Final answer:
Variable life insurance policies are regulated by state insurance commissioners and the Securities and Exchange Commission (SEC). It's advisable to purchase variable life insurance through a licensed agent who is also SEC-registered due to the product's investment component. These agents can provide expert guidance on both insurance and investment aspects.
Step-by-step explanation:
Variable life insurance policies are a type of permanent life insurance where the policyholder can allocate a portion of their premium dollars to a separate account comprised of various investment funds within the insurance company's portfolio, such as stocks, bonds, equity funds, money market funds, and bond funds.
Variable life policies are regulated by both state insurance commissioners and federal securities laws, due to their investment component. This dual regulation occurs because the cash value of the policy is invested in securities. Therefore, they are not only subject to the insurance laws of the states in which they are sold but also to the regulations imposed by the Securities and Exchange Commission (SEC) and must comply with the provisions of the Securities Act of 1933 and the Investment Company Act of 1940.
When it comes to purchasing a variable life policy, it is advisable to work with a licensed insurance agent or broker who is also registered with the SEC to sell securities. These professionals have specialized knowledge of both the insurance and investment aspects of variable life policies and can help guide policyholders through the complexities of the product.