SIE Final #2 Flashcards | Quizlet For a retired person, which of the following investments would provide the greatest protection against inflation? C)none of these. He originally invested $29,000 4 years ago; it now has a value of $39,000. B)It will be lower. U.S. Securities and Exchange Commission. The number of variable annuity accumulation units can rise during the accumulation period when additional units are being purchased. Question #15 of 48Question ID: 606804 Because common stocks are not fixed dollar investments, they have the opportunity to keep pace with inflation. A variable annuity's separate account is: The separate account is used for both variable life insurance and variable annuity investments. Which of the following statements regarding variable annuities are TRUE? A)number of annuity units. All of the following are characteristics of variable annuity contracts Question #36 of 48Question ID: 606805 A)not suitable C)It will be higher. Variable annuities offer the possibility of higher returns and greater income than fixed annuities, but theres also a risk that the account will fall in value. Question #47 of 48Question ID: 606813 B)FINRA. What Are the Biggest Disadvantages of Annuities? used to escrow late or otherwise delinquent premium payments. C) Life annuity with 10 year period certain. Reference: 12.1.1 in the License Exam. 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. A life with period certain contract guarantees payments for a specified number of years to a named beneficiary if the annuitant dies during that time. An annuitant assumes the investment risk of a variable annuity and is not protected byt he insurance company from capital losses. The funds are not liquid due to the surrender fees, and there is also a 10% penalty on withdrawals before age 59-. B)mutual fund units. B)each annuity unit's value varies with time, but the number of annuity units is fixed. A)Joint tenants annuity. Variable Annuities | Investor.gov can be sold by someone with an insurance license only. \text{Balance sheet accounts:}\\ Before the contract is annuitized, your client, currently age 60, withdraws some funds for personal purposes. All of the following statements are true regarding both mutual funds and variable annuities EXCEPT: a. the return to investors is dependent on the performance of the securities in the underlying portfolio b. the investment company act of 1940 is the regulating legislation c. distributions from the underlying mutual fund are taxable to the holder in the year the distribution is made d. the . features they offer rather than as an investment. D)Any tax due is deferred. Fixed annuities are not considered securities as return is guaranteed by the insurance company issuer. A)II and III 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. Typically, they allow one withdrawal each year during the accumulation phase. B)value of annuity units. The amount that is paid doesnt depend on the age (or continued life) of the person who buys the annuity; the payments depend instead on the amount paid into the annuity, the length of the payout period, and (if its a fixed annuity) an interest rate that the insurance company believes it can support for the length of the payout period. B)fixed in value until the holder retires. Question #24 of 48Question ID: 606806 What Are the Risks of Annuities in a Recession? What Are Ordinary Annuities, and How Do They Work (With Example)? A security is an investment for profit with management performed by a third party. C)insurance companies keep variable annuity funds in separate accounts from other insurance products. B. variable annuities offer the investor protection against capital loss. Reference: 12.3.1 in the License Exam, Question #30 of 48Question ID: 606833 A)the number of annuity units becomes fixed when the contract is annuitized. D)separate account may consist of mutual funds. 3. The funds are not liquid due to the surrender fees, and there is also a 10% penalty on withdrawals before age 59 1/2. Premiums made into the annuity purchase accumulation units, c. The separate account provides for a guaranteed minimum return, d. Each month the payment will increase, decrease, or remain the same as the previous months payment based on the actual return as compared to the assumed interest rate (AIR). C. variable annuities will protect an investor against capital loss. With regard to a variable annuity, all of the following may vary EXCEPT: Your answer, number of annuity units., was correct!. (The exception is the fixed income annuity, which has a moderate to high payout that rises as the annuitant ages). For this potential advantage, the investor, rather than the ins. Having a supplemental income stream for retirement and keeping pace with inflation should be the reasons to consider a VA as suitable, but not preservation of capital. Variable annuities are designed to combat inflation risk. The value of accumulation and annuity units varies with the investment performance of the separate account. Given that all of the current retirement investments are subject to market risk, the customer wants these new funds to have no market risk exposure. Question #16 of 48Question ID: 606807 B)I and IV. A)variable annuities may only be sold by registered representatives. U.S. Securities and Exchange Commission. The most suitable option and one considered effective for married couples is a single joint and last survivor contract. Is required by the Securities Act of 1933, 4. Her agent recommended she choose a variable annuity as a safe haven for the funds. But again, the need to designate beneficiaries is not an issue for this annuitant. 