12-GA-62 Georgia Variable Products Exam V2 | 2026/2027 Update | Verified Questions & Answers | Pass Guaranteed

12-GA-62 Georgia Variable Products Exam V2 | 2026/2027 Update | Verified Questions & Answers | Pass Guaranteed Q: What does Whole Life Insurance provide upon the death of the insured? Answer A death benefit (or face amount of coverage) regardless of when the death occurs. Q: What type of death benefit does Whole Life Insurance have? Answer A fixed death benefit. Q: Does Whole Life Insurance have a guaranteed cash value? Answer Yes, it has a guaranteed cash value. Q: What is the premium structure of Whole Life Insurance? Answer It has a fixed premium. Q: What type of protection does Whole Life Insurance offer? Answer Permanent protection. Q: Does Whole Life Insurance need to be converted or renewed? Answer No, it remains in force as long as all premiums are paid in a timely fashion. Q: What is Variable Life Insurance? Answer A form of permanent insurance which requires fixed premiums, but has death benefits and cash values that may vary based on the performance of the investment options. Q: What laws regulate Variable Life Insurance? Answer Regulated by state and federal securities laws and must be registered with the SEC under the Securities Act of 1933. Q: What must accompany any offers to sell Variable Life Insurance policies? Answer A prospectus. Q: Who can issue a Variable Life Insurance policy? Answer Only an insurance company that's licensed and regulated by the state. Q: What type of company must sell Variable Life Insurance policies? Answer A broker-dealer that's registered with the SEC and is a FINRA member. Q: What licenses must agents hold to sell Variable Life Insurance? Answer A state insurance license and either a Series 6 or Series 7 securities registration. Q: Who decides how the premium payments will be invested in Variable Life Insurance? Answer The policyowner, not the insurance company. Q: Can the death benefit of a Variable Life Insurance policy decrease? Answer Generally, it may not decrease below a certain guaranteed minimum. Q: How does the cash value of a Variable Life Insurance policy behave? Answer It may fluctuate greatly. Q: What is a key feature of Universal Life Insurance compared to traditional whole life plans? Answer It provides its owner with more flexibility. Q: What does Universal Life Insurance allow the contract owner to do? Answer Change the coverage amount at their discretion. Q: How is Universal Life Insurance characterized in terms of interest rates? Answer It is characterized as an interest sensitive life product. Q: What do Universal Life Insurance premiums pay for? Answer Pure protection (i.e., term insurance) and a portion is deposited into cash value. Q: What is the fixed interest rate typically paid on the cash savings of Universal Life Insurance? Answer 3% to 4%. Q: How does the interest rate on the cash savings plan of Universal Life Insurance vary? Answer It varies depending on market conditions. Q: What is a characteristic of the premium payments in Universal Life Insurance? Answer The policy owner may pay whatever amount of premium they want each year. Q: What happens if no additional premiums are paid in a Universal Life Insurance policy? Answer The policy uses the cash value to keep coverage in force. Q: What could happen if there is not enough cash to pay for death protection in a Universal Life Insurance policy? Answer The policy could lapse. Q: What is Variable Universal Life Insurance? Answer It combines characteristics of variable whole life insurance and universal life insurance. Q: What are the key features of Variable Universal Life Insurance? Answer It offers investment options, flexible premium payments, flexible expense deduction methods, and a guaranteed minimum death benefit. Q: How does Variable Universal Life Insurance differ from variable whole life insurance? Answer It includes the added benefit of flexible premium payments. Q: Does Variable Universal Life Insurance have a guaranteed minimum coverage amount? Answer Yes, it possesses a guaranteed minimum coverage amount. Q: What is the grace period for fixed premium policies? Answer 31 days following the premium due date. Q: What is the grace period for flexible premium (universal) variable life policies? Answer 61 days from the date that the insurer has notified the owner that the account values are insufficient to cover the cost. Q: What happens if the premium is not paid by the end of the grace period? Answer Coverage will lapse. Q: What occurs if the insured dies during the grace period without paying the premium? Answer The insurer will still pay the death claim less the owed premium. Q: What factors do insurers consider when determining the premium for whole life and fixed premium variable life policies? Answer Insurers consider factors such as the age of the insured, death benefit, and any optional riders. Q: What must a policyowner do to reinstate a life insurance policy? Answer The policyowner must bring the premiums up-to-date and prove insurability. What type of premium does fixed premium variable life insurance have? Answer Fixed premium variable life insurance has a fixed and level premium. What is flexible premium variable life insurance also known as? Answer Flexible premium variable life insurance is also referred to as universal variable life (UVL). What are the key features of flexible premium variable life insurance? Answer It offers flexible premium payments and a guaranteed