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. The growth portion is subject to a 10% penalty. Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield, Claudia Bienias Gilbertson, Debra Gentene, Mark W Lehman, Eric W. Noreen, Peter C. Brewer, Ray H Garrison. B) life income A) Age 56, available cash to invest, makes the maximum retirement plan contributions to an existing IRA and 401(k) plan An annuity is an agreement for one person or organization to pay another a series of payments. Contributions to a nonqualified annuity are made with the owner's after-tax dollars. B) The policyowner. A) 2800. 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. Spartan Technology Services and Solutions Private Limited is a subsidiary of IBM (International Business Machines) Corporation. The paper publication will not be rereleased. 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. D) Any time before the accumulation period. 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. Once a customer annuitizes a variable annuity, which of the following statements are TRUE? The tax on this amount is $3,000. A client has purchased a nonqualified variable annuity from a commercial insurance company. Because common stocks are not fixed dollar investments, they have the opportunity to keep pace with inflation. B) The investor's marital status. III. In a variable life annuity with 10-year period certain, a contract holder receives: A) I and III. A demonstrated ability to quickly learn and continuously develop functional knowledge and an understanding of company products as well as administrative, claims, underwriting and marketing functions. During payout, distributions will fluctuate due to performance in the separate account. a variable annuity does not guarantee an earnings rate of return. do not have a separate account 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. B) II and IV. *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 accumulation unit's value is used to calculate the total value of the 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: C)II and III. Fixed annuities, on the other hand, provide a guaranteed return. D)II and III. C)complete all paper work to purchase the annuity contract and obtain the clients signature immediately. D)Dow Jones Industrial Average. They can be classified by: Nature of the underlying investment - fixed or variable A life with period certain contract guarantees payments for a specified number of years to a named beneficiary if the annuitant dies during that time. A joint-and-last-survivor annuity is a payout option where: C)the invested money will be professionally managed according to the issuers' investment objectives. A)II and IV. C)Life annuity. The work environment characteristics are normal office conditions. \hspace{7pt} a. December 303030, to record the payroll. The client's investment objectives, tax bracket, investment experience and risk tolerance all align well with a VA recommendation. *Insurance companies introduced the variable annuity as an opportunity to keep pace with inflation. Ted's Bio; Fact Sheet; Hoja Informativa Del Ted Fund; Ted Fund Board 2021-22; 2021 Ted Fund Donors; Ted Fund Donors Over the Years. D)II and IV. *The owner of a life annuity with 10-year period certain will receive payments for life, subject to a minimum of 10 years. Annuity death benefits are generally paid in a lump sum. Her agent recommended she choose a variable annuity as a safe haven for the funds. In this case, the investor is taking a lump-sum distribution before reaching age 59- and must pay an additional 10% penalty on the taxable amount. When the contract is annuitized, the annuitant is credited with a fixed number of annuity units. A) II and IV. 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. The remainder of the premium is invested in the separate account. D)A variable annuity, Variable annuities offer tax-deferred growth and are suitable for achieving supplemental retirement income. The entire amount is taxed as ordinary income. In this case, the investor is taking a lump-sum distribution before reaching age 59- and must pay an additional 10% penalty on the taxable amount. Which 2 of the 4 client profiles would a VA be LEAST suitable for? Each of the remaining statements are true. *Variable annuities offer tax-deferred growth and are suitable for achieving supplemental retirement income. IBM is a global brand and has its presence in 170 countries and operates . Distribution can take place before or during any solicitation for sale. Universal variable life policies This role is also eligible for annual short-term incentive compensation. Based on the information given in the question, the VA recommendation would not be suitable. *VAs are less suitable for individuals who have not yet made maximum contributions to other retirement accounts such as IRAs and 401ks. When a variable annuity contract is annuitized, the number of annuity units is fixed. & \underline{\underline{\$1,014,000}} & \hspace{10pt} \text{U.S. savings bonds} & 30,420\\ The number of annuity units becomes fixed when the contract is annuitized; it is the value of each unit that fluctuates. When the second party dies, all payments cease. C) number of accumulation units. D) II and IV. B) prime rate. Payments from a variable annuity depend on the securities' value in the separate account's underlying investment portfolio. C)the number of annuity units is fixed, and their value remains fixed. must precede every sales presentation. D)Any tax due is deferred. A) two people are covered and payments continue until the second death. A)II and IV. Complete a blank sample electronically to save yourself time and money. However, if you take a withdrawal during the contractssurrender period, which can be as long as 15 years, youll generally have to pay a surrender fee. If your customer invests in