Selling Whole Life Insurance: Series 6 License Requirements

The Series 6 license is a securities license that allows an individual to sell certain financial products, such as mutual funds, variable life insurance, and municipal fund securities. It is often sought by insurance sales professionals and financial advisors as it pertains to selling securities that may be tied to insurance products. The license is regulated by the Financial Industry Regulatory Authority (FINRA) and requires passing the Series 6 exam. Candidates must also be sponsored by a member of FINRA or a self-regulatory organization (SRO). This license is particularly important for those selling life insurance.

The Series 6 license and its benefits

The Series 6 license, also known as the Investment Company/Variable Contracts Products Limited Representative License, allows holders to register as limited representatives with the Financial Industry Regulatory Authority (FINRA). This license is particularly relevant to insurance professionals, as it allows them to sell specific financial instruments that are often packaged with insurance/financial products.

Benefits of the Series 6 License

• Expanded Service Portfolio: With a Series 6 license, insurance agents can offer a broader range of products and services, including insurance products with a financial securities-based component, such as variable life insurance, and non-insurance products like retirement planning.
• Competitive Advantage: In a highly competitive marketplace, having a Series 6 license gives insurance agents an edge over online brokers or mobile apps. It enables them to provide a more comprehensive service to their clients, helping them navigate different financial products for their current and future needs.
• Increased Revenue Streams: The Series 6 license allows insurance agents to tap into new revenue streams by selling variable lines of insurance and other financial products that require a securities license.
• Strengthened Client Relationships: With this license, insurance agents can become a one-stop solution for their clients, fostering longer and deeper relationships. They can provide investment advice and address a wider range of client questions, without having to refer them to another specialist.
• Enhanced Advisor Value: By being able to offer variable lines of insurance, such as variable universal life insurance and variable annuities, license holders can position themselves as trusted advisors who provide a full spectrum of options to their clients.
• Streamlined Operations: A Series 6 license enables insurance agents to keep conversations in-house. They can add different types of financial products related to investments and retirement to the insurance services they already provide, creating a more efficient and comprehensive service offering.
• Legal Security: Holding a Series 6 license ensures that insurance agents are legally compliant when advising clients across a broader spectrum of financial products. This helps to mitigate potential legal risks associated with providing advice outside of one's licensed area of expertise.

The Series 63 license and its necessity

The Series 63 license is a critical qualification for securities professionals in the U.S. It is a state-required license that deals primarily with the securities laws that govern the sale of securities in each state. It is also known as the Uniform Securities Agent State Law Examination. This exam is a staple of the financial industry and has been around for almost half a century.

The Series 63 license is managed by the North American Securities Administrators Association (NASAA) and administered by the Financial Industry Regulatory Authority (FINRA). The Series 63 is often mentioned in conjunction with the Series 6 license because they are the two necessary licenses required to sell insurance policies tied to investments. While the Series 6 license is tailored specifically for insurance professionals, the Series 63 license is an administrative license that deals with the securities laws that affect the sale of securities and variable insurance products in each state.

The Series 63 license is necessary for any insurance agent, but especially so if your main product line is life insurance. This is because the Series 63 license, in conjunction with the Series 6 license, allows insurance agents to sell securities-linked products legally. These licenses are the gateway to a career in insurance sales and are required to sell those types of policies.

The Series 63 exam covers eight general subjects related to the professional responsibilities of broker-dealer agents. These include:

• Regulation of Investment Advisers
• Regulations of Investment Adviser Representatives
• Regulation of Broker-Dealers
• Regulations of Agents of Broker-Dealers
• Regulations of Securities and Issuers
• Remedies and Administrative Provisions
• Communication with Customers and Prospects
• Ethical Practices and Obligations

The exam consists of 65 multiple-choice questions, 60 of which are scored and five are unscored. Candidates have 75 minutes to answer at least 43 of the 60 scored questions correctly.

The Series 63 license is a necessity for any insurance agent looking to sell insurance policies tied to investments, especially life insurance policies. It is a critical qualification that ensures securities professionals understand and can follow state-specific regulations that complement federal securities laws.

The Series 7 license and its differences

The Series 7 license is a general securities representative (GS) license. Those who carry this license are officially listed as "registered representatives" by the Financial Industry Regulatory Authority (FINRA) and are referred to as stockbrokers. The Series 7 license has the broadest reach, allowing holders to sell various securities.

