a. *The minimum guaranteed death benefit is provided by that portion of the payment invested in the insurance company's general account. C) The investor's concerns about taxes. Your customer, still working, informs you that she will be funding a variable annuity you have recommended from 2 sources: a refinancing of her primary home where she will be able to draw out equity that has built up since it was purchased 15 years ago, and cashing out another variable annuity that she recently purchased within the past 2 years without a lifetime income rider like the one you have recommended. \text{Salaries:} && \text{Deductions:}\\ C)I and III. For this potential advantage, the investor, rather than the insurance company, assumes the investment risk. Of the answer choices given the best would be to reevaluate the recommendation based on the new information tendered by the client. Which of the following statements is not true about the characteristics of a trend? B) suitable if she has enough equity in the home to fund the variable annuity without cashing out the other VA contract A)the yield is always higher than mortgage yields. IV. On any device & OS. *The return on a variable annuity is not guaranteed; it is determined by the underlying portfolio's value. withdraw funds without any tax consequences. *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. 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 second party dies, all payments cease. D) I and IV. An annuitant assumes the investment risk of a variable annuity and is not protected byt he insurance company from capital losses. A)value of underlying securities held in the separate account. A) Ordinary income tax on earnings exceeding basis. PGIM Fixed Income, a division of PGIM Inc., an SEC-registered investment adviser and a business unit of Prudential Financial, Inc. is seeking a Portfolio Risk Surveillance Analyst. Inflation-hedging, using both tax deferral combined with market growth potential, is made possible by variable annuities #. *Variable annuity contracts must be sold by prospectus due to the characterization of the separate accounts as securities, which must be registered under the Securities Act of 1933 and the Investment Company Act of 1940. Typically, they allow one withdrawal each year during the accumulation phase. A) I and III. Variable annuities are riskier than fixed annuities because the underlying investments may lose value. However, because the client is not yet age 59- when making the withdrawal, he also pays a 10% penalty, or $1,000. Which of the following is NOT an accurate statement concerning a variable life insurance contract? At the end of the year your account has a value of 10750. The value of the customer's account is converted into annuity units if and when the customer decides to annuitize the contract. C) II and III. However, a discussion should occur regarding the risks that are associated with a fixed annuity; purchasing power risk. the agent must be licensed in both insurance and securities. Therefore, variable annuities must be registered with the state insurance commission and the Securities and Exchange Commission. & \underline{\underline{\$1,014,000}} & \hspace{10pt} \text{U.S. savings bonds} & 30,420\\ D)the safety of the principal invested. Question #32 of 48Question ID: 606815 D) A 10% penalty plus the payment of ordinary income tax on funds withdrawn in excess of the owner's basis. However, it does guarantee payments for life (mortality). *Once a variable annuity is annuitized, the accumulation units are converted into a fixed number of annuity units. IBM Noida, Uttar Pradesh, India1 month agoBe among the first 25 applicantsSee who IBM has hired for this roleNo longer accepting applications. b. Your customer in his early 30s has received a modest inheritance from a relative. Determine the revenue equation given the profit and expense equations. How Good of a Deal Is an Indexed Annuity? 6102..55.001) is being updated on an ongoing basis. B)fixed in value until the holder retires. A registered representative explaining variable annuities to a customer would be CORRECT in stating that: The annuity unit's value represents a guaranteed return. Fixed annuities. C)such an annuity is designed to combat inflation risk. The value of accumulation and annuity units varies with the investment performance of the separate account. The company's well-known Rock symbol is an icon of strength, stability, expertise and innovation that has stood the test of time. B) Age 78, retired for 20 years, lives comfortably and wants to leave all liquid assets to children The value of these units varies with the performance of the separate account. A variable annuity is a contract between you and an insurance company, under which the insurer agrees to make periodic pay- ments to you, beginning either immediately or at some future date. DR:BASSANT ADEL 9 QUIZ CH 6 Choose the correct answer: 1-Insurance policy benefits are classified on an insurance company's balance sheet as A. liabilities, because the insurance company may have to pay out the benefits B. assets, because policy benefits are valuable to the company C. liabilities, because customers may fall behind on their premium payments D. assets, because policy benefits . IV. C)Corporate bonds. \hspace{10pt} Federal unemployment (employer only), 0.8%0.8\%0.8%. B)suitable regardless of funding sources A 3 *Variable annuity contracts were devised to help investors keep pace with inflation. Periodic payment deferred annuity. The investor purchased accumulation units. A) waiver of premium 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: With regard to a variable annuity, all of the following may vary EXCEPT: no. II. D)separate account may consist of mutual funds. B) It will be lower. B)I and II A)Fixed annuities. Reference: 12.3.3 in the License Exam. Question #16 of 48Question ID: 606807 An example would be if a life annuity with 10-year period certain contract holder died after 5 years, payments would continue for 5 more years to the beneficiary and then stop. A) Fixed Annuity Prudential's businesses offer a variety of products and services, including life insurance, annuities, retirement-related services, mutual funds, asset management, and real estate services. The funds are not liquid due to the surrender fees, and there is also a 10% penalty on withdrawals before age 59-. D) The fact that periodic payments into the contract may increase or decrease. A passion for serving customers and a personal commitment to following through in a dynamic, fast-paced environment. Question #33 of 48Question ID: 606832 Post navigation *Payments from a variable annuity depend on the securities' value in the separate account's underlying investment portfolio. Over the past five years, 's dividend yield has averaged % per year. You have 4 clients each expressing interest in a variable annuity contract. Reference: 12.3.2.1 in the License Exam. C) the yield is always higher than bond yields. With regard to a variable annuity, all of the following may vary EXCEPT: Which of the following is not a characteristic of a program module? If the client, who is in a 30% tax bracket, makes a random withdrawal of $15,000, what will the tax liability to the IRS be? A)the state banking commission. All of the following investment strategies offer either fully or partially tax-deductible contributions to individuals who meet eligibility requirements EXCEPT: B) II and IV. Income that cannot be outlived by the owner Because this is not guaranteed, the policyowner bears the investment risk. A) two people are covered and payments continue until the second death. B)Variable annuities. C) a variable annuity contract does not guarantee any type of return An investor who purchases a fixed annuity contract assumes purchasing-power risk. 