Colorado Life Producer License Practice Test

Which entity regulates variable life policies?

1. Insurance department

2. Federal government

3. The SEC

4. All of the above

The correct answer is: All of the above

Variable life policies are unique insurance products that combine elements of life insurance with investment components. Because of their nature, they are regulated by multiple authorities to ensure adequate consumer protection and compliance with various regulations. The insurance department at the state level oversees the issuance and regulation of insurance policies, including variable life insurance. Each state has its own insurance commissioners and regulatory frameworks that govern how life insurance products are marketed, sold, and maintained. On the federal side, the Securities and Exchange Commission (SEC) plays a critical role in regulating the investment aspects of variable life insurance policies. Since these policies have investment components that can vary based on the performance of underlying securities, they fall under the jurisdiction of the SEC, which enforces regulations pertaining to the offering of securities. In addition, the federal government has overarching authority that can encompass both state and SEC regulations, ensuring a comprehensive regulatory framework for variable life policies. Therefore, the correct response encompasses all these regulatory entities, indicating that they collectively regulate variable life policies through cooperation and concurrent jurisdiction. This multifaceted approach to regulation is essential for maintaining market integrity and protecting policyholders from potential risks associated with the investment side of variable life products.