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? Her intent was to use the funds for the down payment on a house after graduation. Based only on these facts, the variable annuity recommendation is a variable annuity guarantees payments for life. Reference: 12.3.1 in the License Exam. A)contact the issuer of the clients existing VA contract to facilitate the clients surrender of the contract. is required by the Securities Act of 1933. Deferred annuities A deferred annuity is designed to collect premiums and accrue investment income over an extended period for payout at a later timefor example, when an individual retires. The investor has already paid tax on the contributions but the earnings have grown tax-deferred. If an investor has purchased an immediate variable annuity, which of the following statements best describe the investment? 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. A variable annuity does not guarantee an earnings rate because earnings will depend on the performance of the separate account. contract. Must precede every sales presentation. No other type of financial product can promise to do this. When the second party dies, all payments cease. C)the number of annuity units is fixed, and their value remains fixed. If one purchases an annuity for a set price, the issuing company would invest the funds and hold them until they are supposed to be disbursed, generally based on the owner's age. 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. In addition, if the customer is not at least 59-, there will be a tax penalty of an additional 10%. A customer has an investment objective of keeping pace with inflation while assuming moderate risk. C)annuity units. Reference: 12.1.4.1 in the License Exam. A guaranteed period commits the insurance company to continue payments after the owner dies to one or more designated beneficiaries; the payments continue to the end of the stated guaranteed periodusually 10 or 20 years (measured from when the owner started receiving the annuity payments). An individual retirement annuity is an investment vehiclesimilar to an individual retirement accountthat is offered by insurance companies. Future annuity payments will vary according to the separate account's performance. 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. An important basic characteristic of common stocks that makes them a suitable type of investment for the separate account of variable annuities is: Your answer, changes in common stock prices tend to be more closely related to changes in the cost of living than changes in bond prices., was correct!. D)an accounting measure used to determine payments to the owner of the variable annuity. Annuities basics | III If the customer takes a withdrawal of $10,000, what are the tax consequences? Consequently, the client pays taxes only on the growth portion of the withdrawal ($10,000). Registration with FINRA is de factor registration with the SEC; no registration is required by the state banking commission. Usually the term annuity relates to a contract between an individual and a life insurance company. Are Variable Annuities Subject to Required Minimum Distributions? The value of the customer's account is converted into annuity units if and when the customer decides to annuitize the contract. Deferred annuities, also referred to as investment annuities, are available in fixed . D)the safety of the principal invested. Find out how you can intelligently organize your Flashcards. A) Premiums made into the annuity purchase accumulation units. Your 65-year-old client owns a nonqualified variable annuity. B)Tax-free municipal bonds a variable annuity does not guarantee an earnings rate of return. Therefore, variable annuities must be registered with the state insurance commission and the Securities and Exchange Commission. Registration with FINRA is de facto registration with the SEC; no registration is required by the state banking commission. Variable annuities gave buyers a chance to benefit from rising markets by investing in a menu of mutual funds offered by the insurer. are purchased primarily for their insurance features A)Corporate debt securities Introducing Cram Folders! Withdrawals from a nonqualified variable annuity are made on a LIFO basis, so the taxable earnings are considered taken out before principal. Therefore, variable annuities must be registered with the state insurance commission and the SEC. \hspace{5pt}\text{Revenue}&\text{Credit}&(j)&\\ B)I and II The upside was the possibility of higher returns during the accumulation phase and a larger income during the payout phase. He makes the following four statements, all of which are true EXCEPT Reference: 12.3.2.1 in the License Exam. The amount taxed is the amount of the lump-sum payment minus the deceased's cost basis in the investment. D)the rate of return is determined by the underlying portfolio's value. They can be classified by: An annuity can be classified in several of these categories at once. Your client has $50,000 to invest. All of the following are characteristics of Variable Annuity contracts EXCEPT The possibility of higher returns and greater income than fixed annuities, but there's also a risk that the account will fall in value D) The investment risk is shared between the insurance company and the policyowner. Immediate annuities An immediate annuity is designed to start paying an income one time period after the immediate annuity is bought. . For a retired person, which of the following investments would provide the greatest protection against inflation? 