Which entities primarily regulate variable life insurance?

Variable life insurance is primarily regulated by state insurance departments and the Securities and Exchange Commission (SEC) because of the dual nature of these products. On one hand, variable life insurance includes an insurance component that is regulated at the state level to ensure the financial stability and fairness of insurance policies. State insurance departments oversee the licensing of insurance providers and protect policyholders through regulations that govern policy benefits, premiums, and reserves.

On the other hand, the investment aspect of variable life insurance, which allows policyholders to allocate premiums to various investment options, subjects these products to federal securities laws. The SEC regulates the offer and sale of these securities to ensure transparency, compliance, and protection against fraud. This dual regulation is essential for safeguarding consumers, as variable life insurance combines features of both life insurance and investment products. Thus, the regulation of variable life insurance effectively addresses the complexities and risks associated with its dual nature.