Investment Company/Variable Contracts Products Representative Examination
The Series 6 exam qualifies individuals to sell a limited set of securities products: mutual funds, variable annuities, variable life insurance policies, and 529 college savings plans. It is a focused alternative to the broader Series 7 for representatives whose activities are confined to investment company products and variable contracts. The Series 6 requires passing the SIE exam and firm sponsorship. It is commonly held by bank representatives, insurance agents transitioning to securities, and financial advisers working primarily with packaged products.
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Practice Questions
Test your knowledge with these Series 6-style questions. Click an answer to check if you are correct.
1. An investor plans to invest $50,000 in a mutual fund over the next 13 months. Which feature allows them to receive the breakpoint discount immediately?
Correct: B. A letter of intent (LOI) allows an investor to receive breakpoint pricing immediately by pledging to invest a specified amount within 13 months. Rights of accumulation provide breakpoints based on existing holdings, not future commitments. LOIs are backdated up to 90 days and cover a 13-month period.
2. A 45-year-old investor withdraws $20,000 from a non-qualified variable annuity. The contract value is $80,000 and the cost basis is $50,000. How much is subject to the 10% early withdrawal penalty?
Correct: B. Non-qualified annuity withdrawals use LIFO treatment -- earnings come out first. The earnings in this contract are $30,000 ($80,000 - $50,000 cost basis). Since the $20,000 withdrawal is entirely within the earnings portion, the full $20,000 is subject to both ordinary income tax and the 10% early withdrawal penalty (because the investor is under 59 1/2).
3. Which type of mutual fund share class would be MOST suitable for an investor making a large lump-sum investment with a long-term time horizon?
Correct: A. Class A shares are most suitable for large, long-term investments because the front-end sales load is reduced through breakpoint discounts on larger purchases, and the lower ongoing 12b-1 fees save money over time. Class B and C shares have higher ongoing expenses that compound over time, making them less cost-effective for large, long-term holdings.
4. A client wants to move funds from an existing variable annuity to a new variable annuity without incurring a current tax liability. Which provision allows this?
Correct: B. A Section 1035 exchange under the Internal Revenue Code allows the tax-free exchange of one annuity contract for another, one life insurance policy for another, or a life insurance policy for an annuity (but not an annuity for a life insurance policy). The representative should still evaluate whether the exchange is in the client's best interest, considering surrender charges on the existing contract.
5. Which of the following is a qualified expense for a 529 college savings plan?
Correct: C. Qualified 529 plan expenses include tuition and fees, books, supplies and equipment required for enrollment, room and board (for students enrolled at least half-time), computers and internet access, and up to $10,000 per year for K-12 tuition. Student loan repayment (up to $10,000 lifetime, not $50,000) was added by the SECURE Act. Cars and social membership dues are not qualified expenses.
Related Exams
Consider these exams to expand your registration capabilities beyond investment company products.
General Securities Representative
A broader license that covers everything in the Series 6 plus individual stocks, bonds, options, and other securities. Consider upgrading if you want to sell a wider range of products.
Uniform Securities Agent State Law
Required in most states alongside the Series 6 for state registration as a securities agent. Covers state securities regulations and ethical practices.