Finra Series-6 Exam - Topic 1 Question 17 Discussion

Actual exam question for Finra's Series-6 exam

Question #: 17
Topic #: 1

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.

Show Suggested Answer

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.

by Marguerita at May 09, 2022, 12:04 AM

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Lettie

4 months ago

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

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Cassie

4 months ago

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

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Lilli

4 months ago

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

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Samira

4 months ago

Totally agree, C makes the most sense here.

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Lakeesha

5 months ago

C is correct! Separate accounts are for fixed annuities.

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Reid

5 months ago

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

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Shaniqua

5 months ago

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

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Joanna

5 months 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.

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Toshia

5 months ago

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

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Freeman

5 months 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.

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Cory

5 months 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.

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Darrel

5 months 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.

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Bernardine

5 months ago

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

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