What type of insurance policy is classified as a securities product?

Variable life insurance policies are classified as securities products due to their unique structure that allows policyholders to allocate a portion of their premium payments into various investment options such as stocks, bonds, or mutual funds. This investment component means that the cash value and death benefit of the policy can fluctuate based on the performance of these underlying investments. As a result, variable life policies are regulated by both insurance laws and securities regulations, which necessitates specific licensing for agents selling such products.

In contrast, term life insurance provides a straightforward death benefit for a specified term and does not have any investment features. Whole life insurance offers guaranteed death benefits and cash value growth but operates on a fixed interest rate rather than investment components. Universal life insurance combines flexible premiums and death benefits with a cash value that typically earns interest at a declared rate, but it does not involve the investment risk found in variable life policies. Thus, the distinguishing characteristic of variable life insurance as a securities product lies in its investment aspect, making it subject to additional regulatory scrutiny.