2. B)changes in common stock prices tend to be more closely related to changes in the cost of living than changes in bond prices. Question #35 of 48Question ID: 606810 have investment risk that is assumed by the investor. An accumulation unit in a variable annuity contract is: Your answer, an accounting measure used to determine the contract owner's interest in the separate account., was correct!. The accumulation unit's value is used to calculate the total value of the account. 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. Unit 12: Variable Annuities Flashcards | Chegg.com Any withdrawals you make prior to the age of 59 may also be subject to a 10% tax penalty. D. a majority vote from the shareholders is required to change the investment objectives. C)the invested money will be professionally managed according to the issuers' investment objectives. Fixed annuities typically earn at a lower, stable rate. Your 65-year-old client owns a nonqualified variable annuity. Question #26 of 48Question ID: 606811 People who own an immediate annuity (that is, who are receiving money from an insurance company), are afforded some protection from creditors. The payment might be invested for growth for a long period of timea single premium deferred annuityor invested for a short time, after which the payout beginsa single premium immediate annuity. Equity-Indexed Annuity: How They Work. and Their Limitations - Investopedia There is no beneficiary in the event the annuitant dies. A variable annuity is both an insurance and a securities product. In a variable life annuity with 10-year period certain, a contract holder receives: All of the following statements about variable annuities are true EXCEPT: Your answer, a minimum rate of return is guaranteed., was correct!. Why Is It Important To Have Your Financial Plan And Goals In Place When Considering Investments? Fixed annuities are regulated by state insurance departments. Reference: 12.1.2 in the License Exam, Question #39 of 48Question ID: 721469 withdraw funds without any tax consequences. a variable annuity does not guarantee an earnings rate of return. All of the following characteristics are shared by both a mutual fund and a variable annuity's separate account EXCEPT: Your answer, the payout plans provide the client income for life., was correct!. She will receive the annuity's entire value in a lump-sum payment. 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. "Variable Annuities: What You Should Know," Page 10. Annuities are financial products intended to enhance retirement security. A)Ordinary income taxation on the earnings withdrawn until reaching the owner's cost basis. In contrast to mutual funds and other investments made with aftertax money, with annuities there are no tax consequences if owners change how their funds are invested. The value of the separate account is now $30,000. vote on proposed changes in investment policy. All of the following statements regarding variable annuities are true EXCEPT: A. variable annuities may only be sold by registered representatives. is required by the Securities Act of 1933. A customer has contributed $1,000 a year for 10 years to his tax-deferred nonqualified variable annuity. Balancesheetaccounts:AssetLiabilityOwnersequity:CapitalDrawingIncomestatementsaccounts:RevenueExpenseIncreaseCreditCreditCreditDecreaseCredit(j)CreditNormalBalanceDebit. D)Variable annuity. A)II and IV. Changes in payments on a variable annuity correspond most closely to fluctuations in the: Once a customer annuitizes a variable annuity, which of the following statements are TRUE? \hspace{5pt}\text{Liability}&\text{Credit}&&\\ A)II and IV. However, a discussion should occur regarding the risks that are associated with a fixed annuity; purchasing power risk. In addition, an element of risk must be present. Skylar Clarine is a fact-checker and expert in personal finance with a range of experience including veterinary technology and film studies. This recommendation is: With variable annuities, the rate of returnand therefore the value of your investmentmight go up or down depending on the performance of the stock, bond and money market funds that you choose as investment options. Sub accounts and mutual funds are conceptually. must precede every sales presentation. D)Dow Jones Industrial Average. Question #40 of 48Question ID: 606800 A market-value adjusted annuity is one that combines two desirable features the ability to select and fix the time period and interest rate over which the annuity will grow, and the flexibility to withdraw money from the annuity before the end of the time period selected. Reference: 12.1.2 in the License Exam, Question #23 of 48Question ID: 901858 Mark O Meara Wife Dies, Homes For Sale By Owner In Clark County, Wi, Articles T
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the following are all characteristics of variable annuities except:


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the following are all characteristics of variable annuities except:

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the following are all characteristics of variable annuities except:

