A variable annuity is a
non-exempt security under the Securities Act of 1933 because the purchasers bears the investment risk
Variable annuities are
non-exempt securities that must be sold with a prospectus
considered to be securities that are regulated by the Investment Company Act of 1940
To sell variable annuities, salespersons must be registered with
-FINRA
-State insurance commission
-State securities commission
The issuer of a variable annuity bears the
Expense risk- annuity payment must stay the same even if there are increased expense experienced by the insurance company
Mortality risk
Any changes in value of a variable annuity accumulation unit are directly related to changes in the
value of the securities funding the separate account
Payments into a variable annuity contract are deposited to the insurance company's
separate account
During the accumulation phase
Period payments of fixed dollar amounts can be made into the separate account
Period payments of varying dollar amount can be made into a separate account
During the accumulation phase
All dividends, interest, and capital gains are tax deferred
An "annuity unit" of a variable annuity contract is an
accounting measure of the annuity amount to be received by the owner
Life Annuity with Period Certain
Annuity payment options will continue payments for a specified time period if the annuitant dies prematurely
When a variable annuity contract is annuitized
no more payments can be made into the contract
Joint and Last Survivor Annuity
Pays a married couple until the second party dies
Unit Refund Annuity
If the contract holder dies earlier than expected, the balance left in the separate account is refunded to a beneficiary
An annuitized account in a variable annuity is most similar to
pension payments
Regarding mutual funds and variable annuities that are in the ACCUMULATION phase
Distributions to mutual fund shareholders are taxable to the holder in the year the distribution is made
Distributions to variable annuity holders are tax deferred,
distributions from the underlying mutual fund are NOT taxable to the holder in the year th
For both mutual funds and variable annuities
-the return to investors is dependent on the performance of the securities in the underlying portfolio
-the Investment Company Act of 1940 is the regulating legislation
-the underlying portfolios are managed
-asset appreciation is untaxed for both
Fixed Annuities
-Account grows at a guaranteed rate
-A fixed annuity is suitable for a customer seeking preservation of capital
Guarantee of a minimum growth rate
Can be added to variable annuity account if one pays a higher annual fee for the rider
The "AIR" shown in a variable annuity prospectus is the
conservative illustration of the rate of return of investment
The "death benefit" associated with a variable annuity contract
Applies prior to annuitization,
means that upon death the insurance company will pay a beneficiary at least the amount invested in the contract
If an individual, age 65, wishes to withdraw money from variable annuity, which is true regarding taxation of withdrawal
Part of the withdrawal is subject to income tax
The amount is not subject to 10% penalty tax for early withdrawal
A client surrenders a variable annuity contract 5 years after purchase because of poor performance. Any surrender fee imposed
is NOT deductible
Rollovers permitted without tax due
Exchange of one variable/insurance annuity contract for another variable/insurance annuity contract
Exchange of a life insurance contract for a variable annuity contract
In order to recommend a variable annuity to a custome:
-The customer must be informed, in general terms, of the material features of the product
-The representative must believe that the customer would benefit from the product's features
-The representative must believe that the variable product as a whole, t
A variable annuity is a
non-exempt security under the Securities Act of 1933 because the purchasers bears the investment risk
Variable annuities are
non-exempt securities that must be sold with a prospectus
considered to be securities that are regulated by the Investment Company Act of 1940
To sell variable annuities, salespersons must be registered with
-FINRA
-State insurance commission
-State securities commission
The issuer of a variable annuity bears the
Expense risk- annuity payment must stay the same even if there are increased expense experienced by the insurance company
Mortality risk
Any changes in value of a variable annuity accumulation unit are directly related to changes in the
value of the securities funding the separate account
Payments into a variable annuity contract are deposited to the insurance company's
separate account
During the accumulation phase
Period payments of fixed dollar amounts can be made into the separate account
Period payments of varying dollar amount can be made into a separate account
During the accumulation phase
All dividends, interest, and capital gains are tax deferred
An "annuity unit" of a variable annuity contract is an
accounting measure of the annuity amount to be received by the owner
Life Annuity with Period Certain
Annuity payment options will continue payments for a specified time period if the annuitant dies prematurely
When a variable annuity contract is annuitized
no more payments can be made into the contract
Joint and Last Survivor Annuity
Pays a married couple until the second party dies
Unit Refund Annuity
If the contract holder dies earlier than expected, the balance left in the separate account is refunded to a beneficiary
An annuitized account in a variable annuity is most similar to
pension payments
Regarding mutual funds and variable annuities that are in the ACCUMULATION phase
Distributions to mutual fund shareholders are taxable to the holder in the year the distribution is made
Distributions to variable annuity holders are tax deferred,
distributions from the underlying mutual fund are NOT taxable to the holder in the year th
For both mutual funds and variable annuities
-the return to investors is dependent on the performance of the securities in the underlying portfolio
-the Investment Company Act of 1940 is the regulating legislation
-the underlying portfolios are managed
-asset appreciation is untaxed for both
Fixed Annuities
-Account grows at a guaranteed rate
-A fixed annuity is suitable for a customer seeking preservation of capital
Guarantee of a minimum growth rate
Can be added to variable annuity account if one pays a higher annual fee for the rider
The "AIR" shown in a variable annuity prospectus is the
conservative illustration of the rate of return of investment
The "death benefit" associated with a variable annuity contract
Applies prior to annuitization,
means that upon death the insurance company will pay a beneficiary at least the amount invested in the contract
If an individual, age 65, wishes to withdraw money from variable annuity, which is true regarding taxation of withdrawal
Part of the withdrawal is subject to income tax
The amount is not subject to 10% penalty tax for early withdrawal
A client surrenders a variable annuity contract 5 years after purchase because of poor performance. Any surrender fee imposed
is NOT deductible
Rollovers permitted without tax due
Exchange of one variable/insurance annuity contract for another variable/insurance annuity contract
Exchange of a life insurance contract for a variable annuity contract
In order to recommend a variable annuity to a custome:
-The customer must be informed, in general terms, of the material features of the product
-The representative must believe that the customer would benefit from the product's features
-The representative must believe that the variable product as a whole, t