The full membership of the National Association of Insurance Commissioners (NAIC) is preparing to vote on an actuarial guideline that could affect illustrations of the possible future of performance of index universal life IUL) insurance policies.
The Center for Economic Justice, an advocacy group, is still asking for a last-minute change: prohibiting IUL performance illustrations from implying that the rate a policy will pay the policyholder could be higher than the rate the policyholder would pay to borrow from the policy.
If an IUL seller can create an illustration using a crediting rate that’s higher than the policy loan rate, then “the IUL will illustrate like a riskless ATM,” the center says in comment letter addressed to the NAIC’s executive committee and plenary.
- Links to NAIC executive committee resources are available here.
- An earlier article about the IUL illustration fight is available here.
The NAIC’s executive committee and the plenary are preparing to consider adoption of the new actuarial guideline, “Actuarial Guideline 49-A — The Application of the Life Illustrations Model Regulation to Policies with Index-Based Interest,” at a web-based session set to take place Friday.
“The plenary” refers to a meeting that includes all voting members of the NAIC.
The NAIC is a Kansas City, Missouri-based group for the regulators who oversee insurance oversight efforts for states and other, similar types of jurisdictions, such as the District of Columbia and Puerto Rico. It has 56 voting members.
The current version of the new actuarial guideline, “Actuarial Guideline 49-A — The Application of the Life Illustrations Model Regulation to Policies with Index-Based Interest,” would let the crediting rate in an IUL illustration be up to half a percentage point higher than the policy loan rate.
The center says the current version would, for example, let a life insurer show account value credits at 6.5% every year, and a policy loan cost at 6%.