1980s - ACLI - NAIC Proceedings

  • NAIC Proceedings - ACLI - Universal Life 
  • LIFE , ACCIDENT AND HEALTH (C) COMMITTEE; Life Insurance (C3) Subcommittee, 1980-1, NAIC Proc. 
  • The American Council of Life Insurance also has a special Task Force on Valuation and Nonforfeiture Regulation for New Products, which is studying minimum reserves and nonforfeiture value requirements for universal life policies and which is keeping the advisory committee apprised of its research.

1983-2, NAIC Proceedings

  • 1982-2, NAIC Proceedings - "Suggested Valuation and Nonforfeiture Standards for Certain Life Insurance Plans with Adjustable Features."
  • 1981-1, NAIC Proceedings - ACLI Cost Disclosure Letter Vogel - 14p
  • 1982-1, NAIC Proceedings - (ACLI) presented a paper on cost disclosure for universal life products - 4p
  • 1982-1, NAIC Proceedings - STATEMENT OF THE AMERICAN COUNCIL OF LIFE INSURANCE BEFORE THE NASAA NAIC JOINT REGULATORY INSURANCE - 10p 

STATEMENT ON BEHALF OF THE AMERICAN COUNCIL OF LIFE INSURANCE TO THE NAIC (A) COMMITTEE'S MANIPULATION, LAPSATION, D1VlDEND PRACTICES AND ANNUITY DISCLOSURE TASK FORCE

June 8, 1982

1. The product commonly referred to as "universal life insurance" has aroused considerable attention and is being marketed to an increasing extent.

  • Under a universal life insurance policy, the insured has considerable flexibility with respect to the amount and timing of premium payments.
  • It is possible for the insured to skip premium payments and still have the policy continue in force, even until the point at which the policy expires or matures.
  • Under these circumstances, when is a policy to be considered as having lapsed for the purpose of the proposed disclosure system?
  • How about the situation where a premium is paid, but at a substantially lower level than the policyholder had been paying?
  • Should this be considered a partial lapse and, if so, how should the amount lapsed be measured?

2. Another recent product is "adjustable life insurance."

  • The policyholder must pay premiums on the specified due dates but can request changes in the amount of the premium, the amount of insurance, or the plan of insurance.
  • The policy thus can be changed from a permanent insurance plan to a term plan, and vice versa.
  • How are such policies to be handled under the advisory committee's proposed system, which calls for a separation of the experience between permanent and term insurance?

1982-2, NAIC Proceedings, ATTACHMENT FOUR

ATTACHMENT ONE-J

AMERICAN COUNCIL OF LIFE INSURANCE PROPOSED VALUATION AND NONFORFEITURE GUIDELINES FOR ADJUSTABLE-CASH-VALUE POLICIES

October 15, 1982

  • r is equal to one, unless the account value is less than the Guaranteed Maturity Fund, in which case r is the ratio of the account value to the Guaranteed Maturity Fund.

a. Flexible-premium Adjustable-cash-value Policies

  • Flexible-premium adjustable-cash-value policies are adjustable-cash-value policies which permit the policyowner to vary, independently of each other, the amount or timing of premium payments or the amount of insurance. For such policies the minimum cash surrender values shall be as determined by the following paragraphs.
  • The initial expense allowance shall be the allowance provided by [items (ii), (iii) and (iv) of section five], as applicable, of [the Standard Nonforfeiture Law for Life Insurance, as amended in 1980] for a fixed-premium, fixed-benefit endowment policy with a face amount equal to the initial face amount of the adjustable-cash-value policy, with level premiums paid annually until the highest attained age at which a premium may be paid under the adjustable-cash-value policy, and maturing on the maturity date of the adjustable-cash-value policy. The unused initial expense allowance shall be the excess, if any, of the initial expense allowance over the initial acquisition expense charges as defined above.

The Golden draft recommends the complete deletion of Section 7. The ACLI saw no need to eliminate the provisions of this section.

In addition, a revised Buyer's Guide has been developed and is proposed for adoption as part of the new model regulation.

The revised draft includes annotations indicating the source and background of the changes being proposed to the current model regulation.

  • This proposal would incorporate the following new features into the model regulation:
    • l. The concept of a nonguaranteed element to measure the extent to which policy costs can be affected by premiums, benefits, or other items that are subject to change by the company without the consent of the policyholder.
    • 2. A special plans section to accommodate the, unique features of nontraditional plans such as universal life insurance.

Proposed Revision of NAIC Life Insurance Solicitation Model Regulation - October 22, 1982
LIFE INSURANCE [SOLICITATION] DISCLOSURE MODEL REGULATION

COMMENT: Since new subsection 5(c) contains requirements applicable to existing policies, the name of the regulation
should be revised to indicate that it applies in more situations than just solicitation.

-- STATEMENT ON BEHALF OF THE AMERICAN COUNCIL OF LIFE INSURANCE <ACLI>TO THE NAIC (A) COMMITTEE'S LIFE COST DISCLOSURE TASK FORCE November 29, 1982

1983-1, NAIC Proceedings