What Licenses Are Required to Sell Variable Annuities and Why?

Understanding which licenses and processes are required to sell variable annuities is an essential step for financial professionals–including financial advisors, brokers or insurance agents–who are looking to grow their services with product offerings. Here’s an overview of the steps you’ll need to take to secure these licenses, why they’re necessary and how selling variable annuities differs from selling other types of annuities.

If you’re looking for ways to build your financial advisory practice, SmartAsset’s SmartAdvisor platform can help you connect with potential clients.

What Are Variable Annuities and Who Can Sell Them?

Variable annuities are long-term investments designed for retirement purposes. They allow investors to receive periodic payments immediately or at some future date. However, these products are subject to market risk, which entails the potential loss of principal.

Financial professional need two types of licenses to sell variable annuities:

State insurance license
Series 6 or Series 7 license from FINRA (specifically for variable annuities)

Being licensed ensures that you adhere to regulatory standards and demonstrate your competence to your clients, which can also shield consumers from fraudulent practices. Hence, obtaining the necessary licenses isn’t merely a requirement but a fundamental step in establishing trust and credibility with potential clients.

Specifics for Each License

The Series 6 license, often called the “limited representative” license, allows professionals to sell packaged investment products like variable annuities, mutual funds, and variable life insurance policies. It is generally sufficient for insurance agents who primarily focus on annuities and insurance-linked securities. By contrast, the Series 7 license, also known as the “general securities representative” license, is much broader. It permits holders to sell not only variable annuities but also individual stocks, bonds, options, and other more complex investment products.

In addition to these federal requirements, most states require a life insurance license with a variable products line of authority to sell variable annuities. Depending on the state, this might mean taking a separate exam that focuses specifically on the risks and features of variable contracts. Many states also require professionals to hold a Series 63 (Uniform Securities Agent State Law Exam) or Series 66 (Uniform Combined State Law Exam), which cover state-level securities regulations and ensure compliance with local laws.

Because requirements differ by jurisdiction, it is crucial for aspiring agents to confirm both federal and state-level obligations. A professional licensed only with a Series 6 may be able to sell variable annuities in one state but may need an additional exam or line of authority in another. Understanding these differences helps avoid compliance issues and ensures clients are being served appropriately under both FINRA and state rules.

Selling Annuities

Selling annuities is a task that requires more than just a basic understanding of finance. Alongside obtaining a state insurance license, you may also need a Series 6 or Series 7 license from FINRA, depending on the type of annuity that you intend to sell. The Series 6 license allows you to sell packaged investment products, including variable annuities, while the Series 7 license encompasses the sale of all securities products, including packaged investment products and individual securities, like corporate stocks and bonds.

The process of obtaining these licenses entails completing pre-licensing education, passing state insurance examinations and registering with FINRA if you’re looking to sell variable annuities. This rigorous process ensures that only well-equipped individuals, who understand the complexities and responsibilities associated with selling annuities, are granted the right to do so.

If you’re able to qualify to sell annuities then it could open up your firm for another revenue-generating opportunity. Otherwise, you’ll have to represent clients who want to buy annuities and go through a third party or help them buy directly from an insurance company. If you can sell them directly then you’ll be able to earn additional commissions.

How Selling Variable Annuities Differs From Other Annuities

A couple meets with a financial advisor to discuss the purchase of a variable annuity.

As a financial professional, understanding how variable annuities vary from other types of annuities is vital.

Unlike fixed and indexed annuities, variable annuities allow investors to choose investments and bear the risks associated with those investments. Essentially, they offer more potential for growth, albeit with augmented risk.

Consequently, selling variable annuities demands a deeper comprehension of investment strategies and risk management. There is no difference in what type of annuity to sell in terms of actually selling it. The requirements are the same no matter the annuity type.

The Role of FINRA in Selling Annuities

FINRA is instrumental in maintaining the integrity of the financial markets and protecting investors. They license brokers, enforce standards for fair practices and discipline brokers who violate these established standards.

To do this, FINRA established rule 2330, which set up “sales practice standards regarding recommended purchases and exchanges of deferred variable annuities.”

As an example, imagine that John wants to secure his retirement and considers investing in variable annuities. His broker must ascertain that the variable annuity is suitable for John, based on his investment objectives, risk tolerance and financial situation.

The key term here is “suitability,” which denotes that brokers must align the financial products they recommend with their client’s needs, goals and circumstances.

FINRA explains that the rule “covers the suitability of a deferred annuity exchange for a particular customer, considering, among other factors, whether the customer would incur a surrender charge, be subject to a new surrender period, lose existing benefits, be subject to increased fees or charges, and has had another exchange within the preceding 36 months.”

Regulatory Rules & Compliance Beyond the License

Holding the right licenses is only part of the picture—professionals selling variable annuities are also subject to ongoing regulatory rules and compliance standards. For example, FINRA Rule 2330 outlines requirements for the sale and exchange of deferred variable annuities. This rule emphasizes suitability, disclosure, and supervision, ensuring that representatives recommend variable annuities only when they align with a client’s investment objectives, risk tolerance, and financial situation.

Sales representatives are also required to provide clear and accurate disclosures about the annuity’s features, including fees, surrender charges, mortality and expense risk charges, and investment subaccount options. Clients must receive a prospectus before purchase so they can fully understand what they are buying. Failure to deliver adequate disclosures can expose both the advisor and their firm to disciplinary action.

Compliance doesn’t stop at the point of sale. Broker-dealers are obligated to maintain ongoing supervision of their registered representatives. They must ensure that any recommendations of variable annuities continue to be suitable, especially if a client wishes to exchange one contract for another. Regulators scrutinize replacement transactions closely, as excessive switching can lead to unnecessary costs and may not serve the client’s best interest.

Additionally, sellers of variable annuities may be held to different standards depending on their role. Those acting solely as broker-dealer representatives are generally bound by the suitability standard, while registered investment advisors (RIAs) are held to the fiduciary standard, which requires them to put client interests ahead of their own at all times. This distinction is critical for consumers evaluating advice and for advisors ensuring they comply with the proper regulatory framework.

Bottom Line

A financial advisor explaining how a variable annuity could fit into their retirement plan.

Selling variable annuities requires a combination of state insurance licensing and securities registration, most often through FINRA’s SIE plus Series 6 or Series 7 exams. On top of that, many states mandate a variable annuity line of authority or an additional exam, and some require Series 63 or 66 for compliance with local securities laws. Beyond the licenses themselves, financial professionals must follow strict regulatory standards such as FINRA Rule 2330, provide full disclosures, and ensure all recommendations are in the client’s best interest. If you are considering selling variable annuities, or working with someone who does, understanding these licensing requirements and compliance obligations is essential for both legal protection and client trust.

Tips for Growing Your Advisory Firm

Grow your leads. Building a financial advisory firm can be difficult, especially as you’re trying to grow your client base. Let us help you grow your business. If you are looking to grow your financial advisory business, check out SmartAsset’s SmartAdvisor platform. We match certified financial advisors with right-fit clients across the U.S.
If you’re just starting out then you may want to make sure you’ve thought through all the steps to reach your long-term business goals. Consider our guide on how to start an advisory business to make sure you get off on the right foot.