Series 7 practice questioneasyPackaged Products — Variable Annuities
Variable annuity separate accounts are regulated as:
- ABank deposits insured by the FDIC
- BMunicipal securities exempt from SEC registration
- CGeneral account obligations of the insurance company
- DSecurities registered under the Investment Company Act of 1940✓ Correct answer
Explanation
Why D — Securities registered under the Investment Company Act of 1940
Variable annuity separate accounts are considered securities and must be registered under the Investment Company Act of 1940 as investment companies. Because the policyholder bears the investment risk in the separate account, variable annuities are subject to SEC regulation and must be sold with a prospectus. Representatives must hold both securities and insurance licenses to sell them.
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