vote for the investment adviser. C)I and IV. What Are the Biggest Disadvantages of Annuities? C)III and IV && \hspace{10pt}\text{Group insurance} & \underline{45,630}\\ In a variable life annuity with 10-year period certain, a contract holder receives: About Us B) II and III. View full document. MetLife, Inc. Senior Customer Care Advocate Annuities ($22 per hour B) A 30 year old construction worker recently unemployed who wants to invest his severance pay amounting to 9 months salary. The investor has already paid tax on the contributions but the earnings have grown tax-deferred. A customer has contributed $1,000 a year for 10 years to his tax-deferred nonqualified variable annuity. D) A 50 year old individual with $50,000 cash to invest who has already made the maximum contributions to an IRA and the 401(k) plan at his place of employment and would like to minimize some of the tax consequences of his currently high tax bracket. The figure below illustrates a six-month annuity with monthly payments. Fixed income instruments, like bonds and fixed annuities, are subject to purchasing power risk. Many variable annuities invest the separate account in mutual funds. A single lump-sum investment is made, and payments begin immediately, since the investor has purchased annuity units. A) periodic payment immediate annuity. If the customer takes a withdrawal of $10,000, what are the tax consequences? FINRA. The fees on variable annuities can be quite hefty. \hspace{7pt} a. December 303030, to record the payroll. The $30,000 contract value represents $10,000 of contributions and $20,000 of earnings. Question #26 of 48Question ID: 606811 A)variable annuities may only be sold by registered representatives. Prudential Retirement Security Annuity VI is a group variable annuity (GVA) issued by Prudential Retirement Insurance and Annuity Company (PRIAC) which utilizes a Separate Account offered A) waiver of premium A) changes in common stock prices tend to be more closely related to changes in the cost of living than changes in bond prices. A)II and IV. An accumulation unit in a variable annuity contract is: A)an accounting measure used to determine the contract owner's interest in the separate account. IBM Noida, Uttar Pradesh, India1 month agoBe among the first 25 applicantsSee who IBM has hired for this roleNo longer accepting applications. When a variable annuity contract is annuitized, the number of annuity units is fixed. covers more than one person. III. Supplemental income stream for retirement, not preservation of capital should be the catalyst to consider a VA and for anyone who may need access to the sum invested for any reason a VA would not be considered a suitable recommendation. D)an accounting measure used to determine payments to the owner of the variable annuity. An individual retirement annuity is an investment vehiclesimilar to an individual retirement accountthat is offered by insurance companies. The following changes have been incorporated into Special Publication 800145, as of the date indicated - . Reference: 12.3.3 in the License Exam. 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) When the contract is annuitized, the annuitant is credited with a fixed number of annuity units. This includes transportation, food, lodging, and entertainment. 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. A)2800. Reference: 12.3.1 in the License Exam, Question #30 of 48Question ID: 606833 Is F&G Annuities & Life Inc (FG) a Good Dividend Stock? | AAII An annuity payment is the dollar amount of the equal periodic payment in an annuity environment. The beneficiary is taxed at ordinary income rates during the year the lump sum is received. *During the accumulation phase, the number of accumulation units will increase as additional money is invested. Who assumes the investment risk in a variable annuity contract? D) I and III. 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. 10.1 This chapter addresses a number of ABS statistics relating to the economically active population which were not discussed elsewhere. Each of the remaining statements are true. Policyholders . Full-Time. Determine whether the following events are independent or dependent. Practice all cards. *The customer, in the accumulation stage of the annuity, is holding accumulation units. To comply with Regulation SP, a brokerage firm is required to do all of the following EXCEPT: A) deliver an annual notice of its information collecting and sharing policies to all customers. Reference: 12.1.4.2 in the License Exam. How Are Nonqualified Variable Annuities Taxed? When a partial withdrawal is made from an annuity, the earnings are considered to be taken out first for tax purposes (or LIFO). C) 3000. A guaranteed lifetime annuity promises to pay the owner an income for the rest of their life. B. Variable annuities are designed to combat inflation risk. A registered person recommends the purchase of a variable annuity to one of his clients. If you die before the payout phase, your beneficiaries may receive a. A)I and IV. do not have a separate account B)cost of living. Are Variable Annuities Subject to Required Minimum Distributions? You can learn more about the standards we follow in producing accurate, unbiased content in our. CH 7 Annuities Flashcards | Quizlet Investopedia does not include all offers available in the marketplace. D) a lifetime withdrawal benefit (LWB) or lifetime income benefit is generally in the form of a rider attached to the contract which will come at a cost to the annuitant. A)IPO. B) It will be lower. Distribution of dividends occurs during the accumulation period. d. Each month the payment will increase, decrease, or remain the same as the previous month's payment . *Distributions from a nonqualified plan represent both a return of the original investment made in the plan with after-tax dollars (a nontaxable return of capital) and the income from that investment. Suggesting that loans or drawing equity from a home to fund VA contracts have also been targeted as abusive sales practices. Trends Networks and Critical Thinking Module 2 If the account is annuitized, the investor has chosen a payout option. She will receive the annuity's entire value in a lump-sum payment. C) such an annuity is designed to combat inflation risk. *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. externalities. D) Variable Annuity. An investor who has purchased a nonqualified variable annuity has the right to: Variable annuities