12-GA-62 Variable Products Practice Exam 200
Questions with Correct Answers & Detailed
Rationales in Italics.
This comprehensive practice exam covers the Georgia 12-GA-62 Variable Products
licensing exam content. All questions align with the Official Code of Georgia Annotated
(O.C.G.A.) sections 33-11-50 through 33-11-67, Georgia Insurance Department
Regulations, and federal securities requirements .
SECTION 1: GENERAL PRODUCT KNOWLEDGE
1. What is the primary characteristic that distinguishes a variable life insurance
policy from a fixed premium whole life policy?
A) Variable life has guaranteed cash values while whole life does not
B) The death benefit and cash values fluctuate according to the investment performance
of a separate account
C) Variable life premiums are always lower than whole life premiums
D) Whole life policies cannot have loans while variable life policies can
Answer: B ✅
Rationale: Variable life insurance places policy funds in a separate account invested in
securities. The death benefit and cash values fluctuate with the investment performance of
that separate account, whereas fixed whole life offers guaranteed values from the insurer's
general account .
2. In a variable life insurance policy, the minimum death benefit is:
,A) Not guaranteed and can fall to zero
B) Guaranteed regardless of separate account performance
C) Always equal to the cash value
D) Determined solely by the policyowner's age
Answer: B ✅
Rationale: Variable life policies typically guarantee a minimum death benefit that will be
paid regardless of poor separate account performance, providing downside protection for
beneficiaries. This guarantee is supported by the insurer's general account .
3. Which of the following best describes the "separate account" in a variable life
insurance policy?
A) A savings account at a bank owned by the policyowner
B) An account that is part of the insurer's general assets, invested conservatively in
bonds
C) A segregated portfolio of investments, typically stocks and bonds, held apart from
the insurer's general account
D) A checking account used to pay monthly premiums
Answer: C ✅
Rationale: The separate account is a distinct investment portfolio segregated from the
insurer's general account, where variable policy funds are invested to generate returns
that directly affect policy values. These accounts are registered with the SEC under the
Investment Company Act of 1940 .
4. What is the primary difference between fixed premium variable life and flexible
premium variable life (VUL)?
A) Fixed premium variable life is not regulated in Georgia
B) Flexible premium variable life (VUL) allows policyowners to adjust premium payments
within limits, while fixed premium requires scheduled level payments
C) Fixed premium variable life has no death benefit guarantee
D) Flexible premium variable life cannot be sold to Georgia residents
,Answer: B ✅
Rationale: Flexible premium variable life (often called variable universal life) allows
policyowners to adjust premium payments within limits, while fixed premium variable life
requires scheduled level payments similar to traditional whole life .
5. Which investment option is typically NOT available in a variable life separate
account?
A) Common stock funds
B) Bond funds
C) Money market funds
D) A guaranteed fixed account with no market risk within the separate account
Answer: D ✅
Rationale: While variable accounts offer various investment options, a guaranteed fixed
account would be in the general account, not the separate account, as separate accounts
are defined by their market-based risk exposure .
6. Under Georgia law, which regulatory bodies must license an agent to sell
variable life insurance products?
A) The Securities and Exchange Commission (SEC) only
B) The Financial Industry Regulatory Authority (FINRA) only
C) The Georgia Commissioner of Insurance AND appropriate securities licensing (FINRA
Series 6 or 7)
D) The Federal Deposit Insurance Corporation (FDIC)
Answer: C ✅
Rationale: Under O.C.G.A. § 33-11-66(p), no individual shall sell variable annuity contracts
unless they have both a valid and current life insurance license AND a variable contract
license issued by the Commissioner, and must also maintain FINRA registration .
, 7. The mortality and expense risk charge (M&E charge) in a variable life policy
covers:
A) The investment management fees of the separate account
B) The insurer's risk that policyholders will die sooner than expected and that expenses
exceed projections
C) State premium taxes only
D) The agent's commission exclusively
Answer: B ✅
Rationale: The M&E charge compensates the insurer for bearing mortality risk
(policyholders dying earlier than expected) and expense risk (administrative costs
exceeding projections) .
8. What is the "free look" period in variable life insurance and annuity contracts?
A) A period when premiums are waived
B) A specified number of days after delivery during which the owner can return the
policy for a full refund
C) The time before the policy takes effect
D) A guaranteed loan period
Answer: B ✅
Rationale: The free look period allows new policyowners to review their contract and
return it for a full refund if dissatisfied. Under Georgia law, a 10-day free look period with
total refund of premium payments is required .
9. Which statement best describes the "assumed investment rate" (AIR) in a
variable annuity contract?
A) The guaranteed minimum interest rate the insurer will pay
B) The actual rate of return earned by the separate account
C) An interest rate assumption used to calculate the initial annuity payment and
subsequent payment adjustments
D) The maximum rate the separate account can earn
Questions with Correct Answers & Detailed
Rationales in Italics.
