Expert Answer. Drives - are hardwired characteristics of the brain that correct deficiencies or maintain an internal equilibrium by producing emotions to energize individuals. D) II and III. d. Each month the payment will increase, decrease, or remain the same as the previous month's payment . The creation of an estate. What is the taxable consequence of this withdrawal to your client? Who assumes the investment risk in a variable annuity contract? C) There is no tax as the withdrawal is considered return of capital. Reference: 12.3.2.1 in the License Exam. b) What probability is the 20%20 \%20% mentioned above? The noble relatives of the Count d'Horn absolutely blocked up the ante-chambers of the regent, praying for mercy on the misguided youth, and alleging that he was insane . The beneficiary is taxed at ordinary income rates during the year the lump sum is received. Periodic payments are not a consideration because normally the payments into an annuity are level or in a lump sum. This factor is used to establish the dollar amount of the first annuity payment. Similarly, CDs are insured, thereby eliminating risk and guaranteeing a return. Withdrawals from a nonqualified variable annuity are made on a LIFO basis, so the taxable earnings are considered taken out before principal. Try D)the safety of the principal invested. Question #43 of 48Question ID: 606809 used to escrow late or otherwise delinquent premium payments. The value of the separate account is now $30,000. C) 3800. D) be paid to the issuing company to complete the plan. The wage for applicants for this position is $45,979.00 per year. Distribution can take place before or during any solicitation for sale. B) I and II. 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. An annuity may be purchased under all of the following methods EXCEPT: With variable annuities policyholders can choose from a number of investment opportunities. Question #44 of 48Question ID: 606797 A) variable payments for 10 years, followed by fixed payments for life. A prospectus for a variable annuity contract: Reference: 12.1.2.1.1. in the License Exam. D)variable annuities offer the investor protection against capital loss. The number of annuity units becomes fixed when the contract is annuitized; it is the value of each unit that fluctuates. Sample problems from Chapter 9. . A customer has a nonqualified variable annuity. D) a minimum of 10 years of variable payments, followed by additional variable payments for life. *Only variable annuities have payout plans that provide the client income for life. *The customer, in the accumulation stage of the annuity, is holding accumulation units. A)unsuitable because the return on something as conservative as a variable annuity tends to be low. A joint life with last survivor annuity: On withdrawals from a nonqualified annuity, taxes are paid only on the amount that exceeds cost basis (the amount paid into the annuity). She will receive the annuity's entire value in a lump-sum payment. A) number of annuity units. For a nonqualified variable annuity, cost basis for the annuitant would use the after-tax dollars contributed. Reference: 12.1.2 in the License Exam. If the data is normally distributed with standard deviation$198, find the percent of vacationers who spent less than $1,200 per day. A)not suitable A) Any tax due is deferred. 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. The accumulation unit's value is used to calculate the total value of the account. D) Capital gains tax on earnings exceeding basis. Reasonable accommodations may be made to enable individuals with disabilities to perform the essential functions. A variable annuity has two phases: an accumulation phase and a payout (annuitization) phase. D) not suitable because a lifetime income rider is only for someone who is already retired. It was a lump-sum purchase. The $30,000 contract value represents $10,000 of contributions and $20,000 of earnings. A customer has contributed $1,000 a year for 10 years to his tax-deferred nonqualified variable annuity. Once the cost basis is reached, any further withdrawals are a nontaxable return of principal. This factor is used to establish the dollar amount of the first annuity payment. C)insurance companies keep variable annuity funds in separate accounts from other insurance products. The figure below illustrates a six-month annuity with monthly payments. required to be located off of the company's premises. B) single payment deferred annuity. C) a variable annuity contract does not guarantee any type of return Before the contract is annuitized, your client, currently age 60, withdraws some funds for personal purposes. A 45-year-old investor takes a lump-sum distribution from a nonqualified variable annuity. The annuitized payments are viewed for tax purposes as Essential Characteristics: B) II and IV. A trend makes considerable influence or impact. These contracts cover both lives and will continue to make payments until the last spouse dies. Therefore only a fixed annuity could be considered as suitable. Question #17 of 48Question ID: 606802 The AG49-A Revisions B) payments continue until the death of the primary owner. With a fixed annuity, by contrast, the