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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. The time period depends on how often the income is to be paid. Question #42 of 48Question ID: 606830 Often used for retirement planning purposes, it is meant to provide a regular (monthly, quarterly, annual) income stream, starting at some point in the future. co. will have to pay the death benefit sooner than expected - that is, before receiving some of the expected premium payments. Designed to protect against inflation. they have all the same characteristics as life insurance An Immediate Annuity is designed to provide each of the following features, EXCEPT: The creation of an estate Your client has a large sum of money to invest from the proceeds of the sale of his home. Most variable annuities are structured to offer investors many different fund alternatives. SIE Final #2 Flashcards | Quizlet For a retired person, which of the following investments would provide the greatest protection against inflation? C)none of these. He originally invested $29,000 4 years ago; it now has a value of $39,000. B)It will be lower. U.S. Securities and Exchange Commission. The number of variable annuity accumulation units can rise during the accumulation period when additional units are being purchased. Question #15 of 48Question ID: 606804 Because common stocks are not fixed dollar investments, they have the opportunity to keep pace with inflation. A variable annuity's separate account is: The separate account is used for both variable life insurance and variable annuity investments. Which of the following statements regarding variable annuities are TRUE? A)number of annuity units. All of the following are characteristics of variable annuity contracts Question #36 of 48Question ID: 606805 A)not suitable C)It will be higher. Variable annuities offer the possibility of higher returns and greater income than fixed annuities, but theres also a risk that the account will fall in value. Question #47 of 48Question ID: 606813 B)FINRA. What Are the Biggest Disadvantages of Annuities? used to escrow late or otherwise delinquent premium payments. C) Life annuity with 10 year period certain. Reference: 12.1.1 in the License Exam. 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. A life with period certain contract guarantees payments for a specified number of years to a named beneficiary if the annuitant dies during that time. An annuitant assumes the investment risk of a variable annuity and is not protected byt he insurance company from capital losses. The funds are not liquid due to the surrender fees, and there is also a 10% penalty on withdrawals before age 59-. B)mutual fund units. B)each annuity unit's value varies with time, but the number of annuity units is fixed. A)Joint tenants annuity. Variable Annuities | Investor.gov can be sold by someone with an insurance license only. \text{Balance sheet accounts:}\\ Before the contract is annuitized, your client, currently age 60, withdraws some funds for personal purposes. All of the following statements are true regarding both mutual funds and variable annuities EXCEPT: a. the return to investors is dependent on the performance of the securities in the underlying portfolio b. the investment company act of 1940 is the regulating legislation c. distributions from the underlying mutual fund are taxable to the holder in the year the distribution is made d. the . features they offer rather than as an investment. D)Any tax due is deferred. Fixed annuities are not considered securities as return is guaranteed by the insurance company issuer. A)II and III 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. Typically, they allow one withdrawal each year during the accumulation phase. B)value of annuity units. The amount that is paid doesnt depend on the age (or continued life) of the person who buys the annuity; the payments depend instead on the amount paid into the annuity, the length of the payout period, and (if its a fixed annuity) an interest rate that the insurance company believes it can support for the length of the payout period. B)fixed in value until the holder retires. Question #24 of 48Question ID: 606806 What Are the Risks of Annuities in a Recession? What Are Ordinary Annuities, and How Do They Work (With Example)? A security is an investment for profit with management performed by a third party. C)insurance companies keep variable annuity funds in separate accounts from other insurance products. B. variable annuities offer the investor protection against capital loss. Reference: 12.3.1 in the License Exam, Question #30 of 48Question ID: 606833 A)the number of annuity units becomes fixed when the contract is annuitized. D)separate account may consist of mutual funds. 3. The funds are not liquid due to the surrender fees, and there is also a 10% penalty on withdrawals before age 59 1/2. Premiums made into the annuity purchase accumulation units, c. The separate account provides for a guaranteed minimum return, d. Each month the payment will increase, decrease, or remain the same as the previous months payment based on the actual return as compared to the assumed interest rate (AIR). C. variable annuities will protect an investor against capital loss. With regard to a variable annuity, all of the following may vary EXCEPT: Your answer, number of annuity units., was correct!. (The exception is the fixed income annuity, which has a moderate to high payout that rises as the annuitant ages). For this potential advantage, the investor, rather than the ins. Having a supplemental income stream for retirement and keeping pace with inflation should be the reasons to consider a VA as suitable, but not preservation of capital. Variable annuities are designed to combat inflation risk. The value of accumulation and annuity units varies with the investment performance of the separate account. Given that all of the current retirement investments are subject to market risk, the customer wants these new funds to have no market risk exposure. Question #16 of 48Question ID: 606807 B)I and IV. A)variable annuities may only be sold by registered representatives. U.S. Securities and Exchange Commission. The most suitable option and one considered effective for married couples is a single joint and last survivor contract. Is required by the Securities Act of 1933, 4. Her agent recommended she choose a variable annuity as a safe haven for the funds. But again, the need to designate beneficiaries is not an issue for this annuitant. 