NASAA Series 63Regulation of Securities and IssuersHard
An insurance company issues a variable annuity contract that is registered with the SEC as a security. Under the Uniform Securities Act, this variable annuity is:
- ARequired to register by qualification only, never by coordination
- BAn exempt security because all insurance products are exempt
- CA federal covered security exempt from state registration but still subject to certain state filing fees
- DFully exempt from both state and federal regulation
Show answer & explanationAnswer & explanation
Correct answer: C. A federal covered security exempt from state registration but still subject to certain state filing fees
Fixed annuities and traditional insurance products are exempt securities, but variable annuities are securities registered with the SEC and are typically treated as federal covered securities, exempting them from state registration requirements while states may still impose notice filing fees.
Why the other options are wrong
- A. There is no such restriction limiting variable annuities to qualification only.
- B. Only fixed, non-variable insurance products receive a blanket exemption; variable products are securities.
- D. Variable annuities remain subject to SEC regulation, so this is incorrect.
Variable Annuities and Federal Covered Status
Unlike fixed annuities, variable annuities are securities regulated by the SEC and are treated as federal covered securities, exempting them from state registration but not state notice filing fees.
- Fixed annuities are exempt insurance products, not securities
- Variable annuities are SEC-registered securities
- States may still require notice filings and fees for federal covered securities
Memory trick: Fixed is exempt, Variable is federal covered