insurance company assumes the risk of delivering whatever return it has promised. Once the contract is annuitized, monthly payments to the customer are: The value of an annuity unit varies from month to month according to the performance of the separate account in comparison to the assumed interest rate. C) 10 years of variable payments. You have 4 clients each expressing interest in a variable annuity contract. Immediate life annuity with 10-year period certain. C)none of these. "Variable Annuities: What You Should Know," Pages 67. Though its stated return might not be as high as the other choices potential returns, only a fixed annuity fits the objective and risk averse traits of this client. B)II and III. The upside was the possibility of higher returns during the accumulation phase and a larger income during the payout phase. B)Value of each annuity unit each month. Salaries:SalessalariesWarehousesalariesOfficesalaries$670,000110,000234,000$1,014,000Deductions:IncometaxwithheldSocialsecuritytaxwithheldMedicaretaxwithheldU.S. This makes a total of $4,000 tax and penalty paid on the random withdrawal. Deferred Annuity Definition, Types, How They Work, What Is a Fixed Annuity? C)Money market fund. The owner of a life annuity with 10-year period certain will receive payments for life, subject to a minimum of 10 years. The following changes have been incorporated into Special Publication 800145, as of the date indicated - . c) Construct a contingency table showing all the joint and marginal probabilities. The investor has already paid tax on the contributions but the earnings have grown tax-deferred. A registered representative recommends a variable annuity with an income rider to a client. When the annuitization option is selected, each payment represents both capital and earnings. Among annuities, variable annuities differ from fixed annuities, which provide a specific and guaranteed return. 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. Carefully look at your options when choosing an annuity. A) Age 56, available cash to invest, makes the maximum retirement plan contributions to an existing IRA and 401(k) plan He originally invested $29,000 4 years ago; it now has a value of $39,000. Your 65-year-old client owns a nonqualified variable annuity. An annuitant assumes the investment risk of a variable annuity and is not protected byt he insurance company from capital losses. C)100% tax deferred. A joint-and-last-survivor annuity is a payout option where: One of the following would achieve that objective but a suitability discussion regarding it's risk should also occur. A the safety of the principal invested B the yield is always higher than bond yields. C) During the annuity period. C)III and IV. B)I and III. B) variable annuities. B)a minimum rate of return is guaranteed. When the second party dies, all payments cease. The payout of an annuitized variable annuity account changes from month to month in a manner determined by which of the following? Question #12 of 48Question ID: 606814 Nicks Enterprises has purchased a new machine tool that will allow the company to improve the efficiency of its operations. Since the client is older than 59 at the time of distribution, the additional 10% penalty tax is not incurred. B) a variable annuity contract is not required to be sold by prospectus because it is an insurance contract A) A variable annuity *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. For example, if the income is monthly, the first payment comes one month after the immediate annuity is bought. She will receive the annuity's entire value in a lump-sum payment. A) number of annuity units. B)mutual fund units. Distribution of dividends occurs during the accumulation period. Upon John's death during the accumulation period, Sue takes a lump-sum payment. Determine the revenue equation given the profit and expense equations. *Payments from a variable annuity depend on the securities' value in the separate account's underlying investment portfolio. The holder of a variable annuity receives the largest monthly payments under which of the following payout options? C) I and IV. D) the payout plans provide the client income for life. Annuities are complicated products, so that may be easier said than done. How Are Nonqualified Variable Annuities Taxed? 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. 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 \hspace{10pt} State unemployment (employer only), 3.8%3.8\%3.8% You purchase a variable annuity contract by making either a single purchase payment or a series of purchase payments. D) tax free. The return on a variable annuity is not guaranteed; it is determined by the underlying portfolio's value. IBM Noida, Uttar Pradesh, India4 weeks agoBe among the first 25 applicantsSee who IBM has hired for this roleNo longer accepting applications. Most annuities will not allow you to withdraw additional funds from the account once the payout phase has begun. Reference: 12.1.4.1 in the License Exam. The funds in an annuity are off-limits to creditors and other debt collectors. A)II and IV. They are also riddled with fees, which can cut into profits. \hspace{7pt} a. December 303030, to record