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 C) value of underlying securities held in the separate account. \hspace{10pt} \text{Office salaries} & \underline{234,000} & \hspace{10pt} \text{Medicare tax withheld} & 15,210\\ 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. A)Corporate debt securities The tax on this amount is $3,000. Any withdrawals you make prior to the age of 59 may also be subject to a 10% tax penalty. A) II and IV. C) 10% penalty plus payment of ordinary income tax on all funds withdrawn exceeding basis. The number of annuity units is fixed at the time of annuitization. Underlying equity investments T, age 70, withdraws cash from a profit-sharing plan and purchases a Straight Life Annuity. D) Any time before the accumulation period. This makes a total of $4,000 tax and penalty paid on the random withdrawal. A 45-year-old investor takes a lump-sum distribution from a nonqualified variable annuity. During the payout period, payments are based on a fixed number of annuity units established when the contract was annuitized. Listing tax-deferred growth as an objective for retirement income, which of the following investments is most suitable? A)defined contribution plans. Ideally they should be funded with readily available cash rather than using funds liquidated from existing investments. B) be paid to any legal heirs as recognized by the annuitant's state of domicile. Consequently, the client pays taxes only on the growth portion of the withdrawal ($10,000). Question #31 of 48Question ID: 606836 C)3800. D)I and III. B)It will be lower. vote for the investment adviser. An important basic characteristic of common stocks that makes them a suitable type of investment for the separate account of variable annuities is: III. An immediate annuity is designed to pay an income one time-period after the immediate annuity is bought. Question #36 of 48Question ID: 606805 B)Two-thirds of the withdrawal is taxable as ordinary income. What is the taxable consequence of this withdrawal to your client? When a variable contract is annuitized (distributed in regular payments, not as a lump sum), the number of accumulation units is multiplied by the unit value to arrive at the account's current value. Changes in payments on a variable annuity correspond most closely to fluctuations in the: Needs - are goal-directed forces that people experience. D)I and III. Contributions to a nonqualified variable annuity are not tax deductible. Deal with mathematic Math is all about solving equations and finding the right answer. A) changes in common stock prices tend to be more closely related to changes in the cost of living than changes in bond prices. D) variable annuities may only be sold by registered representatives. Your client owns a variable annuity contract with an AIR of 4%. If an investor has a fixed-annuity contract with an insurance company, which of the following risks is assumed by the investor? D)A variable annuity, Variable annuities offer tax-deferred growth and are suitable for achieving supplemental retirement income. 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. Ideally they should be funded with readily available cash rather than using funds liquidated from existing investments. A) II and III. D) I and III B)a minimum rate of return is guaranteed. The number of annuity units rises once annuitization begins. A)II and III. If you die before the payout phase, your beneficiaries may receive a. A 1 The applicant and possibly the agent initial any changes made. A)II and IV. Travel Times Journal found that the average per person cost of a 10-day trip along the Pacific coast, per person, is $1,015. An individual who purchases a Life annuity is given protection against: the risk of living longer than expected The type of annuity that can be purchased with one monetary deposit is called a (n) Immediate annuity N purchases an annuity by making payments in an amount no less than $100 quarterly. While a variable annuity has the benefit of tax-deferred growth, its annual expenses are likely to be much higher than the expenses of a typical mutual fund. Variable annuities grow tax-deferred, so you dont have to pay taxes on any investment gains until you begin receiving income or make a withdrawal. Diagnosis is made by punch biopsy. the state insurance commission. Question #29 of 48Question ID: 606831 D) 4500. The client's investment objectives, tax bracket, investment experience and risk tolerance all align well with a VA recommendation. Cashing out life insurance policies or VAs where steep surrender charges are likely to exist, particularly in the earlier years of those contracts, is also considered abusive. B) Life annuity. C)Life annuity. A) mortality guarantee. Job Classification: Corporate - Legal and Compliance. IV. Universal variable life policies variable annuity without paying tax at the time of the transfer. As with most retirement account options, withdrawals before the age of 59 will result in a 10% tax penalty. a. it performs a single task b. it is self-contained and independent of other modules c. it is relatively short d. all of the above are chamcleristics of a program module 7. When the first party dies, the annuity payment is made to the survivor. The creation of an estate. B) IPO. Reference: 12.3.3 in the License Exam, Question #34 of 48Question ID: 606834 C) The ordinary income on the proceeds over the cost basis plus 10% of the net gain (if any) if Sue is younger than 59- years old. The downside was that the buyer was exposed to market risk, which could result in losses. A) A variable annuity He makes the following four statements, all of which are true EXCEPT 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. C)III and IV. 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. Many variable annuities invest the separate account in mutual funds. The value of the separate account is now $30,000. must precede every sales presentation. All of the following statements about variable annuities are true EXCEPT: Reference: 12.2.1 in the License Exam. For example, when paying rent, the rent payment (PMT) . Fixed income instruments, like bonds and fixed annuities, are subject to purchasing power risk. While there is no guarantee on how investments in the separate account will perform, depending on its investment performance, the separate account could provide for a larger death benefit than the minimum guaranteed amount.
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