State RegulationsMA specificDifficulty 2/5
A producer is asked how equity indexed whole life insurance is regulated in Massachusetts. Which answer is correct?
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
DOI Bulletin 98-17, issued by the Massachusetts Division of Insurance, addresses equity indexed life products and confirms that they are regulated as insurance products in Massachusetts even though their interest crediting references a securities index. Tracking an index does not transform the contract into a security: the product is a life policy subject to the Division's authority, sold under the state's insurance rules. Producers should present equity indexed whole life as insurance, not as a market investment.
Why the other options are wrong
- A) Index-linked crediting does not exempt the product from state regulation; DOI Bulletin 98-17 brings equity indexed products squarely within the Division's insurance framework.
- C) Exclusive federal treatment misstates the product's status; the Massachusetts Division of Insurance regulates it as insurance under DOI Bulletin 98-17.
- D) Banking regulators handle lending; an insurance product regulating insurance is the Division of Insurance's job.
Memory hook
Index-linked but still insurance — Bulletin 98-17 keeps it at the Division of Insurance.