Regulators will begin technical work necessary for consideration of a model that would offer guidance on policy loan programs associated with life insurance contracts.
The unanimous motion to begin work was made during a conference call of the Life & Annuities “A” Committee of the National Association of Insurance Commissioners, Kansas City, Mo.
The decision follows a notification to the Kansas insurance department from an insurer indicating its intention to implement a policy loan program, according to a July 11 memorandum from Sandy Praeger, Kansas insurance commissioner and NAIC president-elect. The memo to Julie McPeak, Kentucky executive director of insurance and “A” Committee chair, did not identify the insurance company.
The memo notes that “from this company’s perspective, this program provides the policy owner an alternative to a viatical settlement. This program, as described in the letter, would allow in-force policy owners, who meet certain underwriting criteria, to borrow against the death benefit of a policy.
“The underwriting criteria would identify insureds whose life expectancy has changed significantly due to health conditions that have developed since the policy was originally issued.”