minimum death benefit. What is the death benefit on whole life policies? Answer Death benefits on whole life policies are fixed and guaranteed up to age 100. Does the death benefit on whole life policies change based on account performance? Answer No, the death benefit is not increased or decreased by the performance of any account or cash value. What happens to the death benefit if there is an outstanding unpaid loan on a whole life policy? Answer The death benefit may be reduced if there's an outstanding unpaid loan. What is guaranteed about the death benefits on fixed premium variable life policies? Answer Death benefits on fixed premium variable life policies are guaranteed to a minimum. How can the death benefit on fixed premium variable life policies change? Answer The death benefit can be increased or decreased based on the performance of the investment options chosen by the policyholder. How often is the death benefit valued for fixed premium variable life policies? Answer The death benefit is valued on an annual basis. What is the minimum death benefit for flexible premium variable life policies? Answer Flexible premium variable life policies have a minimum death benefit. Can the death benefit for flexible premium variable life policies increase? Answer Yes, the death benefit can be increased based on the performance of the investments in the separate account. What is the cash value of whole life policies? Answer Whole life policies have cash values that are guaranteed and disclosed in the policy. When must whole life policies have cash value? Answer Policies must have cash value after three years. What happens if a whole life policy is surrendered? Answer The policy can be surrendered for the amount of cash value, which would end the coverage. Can loans be taken against the cash value of whole life policies? Answer Yes, loans may be taken against the cash value, but are limited to a percentage of the amount of cash value. Do fixed premium variable life policies have guaranteed cash value? Answer No, fixed premium variable life policies don't have a guaranteed cash value. How does the cash value of fixed premium variable life policies change? Answer The cash value can increase or decrease with the performance of the investments in the separate account. What is the loan limit against cash value in fixed premium variable life policies? Answer Loans may be taken against cash value, but are limited to a lower percentage. How often must cash value be valued in fixed premium variable life policies? Answer Cash value must be valued monthly. Do flexible premium variable life policies have guaranteed cash value? Answer Neither fixed premium variable life nor flexible premium variable life have guaranteed cash values unless some premiums are deposited into the general account. What is the primary source of cash value in variable life policies? Answer The primary source of any cash value is based on investment performance of the separate account. What interest rate applies to values deposited into the general account? Answer Values deposited into the general account pay a minimum interest rate which may be adjusted higher based on current interest rates. In a flexible premium variable life policy, what is the cash value used for? Answer The cash value is the amount that will be used to fund insurance costs when premiums are not paid. What is the main difference between a Separate Account and a General Account? Answer In a separate account structure, assets are held in an account separate from the general account of the insurer or bank. What is a similarity between Variable Annuities and Variable Life Insurance? Both have values that depend on the performance of investments in their separate accounts. Who has control over the investments in Variable Annuities and Variable Life Insurance? The policyholder or contract holder chooses where the money is invested. How are Variable Annuities and Variable Life Insurance regulated? Both are regulated as securities and as insurance products. What type of fees do Variable Annuities and Variable Life Insurance typically have? Both come with fees, such as administrative charges, sales charges, and insurance related costs. What is the primary purpose of Variable Life Insurance? Primarily provides a death benefit with a potential to grow cash value based on investments. What is the primary purpose of a Variable Annuity? Designed to provide a stream of income during retirement. Does Variable Life Insurance have cash value for loans? Yes, it has cash value for loans and non-forfeiture options. How are withdrawals from Variable Life Insurance taxed? Withdrawals are taxed, and early withdrawals may have penalties. What happens to early withdrawals from a Variable Annuity? Early withdrawals are taxed as ordinary income and incur a 10% penalty. What type of death benefit does Variable Life Insurance provide? Provides a guaranteed minimum death benefit that can increase based on investment performance. What is the death benefit structure of a Variable Annuity during the accumulation phase? Provides a death benefit only during the accumulation phase, which is the greater of premiums paid or accumulated value. What is the focus of Variable Life Insurance? The focus is on life insurance coverage, with an optional investment component. What is the focus of a Variable Annuity? The focus is on retirement income through periodic payments (annuitization). Do Variable Life Insurance and Variable Annuities use separate accounts? Yes, both use separate accounts with various subaccounts. Who must approve any change to the separate account's investment policy? The Insurance Commissioner When does a change in investment policy become effective after filing? 