the payroll. The offers that appear in this table are from partnerships from which Investopedia receives compensation. Spartan Technology Services and Solutions Private Limited is a subsidiary of IBM (International Business Machines) Corporation. I. Refinancing a home to draw out equity has been identified by FINRA as an abusive sales tactic regarding the sales of VAs. B) fixed in value until the holder retires. At the end of the year, your account has a value of $10,750 ($5,500 in the stock fund and $5,250 in the bond fund), minus fees and charges. Ideally they should be funded with readily available cash rather than using funds liquidated from existing investments. In March, the actual net return to the separate account was 8%. The remainder of the premium is invested in the separate account. The money paid in will be returned tax free, but the earnings portion will be taxed as ordinary income. B)each annuity unit's value varies with time, but the number of annuity units is fixed. Immediate annuities purchase annuity units directly. B) The proceeds minus John's cost basis taxed as ordinary income at Sue's tax rate. No paper. They are more suitable for individuals who can fund the annuity with cash, want to supplement existing retirement benefits they have already funded, are comfortable with the market risk associated with a VA separate account portfolio and anticipate a long retirement. b. D)A 10% penalty plus the payment of ordinary income tax on funds withdrawn in excess of the owner's basis. Single payment deferred annuity. IBM is a global brand and has its presence in 170 countries and operates . B) contact the issuer of the clients existing VA contract to facilitate the clients surrender of the contract. However, a discussion should occur regarding the risks that are associated with a fixed annuity; purchasing power risk. The beneficiary is taxed at ordinary income rates during the year the lump sum is received. If you die before the payout phase, your beneficiaries may receive a. Variable annuities must be registered with: A)100% tax free. A)accumulation shares. A) 4000. Final answer. The value of the customer's account is converted into annuity units if and when the customer decides to annuitize the contract. No software installation. Investopedia does not include all offers available in the marketplace. A) Ordinary income tax on earnings exceeding basis. B) It will be lower. C)Keogh plans. 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 C) suggest to the client that perhaps a loan or refinancing his vacation home might be a better way to fund the contract purchase. D) the yield is always higher than mortgage yields. Facebook reports that 70%70 \%70% of their users are from outside the United States and that 50%50 \%50% of their users log on to Facebook daily. A)the state banking commission. Many variable annuities invest the separate account in mutual funds. C)II and IV. C) The investor's concerns about taxes. A) There is no risk in a variable annuity. B) The policyowner. A 1 The applicant and possibly the agent initial any changes made. Of the answer choices given the best would be to reevaluate the recommendation based on the new information tendered by the client. B) the rate of return is determined by the underlying portfolio's value. Investopedia requires writers to use primary sources to support their work. Licensed to sell Variable Annuities in the following state(s): FL, TX . *As contributions are made with after-tax dollars, only the earnings generated are taxed on withdrawal. must provide full and fair disclosure. A trend is formed from non-repetitive actions of people. A)the number of annuity units becomes fixed when the contract is annuitized. An annuity factor is taken from the annuity table, which considers, for example, the investor's sex and age. The funds are not liquid due to the surrender fees, and there is also a 10% penalty on withdrawals before age 59-. Payments from a variable annuity depend on the securities' value in the separate account's underlying investment portfolio. This role is also eligible for annual short-term incentive compensation. B) the state insurance department. This recommendation is: A variable annuity is just a tax-deferred annuity in which you get to choose how the value of the annuity is invested. Based on this information the RR should: D)I and III. On an annual basis, the machine will produce 20,000 units with an expected selling price of $10, prime costs of$6 per unit, and a fixed cost allocation of $3 per unit. A)the yield is always higher than mortgage yields. IBM Noida, Uttar Pradesh, India1 month agoBe among the first 25 applicantsSee who IBM has hired for this roleNo longer accepting applications. C) number of accumulation units. The growth portion is subject to a 10% penalty. B)Two-thirds of the withdrawal is taxable as ordinary income. Life Insurance vs. Annuity: What's the Difference? 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. D)II and III. B) I and III. Reference: 12.1.2 in the License Exam, Question #21 of 48Question ID: 606812 Securely download your document with other editable templates, any time, with PDFfiller.
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