Universal-Flexible Factor

  • <WishList> – 1982 – New Jersey – Universal/Flexible Factor: life insurance informational hearing.
    • Department of Insurance, New Jersey. Department of Banking & Insurance
    • [Bonk: the NAIC also has it in their Database, but it is currently unavailable for viewing (as of 2023)]
  • Bill White, chief actuary, New Jersey, reported on their special project pertaining to universal life. – <WishList>
  • Their commissioner, on June 25, 1982, declared an 81-day moratorium on “Universal-Flexible Factor” type of policies.
  • His staff was directed to
    • (1) study the matter and issue a position paper on the subject;
    • (2) conduct public hearings on March 10-11;
    • (3) terminate the moratorium April 16 with the publishing of a set of guidelines. – <WishList>
  • Reports and results have been mailed to each insurance department.
  • Some of the questions New Jersey conveyed included:
    • (1) are these policies participating or non-participating;
    • (2) the “Bait and Switch” potential;
    • (3) disclosure;
    • (4) Federal Income Tax aspects;
    • (5) non-forfeiture values;
    • (6) replacement problems.
  • The concern was not just with the “twisting” replacements, but was the impact of justified replacements on the solvency of replaced companies.

1982-2, NAIC Proceedings

  • N.J. Admin. Code § 11:4-40.2 – Definitions – law.cornell.edu/ – [link]
    • “Universal flexible-factor form” means any life insurance policy, rider or endorsement, whether participating or nonparticipating, which permits the insurer to reserve the right to modify (upward or downward) premiums, premium factors (interests, mortality, expenses), or benefits (death benefits, cash or loan values) on the basis of future anticipated or emerging experience.
  • N.J. Admin. Code § 11:4-40.9 – File and use eligibility – law.cornell.edu/ – [link]
    • (b) The following types of non-variable individual life insurance forms shall be eligible for file and use pursuant to this section:
    • 1. Scheduled premium term policies without cash values, other than universal/flexible-factor forms, multiple-life forms with survivorship benefits, limited death benefit forms, policies with re-entry options, single premium forms, field issued forms or funeral insurance;
  • N.J. Admin. Code § 11:4-45.1 – Purpose and scope – law.cornell.edu/ – [link]
    • (a) These rules set forth the standards and requirements for periodic reports required to be provided to policyholders or contract holders in connection with flexible-factor life insurance forms, individual variable annuity forms, and variable life insurance forms to be filed by the Commissioner for use and delivery in this State pursuant to N.J.S.A. 17B:25-18, 17B:25-18.1, 17B:25-18.2, 17B:27-25, and N.J.S.A. 17B:28-5. These rules also set forth periodic report requirements for all forms for which illustrations are used pursuant to N.J.A.C. 11:4-52.  
    • (b) These rules shall apply to any insurer seeking to deliver or issue for delivery in this State a flexible-factor form, individual variable annuity form or variable life insurance form; or any other form for which illustrations are used pursuant to N.J.A.C. 11:4-52 as set forth in N.J.A.C. 11:4-45.7.
  • 2024 0824 – LC – Paulette T. Glover and John T. Warehime vs. Connecticut General Life Insurance and The Lincoln National Life Insurance Company – Case 3:16-cv-00827-MPS Document 226 Filed 03/08/24  – 71p
    • Flexible Factor Life – 2 times-  redacted