60 days after filing unless the Commissioner objects What can a policyholder do within 60 days of being notified about a change? Exchange the variable life policy for a whole life policy with the same terms What is the Assumed Interest Rate (AIR) in a variable life policy? The net rate, after taxes, expenses, and mortality charges, that helps maintain the minimum death benefit What does the Assumed Interest Rate (AIR) act as a benchmark for? Measuring changes in cash values and death benefits based on the performance of the separate account Assumed Interest Rate (AIR) is the net rate, after taxes, expenses, and mortality charges, that helps maintain the minimum death benefit in a variable life policy. It acts as a benchmark to measure changes in cash values and death benefits based on the performance of the separate account. What is net investment return in a separate account? The return after deducting fees and expenses from interest, dividends, and capital gains. What is the largest expense in variable life insurance policies? The management fee. What type of fees do variable life insurance policies have? Management fee, transaction costs, recordkeeping, and regulatory fees. How do fees vary by account type in variable life insurance? Fixed accounts have low fees, aggressive subaccounts have higher fees, index-based subaccounts have lower fees, and bond subaccounts usually have lower fees. Why do aggressive subaccounts have higher fees? Due to active trading. Why do index-based subaccounts have lower fees? Changes are made only when the index changes. Why do bond subaccounts usually have lower fees? Due to a buy-and-hold strategy. What can a variable life policy be exchanged for within the first 18 months? A whole life policy What must be maintained for a variable life policy to be exchanged for a whole life policy? Premiums What will the initial insurance amount of the new whole life policy be compared to the variable life policy? The same initial insurance amount What will the issue date and age at issue be for the new whole life policy? The same as the variable life policy What type of policy will the new whole life policy be compared to the variable life policy? A comparable policy What will the premium rates be for the new whole life policy? The same as the variable life policy What will the new whole life policy include if applicable? The same riders and benefits as the variable life policy What will the cash values be for the new whole life policy compared to the variable life policy? Comparable cash values What is a minimum death benefit in variable life insurance? It is a death benefit that cannot decrease if premiums are paid. Can the death benefit in variable life insurance increase? Yes, it can increase based on investment performance. What happens to the minimum death benefit in Universal Variable Life (UVL) if premiums aren't paid? The policy could lapse and the death benefit would be lost. Under what condition can the death benefit in UVL increase? If premiums are maintained, the death benefit can increase with investment performance. How do variable life policies build cash value? By directing part of the premium toward the death benefit and the rest to the cash value. What happens if part of the premium goes to a fixed account in a variable life policy? It has a guaranteed cash value. What determines the portion of the premium invested in the separate account of a variable life policy? Market performance. How often are cash values calculated in variable life policies? At least monthly. Can policyholders use the cash value of a variable life policy as an investment? Yes, it is a tax-deferred investment. What can policyholders do with the cash value of their variable life policy? They may borrow against it. What does the non-forfeiture provision in a variable life policy ensure? Cash value is available if premiums stop, regardless of the reason. What percentage of the cash value can be borrowed from variable life policies after 3 years? Up to 75% What is the maximum interest rate for loans against variable life policies? 8% per year What happens to the death benefit if the policyholder dies before repaying the loan? The death benefit is reduced by the loan amount. How is the cash value affected if the policy is surrendered and there is an outstanding loan? The cash value is reduced by the loan amount. What happens to the loan amount from the separate account upon repayment? The loan amount goes back to the separate account. What happens to the loan amount from the general account upon repayment? The loan amount goes back to the general account. What is consistent across life insurance policies? Underwriting for life insurance is consistent across policies. What additional factors may affect variable life policies? Variable life policies may have additional factors due to the separate account's impact on cash values and death benefits. What are standard underwriting factors for life insurance? Standard underwriting factors include age, gender, health history, family health history, personal activities and hobbies, personal habits, occupation, salary, earnings, and wages, and travel outside of the country. Why are variable life policies more complex? Variable life policies