Who regulates variable life insurance?

Variable life insurance and variable annuities are considered investment products by law. Because these variable policies are investment products, they fall under the jurisdiction of the Securities and Exchange Commission. These laws are in conjunction with regulations from state life insurance legislators.

Does the SEC regulate variable life policies?

The Securities and Exchange Commission (SEC) is responsible for bringing stability to the financial markets. … Because of this, variable life insurance falls under the regulation of the SEC and all variable contracts must comply with SEC laws concerning the distribution of securities.

Does SEC regulate insurance?

Executive Summary. The Office of Insurance Products (OIP) is responsible for the regulation of variable insurance under the Investment Company Act of 1940. The Office consists of 13 staff and is part of the Division of Investment Management.

Which state entity regulates the sale of variable insurance contracts?

Variable annuities are securities registered with the Securities and Exchange Commission (SEC), and sales of variable insurance products are regulated by the SEC and FINRA.

Do you need SEC registration to sell variable life insurance?

To sell variable insurance products, an individual must hold a life insurance license and a Financial Industry Regulatory Authority (FINRA) registered representative’s license. … Variable insurance products are regulated by both the state and the SEC as securities.

How do variable life policies work?

Variable life insurance is a permanent life insurance policy, meaning it lasts until the policyholder’s death, combined with a cash-value account invested in bonds or stocks. Plain vanilla term life lasts for a specific number of years and has no investment portion.

Why is variable universal life insurance regulated by both federal and state?

Why? Because of investment risks, variable policies are considered securities contracts. They are regulated under the federal securities laws. Following the federal regulations, sales professionals must provide a prospectus of available investment products to potential buyers.

Why is variable universal life insurance regulated by both federal and state securities laws?

Because the policy owners assume investment risks, variable life insurance policies are securities within the meaning of the federal securities laws and must be registered under the Securities Act of 1933, and the separate account and the underlying funds must generally register as investment companies under the …

What are variable contracts?

(2) The term “variable contracts” shall mean contracts providing for benefits or values which may vary according to the investment experience of any separate or segregated account or accounts maintained by an insurance company.

Is variable life insurance A security?

Variable Life Insurance.

Variable life is a type of security that offers fixed premiums and a minimum death benefit. Unlike whole life insurance, its cash value is invested in a portfolio of securities. … However, the policy’s investment return is not guaranteed and the cash value will fluctuate.

Who is also called as first line underwriters?

Agent is known as primary underwriter.

What type of premium do both universal life and variable universal life policies have?

Both VUL and universal life insurance have cash value. VUL provides the option to invest cash value in stocks and bonds, while universal life usually does not. Universal life policies usually accumulate cash value through a money market interest rate. Both VUL and universal life have adjustable premium payments.

Is death benefit guaranteed with a variable universal life policy?

Variable universal life insurance (“VUL”) policies allow for flexibility in premiums, death benefits, and investment options. … However, many variable universal life insurance policies do not have the minimum death benefit guarantee; instead, many insurers offer minimum guaranteed death benefits for an additional fee.

Which actions taken regarding a universal variable life insurance policy could result in tax liability?

Which actions taken regarding a universal variable life insurance policy could result in tax liability? The best answer is C. Proceeds distributed from a variable life insurance policy are taxable income if there is a distribution of benefits above the amount invested (tax basis) in the separate account.

What is the greatest risk in a variable life insurance policy?

The greatest risk in a variable life insurance policy is the risk of the investments. The insurance company doesn’t guarantee any rate of return and doesn’t offer protection for investment losses. Like any investment, the cash value component of a variable life insurance policy comes with risk.

What must an agent receive to sell variable life insurance policies?

Agents selling variable life products must be registered with FINRA, have a securities license, and must be licensed within the state to sell life insurance. … Variable life insurance is regulated by both the state and federal government, as well as the Insurance Department, and the SEC.

What is the difference between universal life and variable universal life?

The key difference between variable and universal life insurance is the way the cash value grows. While variable life insurance gives you investment options to grow your cash value, the cash value in a universal life insurance policy grows at a rate set by the insurer.

What happens to cash value in universal life policy at death?

Universal life insurance has a cash value component that is separate from the death benefit. Each time you make a premium payment, a portion is put toward the cost of insurance (such as administrative fees and covering the death benefit) and the rest becomes part of the cash value.