Question

Which of the following Regulation Best Interest obligations are imposed on the agent recommending or selling a variable life insurance policy?

I. The compliance obligation
II. The disclosure obligation
III. The care obligation

1. I & II only
2. II & III only
3. I & III only
4. I, II & III

Answer 1

Regulation Best Interest (Reg BI) imposes three main obligations on broker-dealers when recommending or selling investment products, including variable life insurance policies. These obligations are as follows:

1. **The compliance obligation** - Broker-dealers must establish, maintain, and enforce written policies and procedures to comply with Reg BI.

2. **The disclosure obligation** - Broker-dealers must provide specific disclosures to retail customers, including the nature of their relationship, the fees involved, and any conflicts of interest.

3. **The care obligation** - Broker-dealers must exercise care when making recommendations, ensuring that the recommendations are in the best interest of the customer and based on a reasonable diligence and understanding of the customer's needs.

Given that all three obligations apply to agents recommending or selling variable life insurance policies under Reg BI, the correct answer is:

4. I, II & III