The Series 7 license is different from the Series 6 license in that it allows holders to sell a wider range of securities. While the Series 6 license is limited to the sale of "packaged" investment products such as mutual funds, variable annuities, and unit investment trusts (UITs), the Series 7 license authorises holders to sell any individual security, including common and preferred stocks, call and put options, bonds, and other fixed-income investments. The only types of securities that Series 7 licensees are not authorised to sell are commodities futures, real estate, and life insurance.

The Series 7 exam is also longer and more difficult than the Series 6 exam, covering all aspects of stock and bond quotes, put and call options, spreads and straddles, ethics, margin, and related regulations. It is considered one of the more challenging exams due to the wide range of products covered.

In addition, while the Series 6 license can be obtained with just the Series 63 license, the Series 7 license typically requires the Series 63 license as well. This is because the Series 63 license is required by most states to sell securities within a particular state. So, while the Series 6 license may be sufficient for selling certain types of insurance products, the Series 7 license is often needed for a broader range of financial services and products.

In summary, the key differences between the Series 6 and Series 7 licenses lie in the scope of products that can be sold, the difficulty of the exams, and the additional license requirements. The Series 7 license offers a wider range of opportunities in the financial services industry but comes with more stringent requirements and a more challenging exam.

The process of obtaining a Series 6 license

The Series 6 license, also known as the Investment Company and Variable Contracts Products Limited Representative License, allows individuals to sell certain financial products, such as mutual funds, variable life insurance, and municipal fund securities. Here is a detailed breakdown of the process to obtain a Series 6 license:

Step 1: Take and Pass the SIE Exam

The SIE (Securities Industry Essentials) exam is a prerequisite for the Series 6 exam. It covers fundamental topics such as regulatory agencies, product knowledge, and acceptable practices. You can take the SIE exam independently, and it has a lower barrier to entry compared to other FINRA exams as it does not require sponsorship from a firm. Once you pass the SIE exam, you have a four-year window to take and pass the Series 6 exam.

Step 2: Secure a Sponsorship

To be eligible for the Series 6 exam, you must be sponsored by a member firm of the Financial Industry Regulatory Authority (FINRA) or a self-regulatory organization (SRO). The sponsoring firm usually covers the exam fee and applies for candidates by filing a Uniform Application for Security Industry Registration or Transfer (Form U4).

Step 3: Take and Pass the Series 6 Exam

The Series 6 exam is the final step to obtaining your license. It covers topics such as seeking business, opening accounts, providing investment information, and processing transactions. The exam consists of 50 scored questions and five additional unscored questions, with a time limit of 90 minutes. A passing grade is 70% or higher.

Step 4: Register Your License

After passing the Series 6 exam, you must register your license with FINRA and an approved broker-dealer. The broker-dealer will hold your license and oversee your business activities. Additionally, you must fulfill continuing education requirements to maintain your license.

The career opportunities with a Series 6 license

The Series 6 license is a professional certification offered by the Financial Industry Regulatory Authority (FINRA) for financial professionals who wish to sell a specific set of investment products, such as mutual funds, variable annuities, and insurance premiums. This license is essential for those looking to work in sectors providing financial advice related to these products.

Financial Advisor

Financial advisors often obtain a Series 6 license to offer a more comprehensive range of services to their clients. This involves advising individuals on various aspects of their financial life, including investment planning, retirement planning, and estate planning. The average salary for a financial advisor in the United States ranges from $57,000 to $166,000.

Insurance Agent

Insurance agents, particularly those with a life and/or health insurance license, often hold a Series 6 license. This allows them to specialize in selling investment-linked insurance products, such as variable annuities, and other products with an investment component. Insurance agents with a Series 6 license can expect an average salary between $40,000 and $60,000 at the entry level.

Investment Company Representative

Investment company representatives, also known as investment advisors, sell and provide investment advice on products like mutual funds. They typically work for investment companies, brokerage firms, or banks. A Series 6 license is essential for this role as it authorizes the holder to sell specific types of securities, such as mutual funds.

Variable Contracts Products Representative

Variable contracts products representatives are licensed individuals who sell variable annuities and variable life insurance products. They often work for insurance companies, financial advisory firms, or broker-dealers. A Series 6 license is necessary for this role, as it allows them to offer investment-linked insurance solutions to their clients.

Mutual Fund Representative

Mutual fund representatives specialize in the sale and promotion of mutual funds. They may work directly for a mutual fund company or as a third-party intermediary. A Series 6 license is a key qualification for this role, as it demonstrates expertise in selling specific types of investment products.

It is important to note that in addition to the Series 6 license, individuals in these roles may also need to obtain other licenses, such as the Series 63, Series 7, or state-specific insurance licenses, depending on the specific job requirements and the state they are operating in.

Frequently asked questions