a variable annuity and chooses to annuitize at age 65, which of the following statements are TRUE? Only variable annuities have payout plans that provide the client income for life. Periodic payments are not a consideration because normally the payments into an annuity are level or in a lump sum. D) a minimum of 10 years of variable payments, followed by additional variable payments for life. The customer, in the accumulation stage of the annuity, is holding accumulation units. Which of the following is characteristic of variable annuities? Variable annuities should be considered long-term investments due to the limitations on withdrawals. B) with guaranteed minimum withdrawal benefits (GMWBs) the periodic payments can be monthly, quarterly or annually D)I and IV. If an investor has purchased an immediate variable annuity, which of the following statements best describe the investment? *A periodic payment immediate annuity is a contradiction in terms. C)prime rate. Reference: 12.1.2 in the License Exam. C) the client assumes the investment risk. Reference: 12.1.4.1 in the License Exam. Final answer. "Variable Annuities: What You Should Know," Page 6. Of the answer choices given the best would be to reevaluate the recommendation based on the new information tendered by the client. Variable annuities gave buyers a chance to benefit from rising markets by investing in a menu of mutual funds offered by the insurer. A) It will be higher. D) Variable annuities. *Contributions to a nonqualified annuity are made with the owner's after-tax dollars. . If the owner of a variable annuity dies during the accumulation period, any death benefit will: Once a variable annuity has been annuitized: D) The investment risk is shared between the insurance company and the policyowner. B) II and IV. A the safety of the principal invested B the yield is always higher than bond yields. With variable annuities policyholders can choose from a number of investment opportunities. a. 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. A prospectus for a variable annuity contract: 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. D)money market funds. Reference: 12.3.3 in the License Exam, Question #34 of 48Question ID: 606834 Nicks Enterprises has purchased a new machine tool that will allow the company to improve the efficiency of its operations. The owner of a life annuity with 10-year period certain will receive payments for life, subject to a minimum of 10 years. Then find the probability of the event. Reference: 12.1.2.1.1. in the License Exam. Post navigation C) A 25year old public school teacher who would like to save enough for the purchase of her first home within the next 3 to 5 years. All of the following investment strategies offer either fully or partially tax-deductible contributions to individuals who meet eligibility requirements EXCEPT: Distributed along a dermatome. 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. And, unlike a fixed annuity, variable annuities do not provide any guarantee that you will earn a return on your investment. Usually the term "annuity" relates to a contract between an individual and a life insurance company. Question #27 of 48Question ID: 606818 A variable annuity's separate account is: A separate account will invest in a number of different securities. Variable annuity Which of the following is characteristic of fixed annuities? Ideally they should be funded with readily available cash rather than using funds liquidated from existing investments. A customer has a nonqualified variable annuity. Which is it? With a fixed annuity, by contrast, the insurance company assumes the risk of delivering whatever return it has promised. D) cost of living. D)separate account may consist of mutual funds. Round to the nearest hundredth of a percent. no. *An immediate annuity has no accumulation period. A) changes in common stock prices tend to be more closely related to changes in the cost of living than changes in bond prices. *During the accumulation phase, the number of accumulation units will increase as additional money is invested. A)unsuitable because the return on something as conservative as a variable annuity tends to be low. B)II and III. D) A 10% penalty plus the payment of ordinary income tax on funds withdrawn in excess of the owner's basis. How to Navigate Market Volatility While Saving for Retirement, Variable Annuity: Definition and How It Works, Vs. Contributions to a nonqualified variable annuity are not tax deductible. A)Purchasing power risk. D)variable annuities offer the investor protection against capital loss. An ordinary simple annuity has the following characteristics: For example, most car loans are ordinary simple annuities where payments are Get Started. Try Variable annuity salespeople must register with all of the following EXCEPT: A) FINRA. PGIM Fixed Income has over $900 billion in assets under management across a broad array of fixed . She may choose to receive monthly payments for the rest of her life. D) I and II. Determine the revenue equation given the profit and expense equations. Owners of variable annuities, like owners of mutual fund shares, may vote on changes in investment policy and for an investment adviser. externalities. Variable annuities must be registered with: It was a lump-sum purchase. Question #25 of 48Question ID: 606819 A) 4000. C) value of underlying securities held in the separate account. The nature of the securities invested in-bonds and growth stocks-makes it necessary that sales representatives and their principals be licensed in securities as well as insurance. An individual retirement annuity is an investment vehiclesimilar to an individual retirement accountthat is offered by insurance companies. C)II and IV. About Us Before the contract is annuitized, your client, currently age 60, withdraws some funds for personal purposes.