are more complex because cash values and death benefits depend on investment performance. What additional costs are associated with flexible premium variable life policies? Flexible premium policies have additional administration costs due to adjustable premiums. What must be sent to policyholders within 30 days of the one-year anniversary of the policy? A statement detailing cash surrender value, death benefit, any partial withdrawals or policy loans, and related interest charges or additional payments. What may change due to the policy's variable nature? Cash values and death benefits. What must annual statements include regarding the separate account? A financial statement of the separate account. What net investment return period must be included in annual statements? Up to the last five years. What must be listed in the annual statements about the separate account? A list of investments in the separate account. What charges must be reported in the annual statements for the separate account? Charges against the separate account for the previous year. What change must be noted in the annual statements regarding the separate account? Any change in the separate account's investment objective. What are fixed annuities classified as under Section 3(a)(8) of the Securities Act of 1933? They are not considered securities. Who assumes all investment risk in fixed annuity policies? The insurance company. How are fixed annuity investments managed? They are managed by the insurance company to ensure a guaranteed return and cover contract expenses. What happens to the death benefits if death occurs before the annuity starts? A lump sum is paid. What happens to the death benefits if death occurs after the annuity starts? Remaining payments are made. What do fixed-rate annuities offer based on the investment period? A guaranteed return. What is the common investment period for fixed-rate annuities? 1, 3, or 5 years. Do longer commitments in fixed-rate annuities generally offer higher rates? Yes. Is the rate of fixed annuities guaranteed regardless of stock market performance? Yes. Who do fixed annuities appeal to? Conservative investors seeking safety of principal. How do fixed annuities serve more diversified or aggressive portfolios? As a stabilizing component. What is the fixed account in a variable annuity? The fixed account is an insurance product. What is the separate account in a variable annuity? The separate account is considered a security, registered under the Securities Act of 1933 and the Investment Company Act of 1940, and sold through a prospectus. How are variable annuities similar to mutual funds? Variable annuities offer higher potential returns with increased risk. Who assumes investment risk in variable annuities? Investors assume investment risk by choosing subaccounts, which vary in risk and objectives. When do annuity investors pay taxes on earnings? Annuity investors don't pay taxes on earnings until withdrawals or payments begin. What level of control do investors have in variable annuities? Variable annuities allow hands-on control, with no involvement from the insurance company in investment decisions. Who bears the profits and losses in a variable annuity? The investor bears all profits and losses. Do variable annuity contracts typically allow transfers among subaccounts without penalties? Yes, investors can typically transfer money among subaccounts without tax penalties. What is a feature of some variable annuity contracts? Some contracts offer a guaranteed fixed account. What is a Single Premium, Immediate payment method? Requires a lump-sum purchase, with immediate annuitization and distributions starting the following month. Distributions are reinvested to compound growth. What is a Single Premium, Deferred payment method? A lump-sum purchase with annuitization deferred to a later date (usually retirement age) to avoid penalties. Distributions are reinvested to compound growth, and the settlement option is chosen at annuitization. What is a Flexible Premium, Deferred payment method? Payments are made over time, offering flexibility to terminate the investment or withdraw part of the principal. It allows for automatic reinvestment and can be purchased with a single, level, or flexible premium. What are the two types of annuities clients can choose from based on when they need income? Immediate annuities and deferred annuities What is an immediate annuity? An immediate annuity provides immediate income (usually 31 days after purchase) with fixed payments based on the lump-sum investment. How often can payments be made with an immediate annuity? Payments can be made monthly, quarterly, or annually. What is a key characteristic of payments from an immediate annuity? Payments are predictable and not subject to fluctuations. What should clients do before purchasing an immediate annuity? Clients should compare rates and payouts from multiple insurance companies. What is a deferred annuity used for? A deferred annuity is used for growth, with tax-deferred earnings. What kind of payment flexibility does a deferred annuity offer? It allows for single, level, or flexible premiums and withdrawals. What happens to the growth in a deferred annuity? The growth is reinvested automatically. What options does a contract owner have with a deferred annuity? The contract owner can terminate or withdraw part of the principal. What type of growth does a deferred annuity offer? It offers flexibility for both long and short-term