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? Her intent was to use the funds for the down payment on a house after graduation. Based only on these facts, the variable annuity recommendation is a variable annuity guarantees payments for life. Reference: 12.3.1 in the License Exam. A)contact the issuer of the clients existing VA contract to facilitate the clients surrender of the contract. is required by the Securities Act of 1933. Deferred annuities A deferred annuity is designed to collect premiums and accrue investment income over an extended period for payout at a later timefor example, when an individual retires. The investor has already paid tax on the contributions but the earnings have grown tax-deferred. If an investor has purchased an immediate variable annuity, which of the following statements best describe the investment? 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. A variable annuity does not guarantee an earnings rate because earnings will depend on the performance of the separate account. contract. Must precede every sales presentation. No other type of financial product can promise to do this. When the second party dies, all payments cease. C)the number of annuity units is fixed, and their value remains fixed. If one purchases an annuity for a set price, the issuing company would invest the funds and hold them until they are supposed to be disbursed, generally based on the owner's age. 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. In addition, if the customer is not at least 59-, there will be a tax penalty of an additional 10%. A customer has an investment objective of keeping pace with inflation while assuming moderate risk. C)annuity units. Reference: 12.1.4.1 in the License Exam. A guaranteed period commits the insurance company to continue payments after the owner dies to one or more designated beneficiaries; the payments continue to the end of the stated guaranteed periodusually 10 or 20 years (measured from when the owner started receiving the annuity payments). An individual retirement annuity is an investment vehiclesimilar to an individual retirement accountthat is offered by insurance companies. Future annuity payments will vary according to the separate account's performance. 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. An important basic characteristic of common stocks that makes them a suitable type of investment for the separate account of variable annuities is: Your answer, changes in common stock prices tend to be more closely related to changes in the cost of living than changes in bond prices., was correct!. D)an accounting measure used to determine payments to the owner of the variable annuity. Annuities basics | III If the customer takes a withdrawal of $10,000, what are the tax consequences? Consequently, the client pays taxes only on the growth portion of the withdrawal ($10,000). Registration with FINRA is de factor registration with the SEC; no registration is required by the state banking commission. Usually the term annuity relates to a contract between an individual and a life insurance company. Are Variable Annuities Subject to Required Minimum Distributions? The value of the customer's account is converted into annuity units if and when the customer decides to annuitize the contract. Deferred annuities, also referred to as investment annuities, are available in fixed . D)the safety of the principal invested. Find out how you can intelligently organize your Flashcards. A) Premiums made into the annuity purchase accumulation units. Your 65-year-old client owns a nonqualified variable annuity. B)Tax-free municipal bonds a variable annuity does not guarantee an earnings rate of return. Therefore, variable annuities must be registered with the state insurance commission and the Securities and Exchange Commission. Registration with FINRA is de facto registration with the SEC; no registration is required by the state banking commission. Variable annuities gave buyers a chance to benefit from rising markets by investing in a menu of mutual funds offered by the insurer. are purchased primarily for their insurance features A)Corporate debt securities Introducing Cram Folders! Withdrawals from a nonqualified variable annuity are made on a LIFO basis, so the taxable earnings are considered taken out before principal. Therefore, variable annuities must be registered with the state insurance commission and the SEC. \hspace{5pt}\text{Revenue}&\text{Credit}&(j)&\\ B)I and II The upside was the possibility of higher returns during the accumulation phase and a larger income during the payout phase. He makes the following four statements, all of which are true EXCEPT Reference: 12.3.2.1 in the License Exam. The amount taxed is the amount of the lump-sum payment minus the deceased's cost basis in the investment. D)the rate of return is determined by the underlying portfolio's value. They can be classified by: An annuity can be classified in several of these categories at once. Your client has $50,000 to invest. All of the following are characteristics of Variable Annuity contracts EXCEPT The possibility of higher returns and greater income than fixed annuities, but there's also a risk that the account will fall in value D) The investment risk is shared between the insurance company and the policyowner. Immediate annuities An immediate annuity is designed to start paying an income one time period after the immediate annuity is bought. . For a retired person, which of the following investments would provide the greatest protection against inflation? 