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FINRA Series 6 Investment Company and Variable Contracts Products Representative Exam

3. Products and recommendations / Variable contracts: practice questions

Our FINRA Series 6 bank has 28 questions on this topic. Here are 4 of them with answers; the full mock exam draws from every topic, like the real one.

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Question 1

What should a customer consider before exchanging one variable annuity for another?

  1. Only the new contract's bonus credit
  2. Only which insurer has the better logo
  3. New surrender charges and lost benefits
  4. Nothing; exchanges are always beneficial
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C. New surrender charges and lost benefits — Investor.gov and Rule 2330 point to surrender charges, a new surrender period, lost benefits, increased fees and taxes.

Question 2

What is the "accumulation phase" of a variable annuity?

  1. When purchase payments are made and grow
  2. The period of receiving income payments
  3. The free look period
  4. The surrender charge period
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A. When purchase payments are made and grow — Investor.gov: the period when you make purchase payments and your money grows is the accumulation phase.

Question 3

In variable life insurance, what varies with the investment options chosen?

  1. The insurer's credit rating
  2. The premium tax rate
  3. The policy's free look period
  4. The policy's cash value
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D. The policy's cash value — Investor.gov: variable life cash value varies depending, in part, on the performance of the chosen investment options.

Question 4

A withdrawal from a nonqualified annuity before the annuity starting date is generally taxed:

  1. As cost first, then as earnings
  2. Earnings first, then cost
  3. Entirely tax-free
  4. At capital gains rates
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B. Earnings first, then cost — IRS Publication 575: nonperiodic distributions before the starting date from a nonqualified plan are allocated first to earnings, then to cost.

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