must be registered with: All of the following statements concerning a variable annuity are correct EXCEPT: D) variable annuities will protect an investor against capital loss. An annuity is a continuous stream of equal periodic payments from one party to another for a specified period of time to fulfill a financial obligation. This recommendation is: D) unsuitable because her situation exposes her to surrender charges and early withdrawal penalties in exchange for insufficient benefits. Changes in payments on a variable annuity correspond most closely to fluctuations in the: A) Age 56, available cash to invest, makes the maximum retirement plan contributions to an existing IRA and 401(k) plan The LATF-adopted ILVA Actuarial Guideline has an effective date of July 1, 2024 for contracts, riders or endorsements issued on or after that date. C)prime rate. e) Are From the United States and Log on every day independently? \hspace{7pt} a. December 303030, to record the payroll. B) be paid to any legal heirs as recognized by the annuitant's state of domicile. 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. D) Joint and last survivor annuity. D) minimum guaranteed death benefit. C)Mortality risk. The accumulation unit's value is used to calculate the total value of the account. An accumulation unit in a variable annuity contract is: For a retired person, which of the following investments would provide the greatest protection against inflation? C) be returned to the separate account. D)Dow Jones Industrial Average. A) It will be higher. MetLife offers a comprehensive benefits program, including healthcare benefits, life insurance, retirement benefits, parental leave, legal plan services and paid time off. Universal variable life policies Once a customer annuitizes a variable annuity, which of the following statements are TRUE? *Since this is a nonqualified annuity (with no tax deduction), the client pays taxes only on the growth portion or, in this case, $10,000. C) Universal variable life policy. **Because common stocks are not fixed dollar investments, they have the opportunity to keep pace with inflation. B) allow customers to opt out of sharing of financial information with certain nonaffiliated firms. A) I and III. On withdrawals from a nonqualified annuity, taxes are paid only on the amount that exceeds cost basis (the amount paid into the annuity). Annuities basics | III Which of the following statements regarding variable annuities are TRUE? The owner of a variable annuity has all of the following rights EXCEPT the right to vote: a. for the board of trustees b. to change the separate account's investment objective c. for distributing income and capital gains d. for dissolution of the trust c. for distributing income and capital gains. B) II and III A) Dow Jones Industrial Average. Reference: 12.3.3 in the License Exam, Question #34 of 48Question ID: 606834 Reference: 12.1.2 in the License Exam, Question #23 of 48Question ID: 901858 C) taxed as ordinary income only to the extent of earnings. All of the following investment strategies offer either fully or partially tax-deductible contributions to individuals who meet eligibility requirements EXCEPT: 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)4200. Guaranteed Lifetime Annuity: How They Work, When They Pay You, This is also generally true of retirement plans. The growth portion is taxed as a capital gain. Needs - are goal-directed forces that people experience. He makes several statements regarding 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. Simple and general annuities problems with solutions A) The fact that the annuity payment may increase or decrease. The beneficiary is taxed at ordinary income rates during the year the lump sum is received. 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. Reference: 12.2.1 in the License Exam, Question #48 of 48Question ID: 606835 C)III and IV. Of the 4 client profiles below, which might be the best suited for a variable annuity recommendation? 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. The number of variable annuity accumulation units can rise during the accumulation period when additional units are being purchased. D)A variable annuity, Variable annuities offer tax-deferred growth and are suitable for achieving supplemental retirement income. Life Insurance vs. Annuity: What's the Difference? D)II and III. Outgoing personality with the ability to develop relationships (i.e., "People Person") and a sincere desire to help others Fearless, positive attitude, and willingness to be accountable for results Organized, detail-oriented, and excellent time-management skills A desire for continuous learning 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. C) II and IV. D)II and IV. He originally invested $29,000 4 years ago; it now has a value of $39,000. C)I and IV. An 18-year-old, unmarried high school student sought a safe investment for a $30,000 bequest until after she graduated from college. Get the free Learn About Annuities and Their Myths - F&G national origin, genetics, disability, age, veteran status, or any other characteristic protected by law. B)I and III. PGIM Fixed Income has over $900 billion in assets under management across a broad array of fixed . When may a variable annuity account be surrendered? PDF Prudential IncomeFlex Target Vanguard Balanced Index Fund A)There is no tax as the withdrawal is considered return of capital. Variable annuities gave buyers a chance to benefit from rising markets by investing in a menu of mutual funds offered by the insurer. The fixed payment that the annuitant receives loses purchasing power over time as a result of inflation. Reference: 12.1.4 in the License Exam. B) The entire $10,000 is taxable as ordinary income. Once the cost basis is reached, any further withdrawals are a nontaxable return of principal. C) III and IV. C) the yield is always higher than bond yields. A registered representative explaining variable annuities to a customer would be CORRECT in stating that: *Once a variable annuity is annuitized, the accumulation units are converted into a fixed number of annuity units. A) I and II. But again, the need to designate beneficiaries is not an issue for this annuitant. Your client has a large sum of money to invest from the proceeds of the sale of his home. Distribution can take place before or during any solicitation for sale. Based on this information the RR should: When the second party dies, all payments cease.