2. B)changes in common stock prices tend to be more closely related to changes in the cost of living than changes in bond prices. Question #35 of 48Question ID: 606810 have investment risk that is assumed by the investor. An accumulation unit in a variable annuity contract is: Your answer, an accounting measure used to determine the contract owner's interest in the separate account., was correct!. The accumulation unit's value is used to calculate the total value of the account. 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. Unit 12: Variable Annuities Flashcards | Chegg.com Any withdrawals you make prior to the age of 59 may also be subject to a 10% tax penalty. D. a majority vote from the shareholders is required to change the investment objectives. C)the invested money will be professionally managed according to the issuers' investment objectives. Fixed annuities typically earn at a lower, stable rate. Your 65-year-old client owns a nonqualified variable annuity. Question #26 of 48Question ID: 606811 People who own an immediate annuity (that is, who are receiving money from an insurance company), are afforded some protection from creditors. The payment might be invested for growth for a long period of timea single premium deferred annuityor invested for a short time, after which the payout beginsa single premium immediate annuity. Equity-Indexed Annuity: How They Work. and Their Limitations - Investopedia There is no beneficiary in the event the annuitant dies. A variable annuity is both an insurance and a securities product. In a variable life annuity with 10-year period certain, a contract holder receives: All of the following statements about variable annuities are true EXCEPT: Your answer, a minimum rate of return is guaranteed., was correct!. Why Is It Important To Have Your Financial Plan And Goals In Place When Considering Investments? Fixed annuities are regulated by state insurance departments. Reference: 12.1.2 in the License Exam, Question #39 of 48Question ID: 721469 withdraw funds without any tax consequences. a variable annuity does not guarantee an earnings rate of return. All of the following characteristics are shared by both a mutual fund and a variable annuity's separate account EXCEPT: Your answer, the payout plans provide the client income for life., was correct!. She will receive the annuity's entire value in a lump-sum payment. 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. "Variable Annuities: What You Should Know," Page 10. Annuities are financial products intended to enhance retirement security. A)Ordinary income taxation on the earnings withdrawn until reaching the owner's cost basis. In contrast to mutual funds and other investments made with aftertax money, with annuities there are no tax consequences if owners change how their funds are invested. The value of the separate account is now $30,000. vote on proposed changes in investment policy. All of the following statements regarding variable annuities are true EXCEPT: A. variable annuities may only be sold by registered representatives. is required by the Securities Act of 1933. A customer has contributed $1,000 a year for 10 years to his tax-deferred nonqualified variable annuity. Balancesheetaccounts:AssetLiabilityOwnersequity:CapitalDrawingIncomestatementsaccounts:RevenueExpenseIncreaseCreditCreditCreditDecreaseCredit(j)CreditNormalBalanceDebit. D)Variable annuity. A)II and IV. Changes in payments on a variable annuity correspond most closely to fluctuations in the: Once a customer annuitizes a variable annuity, which of the following statements are TRUE? \hspace{5pt}\text{Liability}&\text{Credit}&&\\ A)II and IV. However, a discussion should occur regarding the risks that are associated with a fixed annuity; purchasing power risk. In addition, an element of risk must be present. Skylar Clarine is a fact-checker and expert in personal finance with a range of experience including veterinary technology and film studies. This recommendation is: With variable annuities, the rate of returnand therefore the value of your investmentmight go up or down depending on the performance of the stock, bond and money market funds that you choose as investment options. Sub accounts and mutual funds are conceptually. must precede every sales presentation. D)Dow Jones Industrial Average. Question #40 of 48Question ID: 606800 A market-value adjusted annuity is one that combines two desirable features the ability to select and fix the time period and interest rate over which the annuity will grow, and the flexibility to withdraw money from the annuity before the end of the time period selected. Reference: 12.1.2 in the License Exam, Question #23 of 48Question ID: 901858

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the following are all characteristics of variable annuities except: