There are numerous regulations governing variable life policies. First and foremost, they must be based on an actuarial calculation, not on hypothetical assumptions. Variable life policies, whose terms and conditions vary from state to state, must be regulated by the federal government, the Securities and Exchange Commission (SEC), and the Insurance Department.
Variable life policies fall under the jurisdiction of the Securities and Exchange Commission (SEC), which is responsible for maintaining financial stability and fairness in the financial markets. Because these policies are essentially securities, they must comply with SEC laws and regulations regarding the distribution of securities. All states have laws regarding variable life policies, including those that affect investment activity.
Insurers must maintain separate accounts for each policyholder that reflects their investment experience. Insurers must demonstrate that these separate accounts are actuarially sound and reflect net investment return. Additionally, they must determine the value of the assets in the separate accounts as often as the variable benefits are determined. These valuations must be done at least monthly.
In some cases, you can convert your variable life insurance policy to a substantially comparable paid-up general account life insurance policy. The conversion must not exceed the value of the death benefit of the variable policy at the date of the conversion. Alternatively, you can convert your variable policy to a comparable flexible premium general account policy.
Variable life insurance policies are flexible and provide a significant investment earnings potential. These policies may be conservative or aggressive in their investment strategies. Some of the best life insurance companies offer variable life insurance plans. You can also choose which investment strategies are right for you. To maximize your investment returns, be sure to get a prospectus that covers the different investment options available to you.
Variable life insurance policies are regulated by the SEC and the Federal Trade Commission. The SEC requires insurance firms and investment professionals to be registered with the SEC. All of these entities regulate variable life insurance policies, except the Guaranty Association. They also regulate insurance agents and firms.
Variable life insurance policies are considered securities contracts because their investment risks are higher than those of traditional term life insurance policies. In addition, they tend to be more expensive. In addition to varying premiums, variable policies may require a separate account to invest in stocks and bonds. However, the minimum premiums are the same.