SEC Form N-6

What Is SEC Form N-6?

SEC Form N-6 is a form that certain trust accounts must file with the Securities and Exchange Commission (SEC). The SEC is a regulatory agency that helps to help prevent fraud and other forms of deception involving the financial markets. The SEC monitors the activities and recordkeeping of publicly-traded companies in the United States. SEC Form N-6 helps investors gain access to pertinent information about investing in a variable life insurance contract, which has an investment component within it and can fluctuate in value.

Understanding SEC Form N-6

SEC Form N-6 is a document that must be submitted by separate accounts, which are unit investment trusts (UITs) that offer variable life insurance contracts. A unit investment trust is a U.S. financial company that buys or holds a group of securities, such as stocks or insurance contracts. A UIT is similar to a mutual fund since they represent a basket of investments in which investors pool their funds. A UIT makes these investments available to investors as redeemable units.

Variable Life Insurance Contracts

Variable life insurance is a permanent life insurance policy that contains a sub-account, which provides an additional investment component. The cash value of the policy is invested in the market, similar to a mutual fund. As a result, the policy's payout amounts are based on the performance of the underlying investments within the policy. In other words, variable insurance policies pay more money when the investments are performing well and pay out less money when the investments perform poorly.

Variable life insurance policies have more volatility or fluctuations in value, and thus, more risk associated with them. It’s for these reasons that the SEC mandates Form N-6 to help investors understand the terms, conditions, and risks associated with these policies.

SEC Filings

SEC Form N-6 is just one example of what is known as an SEC filing. These filings are official statements or documents, which could include things like periodic reports, registration statements, and documents involving risk disclosures. In the United States, the federal government requires these documents to be filed and accessible to potential investors in the interest of full disclosure. Investors review all of these documents as a way to evaluate the company’s track record, to assess its current financial health, and also to try and forecast the company’s stock performance in the near future.

Parts of SEC Form N-6

SEC Form N-6 consists of three main parts.

Part A of this filing, the prospectus, must contain clearly-written information about the investment that the average investor, who may not have a specialized background in finance or law, can understand. It should provide a balanced disclosure of the positive and negative aspects of variable life insurance contracts.

Other items included in Part A are as follows:

Like other filings, this document should adhere to the guidelines in Securities Act Rule 421(d), known as the Plain English Rule, which dictates that the wording should be clear, concise, and easily understandable.

Part B contains the statement of additional information (SAI), which may be of interest to some investors. A few of the items located in Part B include:

Finally, Part C contains information about the company and those involved in the insurance offering. Some of the information in Part C includes the following:

Companies that meet the specific criteria must complete and file SEC Form N-6, which is a document that is required by the Investment Company Act of 1940 and the Securities Act of 1933. To satisfy SEC filing obligations, the SEC Form N-6 must be completed and submitted in electronic format on the SEC website. The SEC makes the information contained in these filings available to the public.