An agent most likely needs SEC registration when selling variable life insurance because variable products are considered securities due to their investment components. Unlike traditional life insurance products, variable life insurance allows policyholders to allocate their premiums among various investment options, such as mutual funds or stocks. Because these investments can fluctuate in value and present the potential for investment risk, they are regulated by the Securities and Exchange Commission (SEC).
When agents sell variable life insurance, they must also be registered with the appropriate regulatory bodies to ensure compliance with securities laws. This registration process helps to protect consumers by ensuring that agents are qualified to discuss complex investment products.
In contrast, universal life policies, health insurance, and term life insurance do not have the same investment features and are typically regulated solely by state insurance departments, not the SEC. Therefore, agents selling these types of products do not require SEC registration.