Variable Products
Donna is getting ready to look at variable life insurance as an option for her insurance. Which of the following statements is TRUE about variable life insurance?
A variable life policy cannot be proposed in a sales scenario unless a prospectus precedes or accompanies the proposal, because it is considered a security. The correct answer is: To sell a variable life insurance policy, the proposal must be accompanied by a prospectus
Agents selling variable products must have which of the following?
Agents selling variable products must have a life insurance and a FINRA representative license. The correct answer is: FINRA representative license and Life license.
All of the following statements are correct regarding variable universal life contract charges and fees, EXCEPT:
Interest earned is credited to the cash value. The correct answer is: Interest earned is credited to the death benefit.
Because variable contracts are equity products, they are subject to various regulations. Which of the following applies to variable contracts?
The 12% rule prevents producers from using illustrations with projected interest rates greater than 12% to induce people to purchase policies. They are not bound by NAIC, and they are regulated as both insurance and securities. The correct answer is: The 12% rule
What is the primary purpose of the Investment Company Act of 1940?
The Investment Company Act of 1940 requires insurers to maintain a separate account for variable investments and establishes a cap for sales fees. The correct answer is: Requires insurer to maintain a separate account for variable investments
What is the primary purpose of the Securities Act of 1933?
The Securities Act of 1933 defines a securities product. The correct answer is: Defines a securities product
Which of the following laws defined a security product?
The Securities Act of 1933 ruled that applicants for a variable product must receive a prospectus. It also laid out a clear definition of a security product. The correct answer is: Securities Act of 1933
Which of the following laws requires sales representatives selling variable products to have a Series 6 license?
The Securities Act of 1934 requires sales representatives who sell variable products to have a Series 6 license. The law also regulates sales representatives_ duties. The correct answer is: Securities Act of 1934
All of the following are guaranteed features in a variable life insurance policy, EXCEPT:
The cash value is invested in the insurer's separate account, and is, therefore, not guaranteed. The correct answer is: Cash value
Joanna has selected a variable universal life policy because it meets her needs. Which of the following is not a characteristic of a variable universal policy?
The variable universal life policy DOES have cash value that varies with the performance of the investment. The correct answer is: It has no cash value.
Which of the following is true with regards to a Variable Universal life policy?
Variable Universal Life Polices allow the policyowner to control the investment of cash values and select the timing and amount of premium payments. The correct answer is: The policyowner controls the investment choices and the premium amounts
Which life policy offers the owner the opportunity to invest in products such as money -market funds, long -term bonds and the stock market?
Variable life offers the policy owner the opportunity to invest in equities, bonds and money - market products. The correct answer is: Variable Life
Which policy has fixed premiums, a guaranteed minimum death benefit and nonguaranteed cash values?
These are all characteristics of variable whole life insurance. Universal life and variable universal life insurance have flexible premiums. The correct answer is: Variable whole life
Gerald wants a life insurance policy in which he can choose the investment vehicle. Which policy would you recommend to him?
Gerald would be able to choose where he wants his premiums invested with a variable life insurance policy. The correct answer is: Variable life
In which fund are premiums for a variable whole life insurance policy invested?
Premiums for variable products are invested in the insurer's separate account. The correct answer is: The insurer's separate account
Which of the following policies allows the policyowner to buy term and direct the investments made in the cash value account?
Variable universal life is universal life insurance with a separate account. The correct answer is: Variable universal life
Which life insurance policy allows the policyowner to choose where they want their funds invested?
Variable life insurance policies permit policyowner's to choose where they want premiums invested. The correct answer is: Variable life
Insurance agent Sam would need a securities license to sell this policy:
Any agent selling variable products must have a securities license in addition to a life insurance license. The correct answer is: Variable life
Of the following policies, which has a guaranteed minimum death benefit, fixed premiums and nonguaranteed cash values?
These are all characteristics of variable life insurance. Universal life and variable universal life insurance have flexible premiums. The correct answer is: Variable life
All of the following policy elements are not guaranteed in a variable whole life policy, EXCEPT:
Variable whole life policies have a guaranteed minimum death benefit. The cash value is tied to the separate account, which is not guaranteed. The correct answer is: Death benefit