At the end of June the National Association of Insurance Commissioner (NAIC) adopted Actuarial Guideline 49. This new rule addresses issues with how Indexed Universal Life (IUL) products are illustrated. There are two parts to this – the first has gone into effect and the second will be active starting March 2016:
1. The first part of this regulation governs how carriers determine the maximum illustrated rate they can project for indexed accounts. Based on the analysis I have seen so far, the new rules will limit the maximum projected rates to approximately 6.5% to 7.25%, based on current market conditions. This part of the rule has been effective since September 1, 2015. You have no doubt started to hear from carriers on how they are going to address this new rule.
Davis Life & Annuity applauds this change. We have seen some carriers allow illustrated rates of 8%, 9% or higher. One of our creeds is to under-promise and over-deliver. If you are selling an IUL product assuming a rate higher than 7% average, you are setting up your clients for disappointment and worse yet, providing them with an under-performing policy.
Latest posts by Davis Life & Annuity (see all)
- Volatility Control Indices – Help or Hinderance for FIA Clients? - May 25, 2018
- 3 Steps To Prepare Your Business For Post-DOL Fiduciary Rule - June 16, 2017
- Special 30-Minute Webcast – 54K Per Year in Extra Commission - October 25, 2016