Bank-Like

  • The regulation provides for the pre-funding of cash values, so that the amounts will be available upon policyholder demand, and will not be contingent upon sufficient surplus being available at that time to cover what is the equivalent to a demand deposit.
    • The regulation relies heavily on the NAIC Universal Life Insurance Model Regulation adopted by the NAIC, December 1983 (Proceedings. 1984. Vol. I. pp. 6. 31, 376. 515-526)
  • The significant changes made to the NAIC Model are:

1982-2, NAIC Proceedings

  • (p54) - Life insurers, as I mentioned, are more like banks.
    • Nevertheless, their liabilities are longer than banks’ and it is harder to have a run on a life company.
    • This should allow more time for companies to solve their problems, which are principally due to a change in product mix.

--  Jeffrey Cohen, Vice President, Goldman, Sachs & Company

1991 - FRB-Boston -The Financial Condition and Regulation of Insurance Companies - Conference, Series No. 35 - [link to PDFs]

 

1991 - FRB-Boston -The Financial Condition and Regulation of Insurance Companies - Conference, Series No. 35 - [link to PDFs]

  • Lastly, this seems to be like a bank account plus some kind of term insurance rider.
    • [Bonk: this = Universal Life Insurance]

--  Allan W. Sibigtroth

1979 - SOA - Future Trends and Current Developments in Individual Life Products (rsa79v5n44), Society of Actuaries - 24p

  • In contrast, many of the investment-oriented products marketed in the last decade have shorter duration and require greater liquidity than was needed in earlier ...
1992 - World Bank - The Life Insurance Industry in the United States: An Analysis of Economic and Regulatory Issues, Kenneth M. Wright - 54p
  • Cash Value life insurance can operate as an investment vehicle that combines life insurance protection with a financial instrument that operates similarly to bank certificates of deposit and mutual fund investments.

2005-2006 - GOV (Senate) - Tax Expenditures: Compendium of Background Material on Individual Provisions - Senate - Committee on the Budget, Committee Print 109-72, 109th Congress - [PDF-1002p]

  • What the insurance company is offering in its general account is really the same thing that the BIC writer is offering as a bank.

--  Joseph J. Buff

1992 - SOA - GICS and Other Insurance Company Products - Are They Still Alive?, Society of Actuaries - 26p

  • I am advised that within recent times, insurance companies have offered bank-like products.
    • They call them annuity contracts, but they are really bank-like products, where persons deposit funds in the insurance company.
    • There is some small life insurance component, but it is really a fund where interest is earned.
    • In fact, there are many people in Trinidad and Tobago who have these flexible annuities or annuity contracts, they come by different names, with Colonial Life in particular, and these are really a form of fixed deposit.
    • It is a bank-like instrument.

--  Hon. C. Imbert

2009 0202 - Parliament of the Republic of Trinidad and Tobago - 203p

  • ATTTACHMENT TWO-B - Draft 4/11/88 - RE: Proposed Regulations Concerning the Valuation of Universal Life Insurance Plans
    • The regulation provides for the pre-funding of cash values, so that the amounts will be available upon policyholder demand, and will not be contingent upon sufficient surplus being available at that time to cover what is the equivalent to a demand deposit.  (p434)

1988-2, NAIC Proceedings

  • … the life insurance industry has developed new products that contain predominantly investment features similar to those offered by depository institutions.  (p93)

--  William S. McKee, Tax Legislative Counsel, Department of the Treasury [DOTT]

1983 0311 - GOV (Senate - Committee on Finance) - Taxation of Financial Services Industry (HRG98) - [PDF-356p, VIDEO-?]

  • (p2) - These products, mostly single premium deferred annuities (SPDAs) and guaranteed investment contracts (GICs), differ from what insurance companies have traditionally offered customers.
    • They are sold on the basis of their high fixed rate of return and have more in common with bank certificates of deposit than with other insurance products.

1992 - FRB-Minneapolis - SPDAs and GICs: Like Money in the Bank?, by Neil Wallace and Richard M. Todd, Federal Reserve of Minneapolis - 18p