minimum guaranteed death benefit is provided by that portion of the payment invested in the insurance company's general account. For an insurance company, mortality risk turns out unfavorably if: the SEC. The earnings are taxable but the cost basis is returned tax free. Contributions to a nonqualified annuity are made with the owner's after-tax dollars. D)II and III. D) Joint and last survivor annuity. The value of the customer's account is converted into annuity units if and when the customer decides to annuitize the contract. Reference: 12.2.1 in the License Exam. A joint life with last survivor contract covers multiple annuitants and ceases payments at the death of the last surviving annuitant. How to Rollover a Variable Annuity Into an IRA. IV. Periodic payment deferred annuity. D)I and III. C)insurance companies keep variable annuity funds in separate accounts from other insurance products. Suppose that 20%20 \%20% of their users are United States users who log on daily. C)Growth mutual funds Inflation-hedging, using both tax deferral combined with market growth potential, is made possible by variable annuities #. A)II and IV. D)0. is required by the Securities Act of 1933. *A variable annuity is a security and must be registered with the SEC, not FINRA. A) 4000. C)Corporate bonds. B)4200. The AG49-A Revisions *When money is deposited into the annuity, it is purchasing accumulation units. There are also immediate annuities, which begin paying income right away. *The number of variable annuity accumulation units can rise during the accumulation period when additional units are being purchased. 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: For this potential advantage, the investor, rather than the insurance company, assumes the investment risk. Therefore, variable annuities must be registered with the state insurance commission and the Securities and Exchange Commission. A customer has a nonqualified variable annuity. The growth portion is taxed as ordinary income. variable An immediate annuity consists of a Single Premium T has an annuity that guarantees an income payment for the rest of his life. b. Full-Time. This customer has no spouse or dependents, which negates the value of the death benefit. Refinancing a home to draw out equity has been identified by FINRA as an abusive sales tactic regarding the sales of VAs. C)prime rate. *With guaranteed minimum withdrawal benefits (GMWBs) a lifetime of periodic payments is not guaranteed because payments stop when the annuitant has received an amount equal to the principal account value or the contract term ends. The value of accumulation and annuity units varies with the investment performance of the separate account. 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: A) I and III. D)each annuity unit's value is fixed, but the number of annuity units varies with time. This includes transportation, food, lodging, and entertainment. C) 10 years of variable payments. Instructions\textsf{\textcolor{#4257b2}{Instructions}}Instructions The features of variable deferred annuities are many. A) Age 56, available cash to invest, makes the maximum retirement plan contributions to an existing IRA and 401(k) plan Changes in payments on a variable annuity correspond most closely to fluctuations in the: A) mortality guarantee. A 60-year-old individual, nearing retirement who has both IRAs and a 401k in place, is comfortable with market risk associated with the stock market, and has a lump sum in cash available to fund the annuity However, it does guarantee payments for life (mortality). 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. A) The entire amount is taxed as ordinary income, because it is not life insurance. You can buy an annuity with either a lump sum or a series of payments, and the accounts value will grow accordingly. And, unlike a fixed annuity, variable annuities do not provide any guarantee that you will earn a return on your investment. If the annuitant should die during that time, any death benefit would be paid to a beneficiary designated by the annuitant at the time the annuity was purchased. A)value of underlying securities held in the separate account. C)Keogh plans. C)number of accumulation units. Options. A) II and IV. A) I and II Of the answer choices given the best would be to reevaluate the recommendation based on the new information tendered by the client. B)Value of each annuity unit each month. Question #26 of 48Question ID: 606811 The owner of a life annuity with 10-year period certain will receive payments for life, subject to a minimum of 10 years. Once the contract is annuitized, monthly payments to the customer are: They can be classified by: Nature of the underlying investment - fixed or variable D)I and IV, Universal variable life policies are insurance company products that should be purchased primarily for the insurance features they offer rather than as an investment. B) I and III. Your customer in his early 30s has received a modest inheritance from a relative. Reference: 12.1.2 in the License Exam. In the case of deferred annuities, this is often referred to as the accumulation phase. The growth portion is subject to a 10% penalty. D) 4500. order now. A 58-year-old individual near retirement who is in good health and anticipates a lengthy retirement A) partially a tax-free return of capital and partially taxable. Salaries:SalessalariesWarehousesalariesOfficesalaries$670,000110,000234,000$1,014,000Deductions:IncometaxwithheldSocialsecuritytaxwithheldMedicaretaxwithheldU.S. C) 3000. D) be paid to the issuing company to complete the plan. an annuitant dies sooner than expected. Question #31 of 48Question ID: 606836 Owners of variable annuities, like owners of mutual fund shares, may vote on changes in investment policy and for an investment adviser.

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