the following are all characteristics of variable annuities except:

Fixed annuities are not considered securities as return is guaranteed by the insurance company issuer. A 45-year-old investor takes a lump-sum distribution from a nonqualified variable annuity. Question #22 of 48Question ID: 606803 holder dies sooner than expected. The annuity unit's value represents a guaranteed return. Life Insurance vs. Annuity: What's the Difference? 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. Variable annuity salespeople must register with all of the following EXCEPT: Your answer, the state banking commission., was correct!. Usually the term annuity relates to a contract between an individual and a life insurance company. The value of the separate account is now $30,000. A)value of underlying securities held in the separate account. Fixed annuities pay a fixed monthly benefit which loses purchasing power if there is inflation. Reference: 12.2.1 in the License Exam. Qualified annuities A qualified annuity is one used to invest and disburse money in a tax-favored retirement plan, such as an IRA or Keogh plan or plans governed by Internal Revenue Code sections 401(k), 403(b) or 457. An important basic characteristic of common stocks that makes them a suitable type of investment for the separate account of variable annuities is: B) the yield is always higher than bond yields, C) the yield is always higher than mortgage yields, D) changes in common stock prices tend to be more closely related to changes in the cost of living than changes in bond prices. An annuitant assumes the investment risk of a variable annuity and is not protected byt he insurance company from capital losses. When a variable annuity contract is annuitized, the number of annuity units is fixed. U.S. Securities and Exchange Commission. Under rebalancing, investors shift their investments periodically to return them to the proportions that represent the risk/return combination most appropriate for the investors situation. Flexible premium annuities are only deferred annuities; that is, they are designed to have a significant period of payments into the annuity plus investment growth before any money is withdrawn from them. The minimum guaranteed death benefit is provided by that portion of the payment invested in the insurance company's general account. Question #16 of 48Question ID: 606807 C)The entire $10,000 is taxable as ordinary income. For this potential advantage, the investor, rather than the ins. A security is any investment for profit with management performed by a third party. A)There is no tax as the withdrawal is considered return of capital. B)I and II Reference: 12.3.3 in the License Exam. B)value of annuity units. Lifetime annuities A lifetime annuity provides income for the remaining life of a person (called the annuitant). Reference: 12.2.1 in the License Exam. C)number of accumulation units. You dont have to worry about it anymore. Copyright 2023, Insurance Information Institute, Inc. If the customer takes a withdrawal of $10,000, what are the tax consequences? The holder of a variable annuity receives the largest monthly payments under which of the following payout options? a variable annuity does not guarantee an earnings rate of return. The correct answer is: Defines a securities product All of the following policy elements are not guaranteed in a variable whole life policy, EXCEPT: Select one: a. 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. For each of the items (a) A variable annuity's separate account is: As the name implies, the investment performance of a variable annuity's portfolio (separate account) can vary, and the investor bears the risk of any potential decline in its value. are purchased primarily for their insurance features. An investor owning which of the following variable annuity contracts would hold accumulation units? Variable annuities must be registered with: A variable annuity is a combination of 2 products: an insurance contract and a mutual fund. C)III and IV D) The investment risk is shared between the insurance company and the policyowner. Can I Borrow from My Annuity for a House Down Payment? contract. A)I and IV. A lifetime immediate annuity converts an investment into a stream of payments that last until the annuity owner dies. Which is it? Question #19 of 48Question ID: 606826 Question #14 of 48Question ID: 606823 Fixed period annuities A fixed period annuity pays an income for a specified period of time, such as ten years. All Rights Reserved. Annuities | FINRA.org The number of accumulation units can rise during the accumulation period. The separate account is NOT likely to invest in: The earnings on dollars invested into a variable annuity accumulate tax-deferred, which is why variable annuities are popular products for retirement accumulation. Because the client is older than age 59-, he does not pay 10% premature distribution penalty tax. B)II and III. C) a VA contract does not guarantee any type of return. Please sign in to access member exclusive content. A)exempt from taxes C)III and IV. She will receive the annuity's entire value in a lump-sum payment. Question #37 of 48Question ID: 606817 Registration with FINRA is de facto registration with the SEC; no registration is required by the state banking commission.

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