C) 3000. C)suitable due to the death benefit features of a variable annuity. Do homework Doing homework can help you learn and understand the material covered in class. How does an indexed annuity differ from a fixed annuity? 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. A)II and IV. Find the per-day expense for one of these travelers who had a z-score of -1.6. c. A Bargain Times Vacation Blog writer claimed to have done this vacation for a cost of$710 per person. B) Exchange traded Funds (ETFs) or Exchange traded Notes (ETNs) *Variable annuities offer tax-deferred growth and are suitable for achieving supplemental retirement income. C) The insurance company. He makes several statements regarding the contract. A Variable Annuity has which of the following characteristics? A variable annuity's separate account is: A) used for the investment of monies paid by variable annuity contract holders B) separate from the insurance company's general investments C) operated in a manner similar to an investment company D) as much a security as it is an insurance product All of the above On any device & OS. && \hspace{10pt}\text{Group insurance} & \underline{45,630}\\ A fixed annuity is an insurance contract that pays a guaranteed rate of interest on the owner's contributions and later provides a guaranteed income. A) The fact that the annuity payment may increase or decrease. C) II and III. The downside was that the buyer was exposed to market risk, which could result in losses. B) fixed in value until the holder retires. B) Life annuity. The client's investment objectives, tax bracket, investment experience and risk tolerance all align well with a VA recommendation. D)the rate of return is determined by the underlying portfolio's value. Determine the revenue equation given the profit and expense equations. C) 3800. The separate account is used for both variable life insurance and variable annuity investments. An investor who purchases a fixed annuity contract assumes purchasing-power risk. D) It cannot be determined until the April return is calculated. She may choose to receive monthly payments for the rest of her life. A) I and III. C) It will stay the same. B) I and II. B) I and III. Therefore, variable annuities must be registered with the state insurance commission and the Securities and Exchange Commission. Life Insurance vs. Annuity: What's the Difference? 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. PDF Prudential IncomeFlex Target Vanguard Balanced Index Fund 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. A)accumulation shares. Question #18 of 48Question ID: 606827 B) variable annuities. Her agent recommended she choose a variable annuity as a safe haven for the funds. Distributions from such an annuity are computed on a LIFO basis with the income taxed first. Your client owns a variable annuity contract with an AIR of 4%. C)the yield is always higher than bond yields. *Waiver of premium is a benefit available on qualified life insurance contracts, usually in the form of a rider, which provides for the waiver of premium payments that fall due while the policyholder is totally disabled. C) payments continue for a pre-determined period of time. She may choose to receive monthly payments for the rest of her life. Essential Characteristics: In March, the actual net return to the separate account was 8%. C) II and III. A variable annuity does not guarantee an earnings rate because earnings will depend on the performance of the separate account. A)There is no tax as the withdrawal is considered return of capital. D) The fact that periodic payments into the contract may increase or decrease. who needs access to the sum invested at later time. At the end of the year your account has a value of 10750. Insurance companies introduced the variable annuity as an opportunity to keep pace with inflation. B)Capital gains taxation on the earnings withdrawn in excess of the owner's basis. The correct answer was: partially a tax-free return of capital and partially taxable. C) Life annuity with period certain. What percentile is represented by $710? savingsbondsGroupinsurance$198,74451,71415,21030,42045,630$341,718, Tax rates assumed: Sas#8-psy 002 - Organizational Behavior C) suitable regardless of funding sources If your 60-year-old customer purchases a nonqualified variable annuity and withdraws some of her funds before the contract is annuitized, what are the consequences of this action? Life income riders are best suited for those who anticipate a lengthy retirement and are generally not yet retired when making the VA purchase. C)prime rate. D) variable annuities may only be sold by registered representatives. B) The entire $10,000 is taxable as ordinary income. B. A)exempt from taxes Do whatever you want with a Learn About Annuities and Their Myths - F&G: fill, sign, print and send online instantly. Variable annuities are designed to combat inflation risk. Reference: 12.2.1 in the License Exam. A) a variable annuity contract will provide a fluctuating monthly check upon the annuitization of the contract An immediate annuity is designed to pay an income one time-period after the immediate annuity is bought. If a customer is about to buy a variable annuity contract and wants to select an annuity with a payout option providing the largest possible monthly payment, which of the following payout options would be most suitable? The $30,000 contract value represents $10,000 of contributions and $20,000 of earnings. U.S. Securities and Exchange Commission. You have 4 clients each expressing interest in a variable annuity contract. B) accumulation units. Reference: 12.1.2 in the License Exam, Question #23 of 48Question ID: 901858 Investopedia requires writers to use primary sources to support their work. D)variable annuities. A) 4000. What are the characteristics of annuity? - Wise-Answers Distribution can take place before or during any solicitation for sale. This factor is used to establish the dollar amount of the first annuity payment. D) periodic payment deferred annuity. Of the four client profiles below which might be the best suited for a variable annuity recommendation? In addition, an element of risk must be present. The payout compared to last month's payout. Variable annuities should be considered long-term investments due to the limitations on withdrawals. C)not suitable because a lifetime income rider is only for someone who is already retired 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. Distribution can take place before or during any solicitation for sale. The accumulation period of a variable annuity may continue for many years. The most suitable option and one considered effective for married couples is a single joint and last survivor contract. Deferred Annuity Definition, Types, How They Work, What Is a Fixed Annuity? The original investment has grown to a value of $60,000. D)Variable annuity. B) I and IV. externalities. He makes the following four statements, all of which are true EXCEPT D)I and III. Reference: 12.1.1 in the License Exam. Anthony Battle is a CERTIFIED FINANCIAL PLANNER professional. Once the contract is annuitized, monthly payments to the customer are: A) periodic payment immediate annuity. Future annuity payments will vary according to the separate account's performance. 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 An annuitant assumes the investment risk of a variable annuity and is not protected by the insurance company from capital losses. As with most retirement account options, withdrawals before the age of 59 will result in a 10% tax penalty. An ordinary simple annuity has the following characteristics: For example, most car loans are ordinary simple annuities where payments are. All of the following are characteristics of variable annuity contracts Chapter 4: Annuities Flashcards | Chegg.com *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)value of underlying securities held in the separate account. have investment risk that is assumed by the investor C)the invested money will be professionally managed according to the issuers' investment objectives. A) 2800. Can I Borrow from My Annuity for a House Down Payment? The value of the customer's account is converted into annuity units if and when the customer decides to annuitize the contract. The following changes have been incorporated into Special Publication 800145, as of the date indicated - . The separate account is NOT likely to invest in: Since the client is older than 59 at the time of distribution, the additional 10% penalty tax is not incurred. D)Joint and last survivor annuity. A)100% tax free. What Are the Biggest Disadvantages of Annuities? 8 annuities provide a guaranteed rate of return, whereas annuities provide conservative to aggressive investments whose rates of return are not guaranteed. Reference: 12.1.4.2 in the License Exam. Random withdrawals do not guarantee how long the money will last because large withdrawals can deplete the funds before the annuitant dies. 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: c) Construct a contingency table showing all the joint and marginal probabilities. 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: Try D) a minimum of 10 years of variable payments, followed by additional variable payments for life