Strident opposition by many insurers and lukewarm support among regulators was reflected in a discussion of proposed Actuarial Guideline XYZ that would require minimum nonforfeiture benefits for universal life and variable universal life policies with secondary guarantees.
Regulators voted to expose another draft of the proposed guideline in a 7-3 vote during the spring meeting of the National Association of Insurance Commissioners here. Pennsylvania abstained. New York did not vote, but in previous discussions has said it opposes the guideline, citing 18 years of product development that would be disrupted if it was put into effect.
But Frank Dino, a life actuary with the Florida insurance department and developer of the guideline, said that protecting consumers was reason enough to advance the draft guideline.
Speaking of consumers, he said, “they wont complain because they dont know. We are protectors of consumers and it is our job to get consumers the value they are entitled to.” Even though the chassis of these policies is universal life, the secondary guarantees are long enough so that they are in effect comparable to traditional life insurance products, he added. Consequently, Dino said, these policyholders deserve the same nonforfeiture rights as traditional policyholders.
Several regulators agreed but were uncertain whether the guideline would be adopted in their states and whether their departments would support it.
Other regulators, including Larry Gorski, Illinois life actuary, said the idea of making it optional was satisfactory, given his belief nonforfeiture is rightfully a state issue.