Finra Exam Series-6 Topic 4 Question 64 Discussion

Actual exam question for Finra's Series-6 exam

Question #: 64
Topic #: 4

Ken has a variable life policy and recently learned that he can borrow against its cash value to help pay for some of the expenses he's incurring while pursuing a graduate degree.

Which of the following statements about the loan he can get is true?

AKen can borrow at most only 50% of the cash value, and only as long as he's had the policy for at least three years.

BSince Ken is essentially borrowing his own money; the loan is interest-free.

CKen never has to repay the loan, but if he chooses not to do so, his wife, Barbie, won't get as much when he dies.

DKen has been misinformed. He cannot borrow against the cash value of a variable life policy because the cash values of these policies fluctuate constantly.

Show Suggested Answer

Suggested Answer: C

The true statement is that Ken never has to repay the loan, but if he chooses not to do so, his wife, Barbie, won't get as much when he dies. He can borrow up to at least 75% of the cash value, but there is interest charged on the loan. (In essence, he's paying interest to himself, though.)

by Youlanda at Aug 31, 2023, 07:30 AM

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