Which type of life insurance policy requires an agent to register with the National Association of Securities Dealers (NASD) before sale?

Variable life insurance is a type of life insurance policy that combines the features of a whole life insurance policy with investment elements. This means that the policyholder has the ability to allocate a portion of their premium payments toward various investment options, such as stocks and bonds. Because of this investment component, variable life insurance is classified as a security, which means it is regulated under securities laws.

To sell variable life insurance, an agent must obtain the appropriate securities licenses. This typically involves registering with the Financial Industry Regulatory Authority (FINRA), formerly known as the NASD. This requirement ensures that agents have the necessary training and understanding of the complexities of investment products, providing protection for consumers who may not be familiar with financial markets.

In contrast, other types of life insurance policies, such as term, whole, and universal life insurance, do not involve an investment component and thus do not require the same level of regulation or the need for agents to register as securities representatives. These policies primarily offer a death benefit and do not typically include the investment risk associated with variable policies.