growth. What is a Life Annuity (no refund)? Provides income for life, but payments cease upon death, and any remaining value is retained by the insurance company. What is a Guaranteed Minimum in annuities? Ensures the annuitant or beneficiary receives at least a certain amount. What is a Period Certain Annuity? Guarantees a minimum number of payments, with remaining payments going to a beneficiary if the annuitant dies early. What is an Installment Refund Annuity? Provides lifetime income, with any remaining value refunded to a beneficiary after death, reducing cash flow. What is a Specified Period Annuity? Provides payments for a fixed number of years, with the payment size varying based on account performance. What is a Specified Amount Annuity? Guarantees fixed payments until the account is depleted, with any remaining balance going to the beneficiary if the annuitant dies early. What is a Cash Payment option in annuities? Adds a refund of premiums paid (minus expenses) if the annuitant dies. What should investors consider when choosing annuity options? They should carefully consider their needs and risk tolerance. What is a key characteristic of annuities? Annuities offer safety but require thorough analysis to determine suitability. What do Equity Indexed Annuities (EIAs) offer? A guaranteed minimum return with the potential for higher returns based on an underlying index's performance. What is a risk associated with Equity Indexed Annuities? Surrender charges if withdrawn early. What determines the reliability of the guarantee in an Equity Indexed Annuity? The issuing insurance company. Who are Equity Indexed Annuities suited for? Investors with long time horizons who seek stock market gains with principal protection. What must agents understand about Equity Indexed Annuities? EIA features such as participation rates, caps, and fees. Why is it important for agents to communicate EIA features clearly? To ensure suitability based on the client's risk tolerance and objectives. What is a key benefit of investing in a variable product? Tax deferral How are premiums paid during the accumulation period of a variable product? With after-tax dollars unless part of a qualified plan Are there limits on contributions during the accumulation period of a variable product? No, contributions are not limited What happens to funds in a variable product upon death? They pass directly to the beneficiary and avoid probate Who is responsible for taxes on earnings or appreciation in a variable product account after death? The beneficiary What penalty may apply to withdrawals from a variable product before age 59½? A 10% penalty on earnings How are withdrawals from a variable product taxed? As ordinary income, with earnings taxed first What is the exclusion ratio used for in annuitization? To calculate the tax-free portion of each annuity payment What happens to annuity payments after the cost basis is recovered? Payments are fully taxable What factors influence the tax treatment of annuity investments? Timing of withdrawals and method of payment What does FINRA regulate? The securities industry, including variable products. What are Conduct Rules in FINRA? Rules that govern customer-firm interactions, including compensation, communications, and sales practices. What is the Uniform Practice Code (UPC) in FINRA? A set of rules that standardizes trading and settlement procedures. What does the Code of Procedure (COP) outline in FINRA? The disciplinary process for rule violations. What is the purpose of the Code of Arbitration in FINRA? To provide a process for resolving disputes, particularly monetary ones, between members and public customers. What exams must agents pass to sell variable products? FINRA's Securities Industry Essentials (SIE) Exam and either the Series 6 or Series 7 exam. What is the purpose of the Securities Act of 1933? To prevent fraud by requiring full disclosure of information about new securities offerings. What document is filed with the SEC to provide information about new securities offerings? A registration statement. What is a prospectus in the context of securities? An abbreviated version of the registration statement that serves as the primary disclosure document for variable products. What key details are included in a prospectus for variable products? Investment objectives, policies, and risks. What performance information is included in a prospectus? Subaccount performance and management. What financial information is detailed in a prospectus? Operating expenses and sales charges. What method related to variable products is explained in a prospectus? Method for calculating NAV. What exchange privileges are mentioned in a prospectus? 1035 Exchanges. What must an insurance company have to issue a variable life insurance policy in Georgia? A current certificate of authority. What does the Commissioner evaluate when assessing an insurance company in Georgia? The company's financial condition, the experience and character of its officers, and its compliance with home-state laws. What licenses must agents hold to sell variable life insurance in Georgia? A life insurance license and a variable contract insurance license. What actions can the Commissioner take regarding an agent's license in Georgia? Revocation, suspension, or refusal to renew the license. What issues can lead to the revocation or suspension of an agent's license in Georgia? Issues that would prevent life insurance licensure or violations of securities laws.