Illustrations - NAIC

  1.  1994-1
    • Adopted the report of the Life Disclosure Working Group, which decided that the appropriate illustration should show only policy guarantees and past performance compared to a common index.
      • Communication
        • “Mr. Coleman said he was very disappointed with the plan announced. He was critical of the proposal that the future performance could be demonstrated by the guarantees. He said he was very frustrated because there had never been a two-way discussion on the technical resource advisors' proposal. Few questions were asked of his group, he said, and there had been no opportunity to discuss the proposal. He asked the working group to reconsider and open up opportunities to discuss the issues”
        • Jim Hunt (National Insurance Consumer Organization -- NICO) registered the same complaint. He said he had not been part of the resource group and had no discussion with the regulators
        • “Ms. Faucet responded that people spend more time buying a microwave than they do an insurance policy.”6. Report of the Life Disclosure Working Group.
        • Bob Wright (Va.) gave the report of the working group. He said a decision had been made at the meeting on March 5 that the appropriate illustration should show only policy guarantees and past performance compared to a common index. He said he realized this approach was not favored by the technical resource group, but the working group believed it was very unlikely that illustrations could be made understandable using current scale assumptions.  (p355)
        • 1. Presentations on llustrations (p364)
        • Mr. Wright said the working group was not opposed to showing current scale providing consumers could understand the illustrations, but he had not seen any evidence of an illustration that did that to this point. He invited anyone to come forward with a proposal that would provide clear disclosure, but he indicated it would have to be quite persuasive to influence the working group at this lste date. Commissioner Lyons said the working group was required to move quickly and if they could not do that with current scale the members would choose another option.  (p367)
  1. 1994-2
    • “Mr. Wright said the working group might develop two alternative models, one with guarantees only, and one with projections of non-guaranteed elements in an understandable format.”
    • “Mary Griffin (Consumers Union) asked about Section 2 and the phase "misrepresenting the benefits of the life insurance policy."
    • “Mr. Coleman commented on the definition of illustration in Subsection C. He said the definition is broader than he would like to see, and said that the technical resource advisors would give this thought and make suggestions for refined language.”
  2. 1994-3
    • “Commissioner Robert Hunter (Texas) asked if the assumptions being discussed in Section V of the standards paper would be disclosed in the policy. Commissioner Wilcox responded that they did not need to be disclosed in the same manner that they would be disclosed to an actuary, but that some information would be required.”
  3. 1996-1

    • Mr. Higgins said he would need to be convinced that it was appropriate to show on an illustration something that the consumer would never get.

    • The working group next reviewed Appendix D to the Life Insurance Disclosure Model Regulation, which contained policy information for a universal life policy or indeterminate premium policy. The working group agreed that, since most of this information was directly based on non-guaranteed elements, it would

      be appropriate to delete the entire appendix.

    • ATTACHMENT ONE-A1

      TO: NAIC Members

      FROM: Robert E. Wilcox, Chair, Life Disclosure Working Group

      DATE: January 21, 1996

      RE: Life Insurance Illustrations Model Regulation

      In December the NAIC membership adopted a new Life Insurance Illustrations Model Regulation to address some of the problems we have all been experiencing as consumers complain that their "vanishing" premiums haven't vanished and the high returns they expected haven't materialized.