Zurich engaged a major US law firm to help it understand US laws and regulations as they might apply to policies such as yours (i.e. your policy was taken out in the UK when you were resident in the UK) and where the policyholder (such as yourself) has since become a US resident. I summarise below the key points of the advice we have been given:
- Continued servicing of policies sold to non-US residents (at commencement) who subsequently relocated to the US, and have become US resident, does not violate US state insurance laws. Thus, your policy can continue in force.
- In the US, the term “securities” is defined in section 2(a)(1) of the Securities Act and Section 3(a)(10) of the Exchange Act. In addition to the types of instruments commonly understood to be securities, the term securities also includes a category of instrument known as “investment contracts”. We have been advised that unit-linked policies (such as yours) are caught by the US definition of “investment contracts”.
- Unit-linked policies, may give policyholders rights to take certain actions after issuance – such as making regular premium payments, increasing/decreasing premiums, making one time additional premiums and changing fund allocations. We have been advised that, in all these circumstances, the SEC would view the investment of a future premium (and the reinvestment of funds in the case of a fund switch) as a separate purchase of a security each time exercised.
As Zurich is a non-US insurance company and does not have SEC or US insurance regulatory permissions to purchase securities on your behalf, all of the above mentioned transactions have to be blocked whilst a policyholder is US resident.