This comprehensive practice exam covers the Georgia 12-GA-62 Variable Products
licensing exam content. All questions align with the Official Code of Georgia Annotated
(O.C.G.A.) sections 33-11-50 through 33-11-67, Georgia Insurance Department
Regulations, and federal securities requirements .
SECTION 1: GENERAL PRODUCT KNOWLEDGE
1. What is the primary characteristic that distinguishes a variable life insurance
policy from a fixed premium whole life policy?
A) Variable life has guaranteed cash values while whole life does not
B) The death benefit and cash values fluctuate according to the investment performance
of a separate account
C) Variable life premiums are always lower than whole life premiums
D) Whole life policies cannot have loans while variable life policies can
Answer: B ✅
Rationale: Variable life insurance places policy funds in a separate account invested in
securities. The death benefit and cash values fluctuate with the investment performance of
that separate account, whereas fixed whole life offers guaranteed values from the insurer's
general account .
2. In a variable life insurance policy, the minimum death benefit is:
,A) Not guaranteed and can fall to zero
B) Guaranteed regardless of separate account performance
C) Always equal to the cash value
D) Determined solely by the policyowner's age
Answer: B ✅
Rationale: Variable life policies typically guarantee a minimum death benefit that will be
paid regardless of poor separate account performance, providing downside protection for
beneficiaries. This guarantee is supported by the insurer's general account .
3. Which of the following best describes the "separate account" in a variable life
insurance policy?
A) A savings account at a bank owned by the policyowner
B) An account that is part of the insurer's general assets, invested conservatively in
bonds
C) A segregated portfolio of investments, typically stocks and bonds, held apart from
the insurer's general account
D) A checking account used to pay monthly premiums
Answer: C ✅
Rationale: The separate account is a distinct investment portfolio segregated from the
insurer's general account, where variable policy funds are invested to generate returns
that directly affect policy values. These accounts are registered with the SEC under the
Investment Company Act of 1940 .
4. What is the primary difference between fixed premium variable life and flexible
premium variable life (VUL)?
A) Fixed premium variable life is not regulated in Georgia
B) Flexible premium variable life (VUL) allows policyowners to adjust premium payments
within limits, while fixed premium requires scheduled level payments
C) Fixed premium variable life has no death benefit guarantee
D) Flexible premium variable life cannot be sold to Georgia residents
,Answer: B ✅
Rationale: Flexible premium variable life (often called variable universal life) allows
policyowners to adjust premium payments within limits, while fixed premium variable life
requires scheduled level payments similar to traditional whole life .
5. Which investment option is typically NOT available in a variable life separate
account?
A) Common stock funds
B) Bond funds
C) Money market funds
D) A guaranteed fixed account with no market risk within the separate account
Answer: D ✅
Rationale: While variable accounts offer various investment options, a guaranteed fixed
account would be in the general account, not the separate account, as separate accounts
are defined by their market-based risk exposure .
6. Under Georgia law, which regulatory bodies must license an agent to sell
variable life insurance products?
A) The Securities and Exchange Commission (SEC) only
B) The Financial Industry Regulatory Authority (FINRA) only
C) The Georgia Commissioner of Insurance AND appropriate securities licensing (FINRA
Series 6 or 7)
D) The Federal Deposit Insurance Corporation (FDIC)
Answer: C ✅
Rationale: Under O.C.G.A. § 33-11-66(p), no individual shall sell variable annuity contracts
unless they have both a valid and current life insurance license AND a variable contract
license issued by the Commissioner, and must also maintain FINRA registration .
, 7. The mortality and expense risk charge (M&E charge) in a variable life policy
covers:
A) The investment management fees of the separate account
B) The insurer's risk that policyholders will die sooner than expected and that expenses
exceed projections
C) State premium taxes only
D) The agent's commission exclusively
Answer: B ✅
Rationale: The M&E charge compensates the insurer for bearing mortality risk
(policyholders dying earlier than expected) and expense risk (administrative costs
exceeding projections) .
8. What is the "free look" period in variable life insurance and annuity contracts?
A) A period when premiums are waived
B) A specified number of days after delivery during which the owner can return the
policy for a full refund
C) The time before the policy takes effect
D) A guaranteed loan period
Answer: B ✅
Rationale: The free look period allows new policyowners to review their contract and
return it for a full refund if dissatisfied. Under Georgia law, a 10-day free look period with
total refund of premium payments is required .
9. Which statement best describes the "assumed investment rate" (AIR) in a
variable annuity contract?
A) The guaranteed minimum interest rate the insurer will pay
B) The actual rate of return earned by the separate account
C) An interest rate assumption used to calculate the initial annuity payment and
subsequent payment adjustments
D) The maximum rate the separate account can earn
