Practice Quiz

FINRA Series 6

Category - Series 6

Start a Study Session Sign up for Question of the Day
Which of the following statements regarding the separate account of an insurance company is true?
  1. The monies in the separate account are used to make payments to all the policyholders of the company when a payment is triggered.
  2. The separate account contains the monies from which the company pays its operating expenses, e.g., salaries, etc.
  3. Funds from the separate account are used to make payments to fixed annuity investors.
  4. The separate account must register as an investment company under the Investment Company Act of 1940.
Explanation
Answer: D - The true statement is that the separate account must register as an investment company under the Investment Company Act of 1940. The premiums paid by investors for variable life insurance (less numerous charges) are invested in subaccounts within the separate account, and the earnings of the subaccounts are used, in turn, to make payments to the owners of variable life insurance policies, but not to any of the other policyholders of the company, such as the fixed annuity investors. The insurance company pays its operating expenses out of its general account.
Was this helpful? Upvote!
Login to contribute your own answer or details
Start a Study Session Sign up for Question of the Day

Top questions

Related questions

Most popular on PracticeQuiz