A)unsuitable because the return on something as conservative as a variable annuity tends to be low. All of the following are characteristics of variable annuity contracts A variable annuity's separate account is: D)II and III. U.S. Securities and Exchange Commission. The return on a variable annuity is not guaranteed; it is determined by the underlying portfolio's value. Nature of the underlying investment fixed or variable, Primary purpose accumulation or pay-out (deferred or immediate), Nature of payout commitment fixed period, fixed amount or lifetime, Premium payment arrangement single premium or flexible premium. D)partially a tax-free return of capital and partially taxable. The earnings are taxable but the cost basis is returned tax free. If this client is in the payout phase, how would his April payment compare to his March payment? Unit 12: Variable Annuities Flashcards | Chegg.com Question #22 of 48Question ID: 606803 Single premium annuities are often funded by rollovers or from the sale of an appreciated asset. Fixed income instruments, like bonds and fixed annuities, are subject to purchasing power risk. Universal variable life policies are ins. Equity-Indexed Annuity: How They Work. and Their Limitations - Investopedia With variable annuities, the rate of returnand therefore the value of your investmentmight go up or down depending on the performance of the stock, bond and money market funds that you choose as investment options. Based only on these facts, the variable annuity recommendation is Your answer, Life annuity., was correct!. A variation of lifetime annuities continues income until the second one of two annuitants dies. A)II and IV. All of the following investment strategies offer either fully or partially tax-deductible contributions to individuals who meet eligibility requirements EXCEPT: All of the following characteristics are shared by both a mutual fund and a variable annuity's separate account EXCEPT: A)the client assumes the investment risk. A customer has an investment objective of keeping pace with inflation while assuming moderate risk. 4. When a partial withdrawal is made from an annuity, the earnings are considered to be taken out first for tax purposes (or LIFO). Some state statutes and court decisions also protect some or all of the payments from those annuities. 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: Your answer, accumulation units., was correct!. For a retired person, which of the following investments would provide the greatest protection against inflation? If an ins. It credits a minimum rate of interest, just as a fixed annuity does, but its value is also based on the performance of a specified stock indexusually computed as a fraction of that indexs total return. Azanswer team is here with the correct answer to your question. The individual already making the max retirement acct contributions, with cash to invest, would be most suitable for a VA recommendation. A registered representative explaining variable annuities to a customer would be CORRECT in stating that: Your client owns a variable annuity contract with an AIR of 4%. The number of annuity units becomes fixed when the contract is annuitized; it is the value of each unit that fluctuates. B)Variable annuities. Variable annuities provide protection from inflation because their monthly income can increase depending on the separate account's performance. B)Fixed annuity contract with a discussion regarding timing risk Uses in Investing, Pros, and Cons, Indexed Annuity: Definition, How It Works, Yields, and Caps, Joint and Survivor Annuity: Key Takeaways. Your answer, The entire $10,000 is taxable as ordinary income., was correct!. D)A variable annuity, Variable annuities offer tax-deferred growth and are suitable for achieving supplemental retirement income. Reference: 12.3.2.1 in the License Exam. Reference: 12.3.3 in the License Exam. have investment risk that is assumed by the investor. The # of accumulation units is always fixed throughout the accumulation period, 2. Most variable annuities are structured to offer investors many different fund alternatives. 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: A)the number of annuity units becomes fixed when the contract is annuitized. D)separate account may consist of mutual funds. D)suggest to the client that perhaps a loan or refinancing his vacation home might be a better way to fund the contract purchase. Carefully look at your options when choosing an annuity. These include white papers, government data, original reporting, and interviews with industry experts. 