1982-1, NAIC Proceedings

  • "Companies Earning Lower Interest Rates than the Rate Assumed in Their Reserves"
  • Special Task for of the ACLI Cost Disclosure Subcommittee
  • 2. Heard recommendations and reports from departments, consumer groups and industry concerning the
    • regulation of universal life products,
    • replacement practices and
    • methods of cost disclosure.

1982-1, NAIC Proceedings

  • The chairman also noted that the task force met independently of the joint committee on October 19 and 29 to discuss possible approaches to the regulation of new and innovative life insurance products such as universal life.
    • The chairman briefly summarized universal life and indicated the importance of studying such products and, if necessary, developing safeguards to protect consumers.
    • The chairman also noted that the task force met independently of the joint committee on October 19 and 29 to discuss possible approaches to the regulation of new and innovative life insurance products such as universal life.
    • The chairman briefly summarized universal life and indicated the importance of studying such products and, if necessary, developing safeguards to protect consumers.

1982-1, NAIC Proceedings

  • David M. Sanderford, Security First Group of Los Angeles, inquired about securities regulators' views on the higher guaranteed interest of the universal life product.
  • [Editor's Note - The Executive (EX) Committee approved the establishment of an advisory committee to study new or innovative life insurance products.  (p119)

[Bonk: David M. Sanderford was the Plaintiff Expert Witness in the 2010 Blumenthal v New York Life Lawsuit?]

1982-1, NAIC Proceedings

  • 15. NASAA/NAIC Joint Committee
    • The revised report of the NASAA/NAIC Joint Regulatory Products Study Committee was adopted as amended (Attachment Two). The amendment substituted a resolution for the position paper adopted by the Joint Committee in Phoenix (Attachment Two-A). 
  • [Bonk:  join with 1982-1 - STATEMENT OF THE AMERICAN COUNCIL OF LIFE INSURANCE BEFORE THE NASAA/NAIC JOINT REGULATORY INSURANCE PRODUCTS STUDY COMMITTEE - August 31, 1981]

1982-1, NAIC Proceedings

  • 3. Universal Life and Related Plans of Life Insurance and Annuities
    • There is considerable interest in these types of life insurance and annuities, and a number of new varieties of plans have recently been developed.
    • The wording of the 1980 version of the model Standard Valuation Law and the model Standard Nonforfeiture Law for Life Insurance contemplates that the commissioners of insurance for the states will issue regulations on these types of life insurance plans.
    • It is hoped that there can be considerable uniformity in such regulations.
    • A model regulation is needed urgently, and it should be drafted some time in 1982 and then possibly adopted by the NAIC later in that year. (p349)

1982-1, NAIC Proceedings

  • Nonforfeiture Value - The contemplated minimum cash surrender value requirement is based on a retrospective approach, since future premiums are not known.

1982-1, NAIC Proceedings

  • In the ACLl's view, there is no investment risk to the consumer since the product typically carries a guarantee which includes principal plus four percent and since the interest to be earned beyond the guaranteed amount does not involve the kind of risk that is associated with securities.

--  Gary Hughes - ACLI

1982-1, NAIC Proceedings

  • (p399) - STATEMENT ON BEHALF OF THE AMERICAN COUNCIL OF LIFE INSURANCE TO THE NAIC (A) COMMITTEE'S TASK FORCE ON LIFE INSURANCE COST DISCLOSURE - December 15, 1981

1982-1, NAIC Proceedings

  • Mr. Case continued his report by describing the valuation and nonforfeiture concepts which the ACLI Task Force had tentatively developed for universal life insurance.
  • The following is an explanation, as presented by Mr. Case, of the concepts which are embodied in the material:
  • Universal life policies involve a running account, to which premiums (after deduction of certain expense charges) and interest are credited and from which mortality charges and other expense charges are deducted.
  • The account value is redetermined periodically (typically, once a month).
  • The cash surrender value at any time may be equal to the account value, or it may be different from the account value, as specified in the policy.

(p122) - STATEMENT OF THE AMERICAN COUNCIL OF LIFE INSURANCE BEFORE THE NASAA/NAIC JOINT REGULATORY INSURANCE PRODUCTS STUDY COMMITTEE - August 31, 1981

ATTACHMENT ONE-A

On behalf of its 525 member life insurance companies the American Council of Life Insurance (the "Council") is pleased
to have this opportunity to present its views on the continuing inquiry into the regulation of so-called nontraditional insurance products being conducted by the NASAA/NAIC Joint Regulatory Insurance Products Study Committee (the "Joint Study Committee").

1982-1, NAIC Proceedings

  • This topic was described under the topic heading "Completely Flexible Life Insurance Plans (Universal Life Insurance Plans)'' in the June 1981 semi-annual report of the former (C4) Technical Subcommittee.

1982-1, NAIC Proceedings

Universal Life and Related Plans of Life Insurance and Annuities
a. General Features
b. Interest Indexed plans
c. Reporting requirements and regulation
d. Distinguishing features as compared to variable life insurance and variable annuities
e. Other matters

1982-1, NAIC Proceedings

Ill. FUNDED PLANS OF LIFE INSURANCE (UNIVERSAL LIFE) AND ANNUITIES (LATER CHANGED TO UNIVERSAL LIFE AND RELATED PLANS OF LIFE INSURANCE AND ANNUITIES)

A. General Features

  • The Technical Staff Actuarial Group discussed the appropriateness of the name given to this topic on the agenda.
  • Other names considered were: "Universal Life and Indeterminate Premium Plans," or "Adjustable Life Policies."
  • It was decided to use the title "Universal Life and Related Deferred Annuities."
  • Mr. Montgomery suggested that the words, "Plans valued on a retrospective basis," could be added.

1982-1, NAIC Proceedings

STATEMENT OF JAMES HUNT, FSA, DIRECTOR NATIONAL INSURANCE CONSUMER ORGANIZATION BEFORE THE NAIC TASK FORCE ON LIFE INSURANCE COST DISCLOSURE - December 15, 1981

  • With the advent of universal life, a form of whole life, it is now possible to say that only coincidently may the NAIC Interest-adjusted method be used to compare whole life and universal life.

1982-1, NAIC Proceedings

C. Reporting Requirements and Regulations

  • In December 1980 the NAIC Technical Staff Actuarial Group (formerly the NAIC Life, Accident and Health Insurance (C4) Technical Subcommittee) had asked the American Council of Life Insurance to develop proposed valuation and nonforfeiture requirements for universal life insurance policies, adjustable-premium policies, and single-premium adjustable death benefit policies.
  • Since the Standard Valuation and Nonforfeiture Laws do not directly address plans of those types, the NAIC's 1980 model amendments of the Standard Laws included a provision stating that valuation and nonforfeiture requirements for such policies may be determined by regulations promulgated by the insurance commissioner.

1982-1, NAIC Proceedings