Life Insurance And Securities Licenses: What's The Link?

A securities license is a requirement for insurance agents who want to sell variable insurance products, such as variable life insurance and variable annuities. These types of insurance products are considered securities because they have an investment component tied to financial markets, which introduces an element of risk for the policyholder. To legally sell these products, insurance agents must obtain a securities license in addition to their standard insurance license. This usually involves passing a series of exams administered by the Financial Industry Regulatory Authority (FINRA) and, in some cases, the North American Securities Administrators Association (NASAA). Obtaining a securities license can help insurance agents expand their service portfolio, stand out in a competitive marketplace, and uncover new revenue streams.

Why life insurance producers seek securities licenses

Life insurance producers seek securities licenses for several reasons.

Firstly, a securities license allows insurance agents to offer a wider range of products and services, including variable lines and retirement planning. With a securities license, insurance agents can sell securities products, such as stocks, bonds, and variable annuities, in addition to traditional insurance products. This enables them to provide a more comprehensive service to their clients and stand out in a competitive marketplace.

Secondly, having a securities license can help insurance agents uncover new revenue streams. By selling variable lines and other financial products that require a securities license, insurance agents can increase their book of business and revenue. For example, the ability to sell variable annuities and variable life insurance, which are currently in high demand due to rising interest rates and market volatility, can lead to higher commissions.

Thirdly, a securities license can strengthen existing client relationships and help build new ones. With a securities license, insurance agents can address a broader range of client questions and provide a one-stop solution for their financial needs. This can foster longer and deeper relationships with clients, who may prefer to work with a single trusted advisor for all their financial needs.

Additionally, a securities license can help insurance agents become more valuable advisors. By having a full view of their clients' financial products and services, insurance agents can provide more informed and comprehensive advice. This can help insurance producers be seen as more than just salespeople and allow them to better assist clients in making important financial decisions.

Finally, a securities license ensures compliance and legal standing. The financial services industry is highly regulated, and advising clients on areas where one is not licensed can lead to legal issues. With a securities license, insurance agents can confidently and legally provide advice and services across a broader spectrum of financial products.

Overall, life insurance producers seek securities licenses to expand their service offerings, uncover new revenue opportunities, strengthen client relationships, become more valuable advisors, and ensure legal compliance.

The Series 6 securities license

To obtain the Series 6 license, candidates must pass the Investment Company/Variable Contracts Products Limited Representative (Series 6) exam, which is administered by the Financial Industry Regulatory Authority (FINRA). The exam covers mutual funds, variable annuities, securities, tax regulations, retirement plans, and insurance products. It consists of 50 scored questions, with 5 additional unmarked and unscored questions, and candidates need a passing grade of 70% or above. The test costs $75 and is administered via computer with no reference material allowed.

The Series 6 license is often seen as the ideal companion license for those in the insurance industry. It allows holders to expand the financial products and services they offer and increase their level of expertise. It is also a requirement for life insurance producers who want to sell variable life insurance.

To take the Series 6 exam, candidates must be sponsored by a FINRA member firm or a self-regulatory organization (SRO). The SIE exam is a corequisite for the Series 6 exam, but it does not require firm sponsorship. Candidates have a four-year window to take and pass the Series 6 exam after passing the SIE.

The Series 7 securities license

The Series 7 license, also known as the General Securities Registered Representative license, is a qualification for the sale of a broad range of securities. This includes corporate stocks and bonds, municipal bonds, mutual funds, variable annuities, options, direct participation program (DPP) partnerships, and packaged securities. It is considered the gold standard license within the financial services industry.

The Series 7 license is generally preferred by banks and broker-dealers for new recruits entering the financial services industry. Those who obtain this license are officially registered representatives, but are more commonly referred to as stockbrokers.

To obtain the Series 7 license, candidates must pass the Securities Industry Essentials (SIE) exam and the Series 7 exam. The SIE exam covers common topics such as fundamentals, regulatory agencies and their functions, product knowledge, and acceptable and unacceptable practices. The Series 7 exam measures the candidate's knowledge of the critical functions of a general securities representative, including sales of various types of securities.

The Series 7 exam consists of 125 multiple-choice questions, with a passing score of 72%. Candidates have 3 hours and 45 minutes to complete the exam. The exam covers four major job functions: seeking business for the broker-dealer, opening accounts, providing information and recommendations to customers, and processing transactions.

To take the Series 7 exam, candidates must be sponsored by a member firm or self-regulatory organization (SRO). The sponsoring firm typically covers the exam fee. Candidates have a four-year window to take and pass the Series 7 exam after passing the SIE exam.

The Series 7 license is an important qualification for individuals seeking a career in the financial services industry, particularly those interested in working as stockbrokers or financial advisors. It allows licensees to offer a wide range of securities products to their clients and provides a competitive edge in the marketplace.

The Series 63 securities license

The Series 63 exam is typically required in addition to other qualifications, such as the Series 6 or Series 7 license. To become a registered representative and sell securities in most U.S. states, securities professionals must pass the Series 63 exam, in addition to the Series 6 or Series 7. The Series 63 exam is 75 minutes long and consists of 65 multiple-choice questions, 60 of which are scored and 5 of which are unscored pretest questions. Candidates must correctly answer at least 43 of the 60 scored questions to pass.

The exam covers eight general subjects related to the professional responsibilities of broker-dealer agents, including the regulation of investment advisers, the regulation of broker-dealers, the regulation of agents of broker-dealers, the regulation of securities and issuers, remedies and administrative provisions, communication with customers and prospects, and ethical practices and obligations.

To schedule the Series 63 exam, broker-dealer employees must have their firm file an electronic Form U4 (Uniform Application for Securities Industry Registration or Transfer). Individuals not part of a FINRA member firm can independently schedule the exam by opening an enrollment window on FINRA's website and paying a $147 fee.

The Series 65 securities license

The Series 65 license, also known as the Uniform Investment Adviser Law Examination, is a North American Securities Administrators Association (NASAA) exam administered by the Financial Industry Regulatory Authority (FINRA). It is a securities license and exam that qualifies individuals to act as investment advisers in the US. The Series 65 is important for representatives who advise on ERISA-regulated retirement accounts.

The exam consists of 130 multiple-choice questions, with 10 unscored questions, and candidates have 180 minutes to complete it. A passing score is 92 out of 130, or just over 70%. The exam covers four topic areas: economic factors and business information; investment vehicle characteristics; client investment recommendations and strategies; and laws, regulations, and guidelines on unethical business practices.

The Series 65 license does not expire as long as the holder is actively working in the financial services industry. However, if they leave the industry for more than two years, their new employer may require them to pass the exam again. Candidates do not need to be sponsored by a firm to take the exam, but they must file a Form U10 (Form U4 for brokers) and pay the $187 exam fee.

The Series 65 is one of three NASAA exams, the others being the Series 63 and Series 66. The Series 65 is the oldest of the three, dating back to 1989, and it focuses on evaluating the competency of individuals who want to engage in investment advisory services. The Series 63 exam, on the other hand, is for those who wish to sell investment products, while the Series 66 combines the subject matter of the Series 63 and 65.

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