Misleading Illustrations

  • Apples and Oranges.
    • We continue to put out these apples vs. oranges illustrations.
      • We're misleading our policyholders.
      • We are providing the ammunition to make replacements of inforce policies with new coverage that is not in the policyowner's best interest.

--  Walter Miller:

1983 - SOA - Surplus Distribution and Allocation for New and Inforce Policies - 22p

  • 2019 - IULSWG - Birney, Thomas, Scott Harrison
  • 2019 - IULSWG - Birney, Chris Kite, Moore, Scott Harrison, Global Atlantic-?,
    • Vincent Tsang-Credibility of Illustrations
      • Judy Faucett - Junk Illustrations
      • Purpose of Inforce Illustration
        • Rachel-? -
        • Vincent Tsang
  • 2023 - LIAC - French, Andersen, Birney, Thomas, Bonk
  • Companies could educate their agents in the use of reliable methods and prohibit, to the extent possible, use of misleading illustrations.
    • In this regard the companies' control is somewhat limited by the existence of independent brokers and the recent emergence of independent computer services.
    • Beyond that, I am not sure what effective steps can or should be taken.

--  Michael B. Hutchinson

1969 - SOA - Life Net Cost Comparisons, Society of Actuaries - 34p

  • In my presentation, I will be talking about the views of the regulators in the U.S. on the illustration problem.
  • Some of the comments that we have heard from regulators about the illustration situation suggest feelings of, if not outright despair, growing frustration.
    • A couple of them spoke sadly of the futility of regulating an illustration when the real issues involve the agent or the company.
    • Larry Gorski of the Illinois department mentioned that in states that do not regulate advertising or promotional materials, misleading statements can be rampant in those materials even if the illustrations are made pure.

 --  Benjamin J. Bock, Transamerica Occidental

1992 - SOA - Life Insurance Sales Illustrations, Society of Actuaries - 16p

  • First thing that I want to say is that there have been some references to Misleading Illustrations.
    • I'm certainly not aware of the Regulators have not found that Illustrations are misleading.
    • That seems to be just an allegation that is left hanging in the air, which is inaccurate. 
    • The Illustration is not misleading.
  • The policy is performing according to policy mechanics. 

-- Scott Harrison  

2019 1115 - NAIC - IULISG - IUL Illustration Subgroup - Conference Call - [Bonk: Not in Proceedings]

  • The Academy Life Committee has a task force that's chaired by Helen Gaff.
    • This committee was set up, at the request of the NAIC's Actuarial Task Force, to address misleading illustrations, specifically to address the pattern of values on illustrations.

--  Douglas C. Doll

1991 - SOA - Product Update - Individual Life, Society of Actuaries - 18p

  • Many years ago, when life insurance was born, a consumer knew what his annual premium bought; a guarantee that on his death his heirs would receive x amount of money.
    • This money generally was to compensate heirs for the loss of incomedue to the breadwinner's death.
  • As the years went on, insurance companies devised the level-premium method, which added a savings element to the insurance or death protection.
    • The companies thought the idea would have consumer appeal, and would protect against the companies ending up with only the worst risks.
    • And the facts seem to suggest the companies were right.
  • Of the total 20 million new ordinary and industrial life policies bought in 1971, less than 1 in 10 was the old-fashioned term protection.
  • But while the policies became a package of savings and protection, the premiums stayed a single unit.
  • Thus, the vast majority of consumers today are putting a part into savings, and a part toward death protection when they deposit that premium.
  • But no one is telling them how much goes into each category.
  • Obviously, as the convening of these hearings shows, I have the feeling that it is time that perhaps someone did.
  • And this is a philosophy shared apparently by a number of others that we will hear during this opening set of hearings. (p1)

--  Senator Philip Hart (D-MI)

1973 0220 - GOV (Senate) - The Life Insurance Industry, Philip Hart (D-MI) - Part 1 of 4  ---   [BonkNote]  ---   [PDF-815p-GooglePlay]   

  • 1993-3, NAIC Proceedings - 1992 0724 - Letter - NCOIL to State Governors - Re: Full Disclosure/No Misleading Advertising in the Sale of Life Insurance, Attachment Six-A2 - [link-pic]
    • To encourage full disclosure and combat misleading advertising in the sale of life insurance, the Executive Committee of NCOIL urges that state insurance departments:
      • (1) Require full disclosure of withdrawal charges and actual pure net interest when interest rates are used to advertise and sell life company products;