Washington Bureau — NU Online News Service
The new Securities and Exchange Commission rule subjecting equity indexed annuities to federal oversight appears to apply only to annuities, but as a practical matter, it could also have an impact on indexed life insurance products, says the Association for Advanced Life Underwriting.
The impact could be felt on those indexed life products that calculate and credit interest similar to the manner in which interest is credited on EIAs, AALU is telling its members.
In an analysis based on comments by its lawyers and other advisers, the AALU is also telling its members that there is a “distinct possibility” that industry interests may challenge the ruling in court.
At the same time, the AALU said in a bulletin to members, “the final rule will be narrower in scope than the proposed rule,” something the AALU fought to do, although it is unclear when the final rule will be published.
Moreover, the rule will not go into effect until Jan. 12, 2011 and will be prospective, according to statements made at the SEC meeting where the rule, 151A, was adopted. That in itself is a significant concession, because the proposed rule published in June provided only for a 12-month grace period.