Management Notes

Reference Notes for Management

In order to sell a(n) ______________ Life policy, a producer is required to register with the Financial Industry Regulatory Authority (FINRA).

Looking for the answer to the question below related to  Management ?

In order to sell a(n) ______________ Life policy, a producer is required to register with the Financial Industry Regulatory Authority (FINRA).


a) Variable
b) Adjustable
c) Straight
d) Term

The Correct Answer Is:

  • a) Variable

Answer Explanation:

  • Variable Life Policy:

A variable life insurance policy is a kind of permanent life insurance that offers the policyholders the option to invest their premiums in several types of investments, such as stocks, bonds, and mutual funds, and then watch the cash value of the policy fluctuate based on the performance of these investments.

This type of insurance is regulated by the Financial Industry Regulatory Authority (FINRA) since it involves the investment component as well as the possibility of the policy’s cash value fluctuating.

It ensures that producers (insurers or brokers) follow appropriate regulations and ethical standards when selling variable life insurance policies, as well as overseeing the securities industry, including the sales of variable life insurance policies. FINRA oversees the securities industry, including the sale of variable life insurance policies.

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

  • b) Adjustable Life Policy:

Adjustable life insurance is a type of permanent life insurance policy that allows policyholders to adjust the premium payments, death benefit, and cash value of the policy over time. It is not specifically associated with investment options.

This policy allows policyholders to adjust their coverage to meet changing needs, while also providing them with a death benefit and cash value that will continue to grow over time. The policyholder can also adjust the premiums to make them more manageable.

Since adjustable life insurance primarily involves the adjustment of policy features, it is not required to be registered with FINRA. For instance, the policyholder can increase or decrease the policy’s death benefit or convert the policy to a term life insurance policy, all without notifying FINRA.

  • c) Straight Life Policy:

Straight life insurance, also known as whole life insurance, is another type of permanent life insurance where the premium payments and death benefit remain fixed for the life of the policy. There is typically no investment component involved.

This type of insurance can be beneficial for families who want to ensure that their loved ones are financially secure in the event of their death. It can also help to provide financial stability for elderly policyholders who may need extra support in their later years.

Because straight life insurance does not involve investment options or securities, it does not require registration with FINRA. For instance, straight life insurance policies are not subject to the same rules and regulations as variable life insurance policies, which are regulated by FINRA.

  • d) Term Life Policy:

Term life insurance is a type of temporary life insurance that provides coverage for a specified term (e.g., 10, 20, or 30 years). It does not have a cash value or investment component. The policyholder pays a premium for the coverage period and the policy expires at the end of the term.

If the policyholder dies during the coverage period, the policy pays out a death benefit to the beneficiaries. Term life insurance is a popular choice among younger families because of its affordability.

Since term life insurance policies do not involve investments or securities, producers selling term life policies are not required to register with FINRA. For instance, a life insurance producer can sell a term life policy without being a FINRA registered representative.


In summary, the requirement for producers to register with FINRA is associated with variable life insurance policies because they involve investment options and securities regulation. Other types of life insurance policies, such as adjustable life, straight life, and term life, do not require FINRA registration as they do not involve the same level of investment and securities complexity.

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