All of these insurance products require an agent to have proper FINRA securities registration in order to sell them EXCEPT for

Options:

a) Variable Life
b) Modified Whole Life
c) Universal Variable Life
d) Variable Annuity

The Correct Answer Is:

b) Modified Whole Life

Correct Answer Explanation:

b) Modified Whole Life does not require an agent to have proper FINRA securities registration in order to sell it.

Modified Whole Life policies differ from traditional life insurance by excluding securities-based investment components and their associated performance ties between death benefits and cash value accumulation.

Consequently, agents are not required to register with FINRA due to the absence of securities sales, making these policies attractive for those seeking life insurance without agent fees, such as coverage for spouses, children, or parents.

Now, let’s explain why the other options are not correct:

a) Variable Life:

To sell variable life insurance policies, agents must be registered with FINRA as securities brokers and hold the appropriate licenses. These policies, like mutual funds, have a cash value component invested in various subaccounts.

Because their cash value depends on investment performance, agents need to be knowledgeable about different types of Variable Life policies, their risks, benefits, investment options, and fees to provide informed advice to clients.

c) Universal Variable Life:

Universal Variable Life (UVL) insurance policies are linked to securities, allowing policyholders to invest their cash value in various subaccounts subject to market fluctuations.

Agents selling UVL policies must have FINRA securities registration as they deal with both life insurance and securities. These agents need to thoroughly understand the products, provide accurate advice, manage risks, and comply with relevant laws and regulations.

To recommend suitable products, agents must adhere to FINRA’s suitability standards, considering customers’ financial profiles, goals, and risk tolerance.

d) Variable Annuity:

Variable Annuities allow individuals to invest in various sub-accounts, with future income payments dependent on investment performance.

As security products with an insurance component, agents selling them must be registered with FINRA. Designed as long-term investments, Variable Annuities require several decades of holding.

It’s crucial for investors to understand the risks, benefits, and associated fees, including surrender charges, mortality fees, and commissions. Due to their complexity, thorough comprehension of all costs and investment risks is essential.

Conclusion:

Since Modified Whole Life is a traditional life insurance policy without an investment component tied to securities, FINRA securities registration is not required.

To sell Variable Life, Universal Variable Life, and Variable Annuities, agents must be registered with FINRA securities.