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. The value of the separate account is now $30,000. used for the investment of funds paid by contract holders. The owner of a life annuity with 10-year period certain will receive payments for life, subject to a minimum of 10 years. D)the rate of return is determined by the underlying portfolio's value. Can I Borrow from My Annuity for a House Down Payment? \hspace{5pt}\text{Drawing}&&&\\ A)Fixed annuities. Her agent recommended she choose a variable annuity as a safe haven for the funds. There is no clear answer to this. For a retired person, which of the following investments would provide the greatest protection against inflation? The annuity unit's value represents a guaranteed return. A)the state banking commission. The fees on variable annuities can be quite hefty. must precede every sales presentation. Changes in payments on a variable annuity correspond most closely to fluctuations in the: If an annuitant lives longer than expected, the ins. C)not suitable because a lifetime income rider is only for someone who is already retired If the contract holder dies before the period expires, the remaining payments are made to the beneficiary. C)III and IV. a life insurance holder lives longer than expected. These contracts come with high surrender charges. A) The fact that the annuity payment may increase or decrease. D)Investment risk. Question #17 of 48Question ID: 606802 Changes in payments on a variable annuity correspond most closely to fluctuations in the: Once a customer annuitizes a variable annuity, which of the following statements are TRUE? Contributions to an IRA may be tax deductible, depending on the individual's earnings and participation in a company-sponsored qualified retirement plan. Distribution can take place before or during any solicitation for sale. b. they have all the same characteristics as life insurance An Immediate Annuity is designed to provide each of the following features, EXCEPT: The creation of an estate Your client has a large sum of money to invest from the proceeds of the sale of his home. Distributions from nonqualified variable annuities are: Your 55-year-old client owns a nonqualified variable annuity. C)III and IV She may choose to receive monthly payments for the rest of her life. d. 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. If an investor has a fixed-annuity contract with an insurance company, which of the following risks is assumed by the investor? 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. D. Value of each annuity unit each month. Question #31 of 48Question ID: 606836 Many annuity companies offer a variety of investment options. Find out how you can intelligently organize your Flashcards. In addition, you can withdraw 10% of your contract value each year free of surrender charges. Question #28 of 48Question ID: 606821 Explaining What have been the major population changes since the first census in 1790? B)the investment portfolio is managed professionally. As with all tax-deferred accounts, municipal bonds are not appropriate investments because interest earned on municipals is already tax exempt at the federal level. In recent years, annuity companies have created various types of floors that limit the extent of investment decline from an increasing reference point. Question #40 of 48Question ID: 606800 The value of the customer's account is converted into annuity units if and when the customer decides to annuitize the contract. A deferred annuity is an insurance contract that promises to pay the buyer a regular stream of income, or a lump sum, at some date in the future. 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. Generally the most that creditors can access is the payments as they are made, since the money the annuity owner gave the insurance company now belongs to the company. the producer is responsible for providing the applicant a summary of coverage that includes all of the following EXCEPT. The $30,000 contract value represents $10,000 of contributions and $20,000 of earnings. Question #35 of 48Question ID: 606810 Fixed period annuities A fixed period annuity pays an income for a specified period of time, such as ten years. The contract has a schedule of surrender charges, beginning with a 7% charge in the first year, and declining by 1% each year. Question #13 of 48Question ID: 606822 B)I and III. holder dies sooner than expected. Question #44 of 48Question ID: 606797 A)Joint tenants annuity. Insurance companies introduced the variable annuity as an opportunity to keep pace with inflation. C)the invested money will be professionally managed according to the issuers' investment objectives. We also reference original research from other reputable publishers where appropriate. Because the client is older than age 59-, he does not pay 10% premature distribution penalty tax. Here is how guaranteed lifetime annuities work. A)2800. She will receive the annuity's entire value in a lump-sum payment. D)variable annuities offer the investor protection against capital loss. Immediate annuities An immediate annuity is designed to start paying an income one time period after the immediate annuity is bought. Refinancing a home to draw out equity has been identified by FINRA as an abusive sales tactic regarding the sales of VAs. Cram has partnered with the National Tutoring Association. An investor who has purchased a nonqualified variable annuity has the right to: Which of the following statements regarding variable annuities are TRUE? Variable Annuities Flashcards | Quizlet All of the following characteristics are shared by both a mutual fund and a variable annuity's separate account EXCEPT: Your answer, the payout plans provide the client income for life., was correct!.
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