Discuss Finra Series-6 Exam Topic 1 Question 17

Which of the following statements regarding the separate account of an insurance company is true?

AThe monies in the separate account are used to make payments to all the policyholders of the company when a payment is triggered.

BThe separate account contains the monies from which the company pays its operating expenses, e.g., salaries, etc.

CFunds from the separate account are used to make payments to fixed annuity investors.

DThe separate account must register as an investment company under the Investment Company Act of 1940.

Suggested 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.

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13 comments · newest first

Lettie 1 year ago

I always thought separate accounts were just for investments, interesting!

Cassie 1 year ago

Not sure about D, seems like a stretch to call it an investment company.

Lilli 1 year ago

Wait, I thought separate accounts were for all policyholder payments?

Samira 1 year ago

Totally agree, C makes the most sense here.

Lakeesha 1 year ago

C is correct! Separate accounts are for fixed annuities.

Reid 1 year ago

I vaguely recall something about the Investment Company Act, but I can't remember if it applies to separate accounts or not.

Shaniqua 1 year ago

I’m a bit confused about the operating expenses part. I thought those were covered by the general account, not the separate account.

Joanna 1 year ago

I remember practicing a question about how separate accounts are used for variable products, so I feel like option C might be the right choice here.

Toshia 1 year ago

I think the separate account is specifically for certain types of investments, but I'm not sure which statement really captures that.

Freeman 1 year ago

Option A is definitely the way to go here. Proper cable management is key when installing servers in a rack. The cable management arm is designed for this exact purpose.

Cory 1 year ago

I think I know the right answers. Policies give decision makers both specific guidance (option B) and more general direction (option C). I'll select those two.

Darrel 1 year ago

This is a good opportunity to showcase my understanding of budgeting systems. I'll make sure to hit on the key points like using budgets for control, planning, and performance evaluation.

Bernardine 1 year ago

This one seems pretty straightforward. I'm pretty sure the Hazard Communication Standard is the right answer here.

Finra Series-6 Exam - Topic 1 Question 17 Discussion