Maryland Life and Health Insurance License Practice Exam

Which type of insurance is typically NOT associated with a securities license?

1. Term life insurance

2. Whole life insurance

3. Variable life insurance

4. Universal life insurance

The correct answer is: Term life insurance

The type of insurance that is typically not associated with a securities license is term life insurance. Term life insurance provides coverage for a specified term or period, and it pays out a death benefit if the insured passes away during that term. It does not have a cash value component or investment features that would require a securities license for selling. In contrast, variable life insurance includes investment components, allowing policyholders to allocate a portion of their premiums into various investment options, such as stocks and bonds. Because of this investment feature, selling variable life insurance requires a securities license as it involves the sale of investment products. Whole life insurance and universal life insurance also have cash value components but are typically structured differently than variable products. However, they do not require a securities license because they are primarily focused on providing death benefits and building cash value through guaranteed interest, rather than offering investment options. Therefore, term life insurance stands out as the coverage that does not connect with the complexities of investment and securities regulations.