What must insurance producers ensure when selling a policy that includes a variable component?

When an insurance producer sells a policy that includes a variable component, it is essential for them to be licensed to sell securities, in addition to having the appropriate insurance license. This is due to the nature of variable products, such as variable life or variable annuities, which combine insurance elements with investment components. These products are classified as securities because they involve investment risks and their value can fluctuate based on market performance.

To sell these products legally, producers must meet the regulatory requirements set forth by both the insurance and securities industries. This often includes passing examinations for both types of licenses to ensure that producers are knowledgeable about the intricacies of investment and insurance products. Therefore, being licensed to sell securities is a crucial requirement for any producer engaging in these transactions, as it protects consumers and ensures that producers have the necessary expertise to advise clients properly.