South Carolina Life Insurance Practice Exam

What does SEC Registration pertain to in the context of insurance?

1. Life insurance policy auditing

2. Disclosure of variable products

3. Insurer financial stability

4. Insurance agent licensing

The correct answer is: Disclosure of variable products

SEC Registration pertains to the requirement for certain investment products to be registered with the Securities and Exchange Commission (SEC). This is particularly relevant for variable products, such as variable life insurance and variable annuities, which are considered securities. Because these products involve investments that can fluctuate in value, they require full disclosure to consumers about the nature of the investment, the risks involved, and any fees or charges that may apply. The SEC's role is to ensure that consumers receive adequate information to make informed decisions about these variable products. This includes performance data, investment strategies, and the financial risks associated with the investments. The registration process helps to protect investors by ensuring that the products comply with regulatory standards and are being offered transparently. In contrast, the other options focus on different aspects of insurance. Life insurance policy auditing is more about assessing the policies rather than regulatory compliance. Insurer financial stability pertains to the overall financial health of an insurance company, which is monitored by entities other than the SEC, like state insurance regulators. Insurance agent licensing deals with the qualifications and regulatory requirements for agents to sell insurance, rather than the registration of the products themselves.