Maryland Life and Health Insurance License Practice Exam

What type of license is required for a life insurance producer to sell variable life insurance?

1. Securities license

2. Property and casualty license

3. Health insurance license

4. Commercial lines license

The correct answer is: Securities license

To sell variable life insurance, a life insurance producer is required to obtain a securities license. Variable life insurance policies are considered to be a combination of life insurance and investment products because they contain options for variable investment accounts. This means that the cash value of the policy can fluctuate based on the performance of the investments chosen by the policyholder. In addition to a life insurance license, producers must meet the regulatory requirements to sell securities, which includes passing the appropriate examinations to obtain the securities license. This dual licensing ensures that the producer is knowledgeable about both insurance and investment products, which is essential for adequately advising clients on these complex financial instruments. The other types of licenses listed, such as the property and casualty, health insurance, and commercial lines licenses, do not cover the sale of variable life insurance. These licenses pertain to different areas of insurance that do not involve the investment components that characterize variable life policies.