NAIFA / NALU - Snippets

1970s

  • George Hill:  In September, 1972, the National Association of Life Underwriters National Council went on record as opposing the adjusted method or any specific formula or index which purports to represent the cost or relative value of a life insurance policy.
    • However, their board of trustees held to its position of making available to the consumer all pertinent data and to its position that the interest-adjusted cost (IAC) might be useful under the proper circumstances, although it is inadequate and has limited application.
    • About the same time, the past president of the NALU, Mr. Mischke, summed up the position of both the NALU and the NAIC when he stated that cost comparisons are no substitute for accurate information about the policy provisions, premiums, and cash values.
    • So Mr. Mischke asked the commissioners not to require the agent to present inappropriate figures or confusing information to the prospective buyer.
    • The NALU's position has, however, become a little more receptive to the idea of cost comparison.

1974 - SOA - Life Insurance and Consumerism, Society of Actuaries - 160p

  • The findings and conclusions, and this Is the part that created the explosion, were that there is a shortfall of information, particularly with respect to ordinary life and that consumer experience does suggest that the consumer Is not able to adequately determine the suitability of the product, the quality of the product, or the cost of the product.
    • As a consequence, consumers are sustaining losses, and this would be a definite Indication of a market failure.
  • [Bonk: re 1978 12 - GOV (House - Report) - Life Insurance Marketing and Cost Disclosure Report Together with Dissenting Views, John Moss (D-CA)  ---  [BonkNote] ---   [PDF-109p] 

--  Jack E. Bobo, NALU, National Association of Life Underwriters, Executive Vice President

1979 - SOA - Cost Disclosure, Society of Actuaries - 18p

1980s

  • 1983 0510, 0511 and 0728 - GOV (House) - Tax Treatment of Life Insurance, Pete Stark (D-CA)  ---  [BonkNote]
    • p314 - Statement of Thomas Gregg, NALU, National Association of Life Underwriters (cka NAIFA)

  • NALU - The task force then heard from William Albus (National Association of Life Underwriters) who commented that if the so-called "range approach" were adopted, it would not necessarily be beneficial.
    • While he asked to reserve further comment as the proposal is further considered, the NALU was opposed to the amendments.
    • However, Mr. Albus noted his support for the current model and support for its continued adoption in the jurisdictions.

1988-2, NAIC Proc.

  • William Albus (National Association of Life Underwriters - NALU) commented that:
    • ...the requirement for disclosing sales commissions is unnecessary because it is superfluous and would only confuse consumers.
    • ...the purpose of disclosure is to provide information for making an informed decision and the disclosure of sales commissions has nothing to do with making this decision.

1988-2, NAIC Proc.

1990s

  • NALU - William N. Albus {National Association of Life Underwriters) suggested that in each instance where the words "interest," "interest rate" and "interest earnings" appear, the term "nonguaranteed policy elements" be substituted.

1991-1A - NAIC Proceedings - p561 - Projected Interest Earnings Working Group - (A) - NAIC  ---  [BonkNote]

  • I sincerely believe we have a flawed instrument in today's sales illustrations.
  • ...we did not communicate the impact of change as well as we should have.
  • Our biggest mistake would be to delay.
  • I don't believe the consumer will tolerate or forgive us, let alone the regulators, if we do nothing.

--  Robert Nelson, Chairperson of the National Association of Life Underwriters (NALU) Task Force on Illustrations - (Currently NAIFA)

1993 - SOA - Sales Illustrations: We Can't Life With Them, But We Can't Live Without Them!, Society of Actuaries - 28p

  • I'd like to stress that agents don't pretend to know the answers.
  • It is our intent to ask for your help because we're currently living with problems that lack solutions.
    • (your = actuaries)

--  Robert Nelson, Chairperson of the National Association of Life Underwriters (NALU) Task Force on Illustrations - (Currently NAIFA)

1993 - SOA - Sales Illustrations: We Can't Life With Them, But We Can't Live Without Them!, Society of Actuaries - 28p

  • An agents’ association representative [Robert M. Nelson (NALU / NAIFA)] reported that his group was concerned about problems because agents are generally the first to hear the disappointments, confusion and bitterness created by the unrealized expectations of policyholders.
  • Of paramount concern to agents is the fact that illustrations may not be supportable under current actuarial standards of practice.
  • He asked the group to concentrate on the serious problems caused when illustrations of non-guaranteed elements and dividends are not supportable for even a few years into the future and tend to overstate the amount of non-guaranteed elements and dividends likely to be paid.
  • The association recommended more precise definitions and stricter rules on supportability and current experience.
  • The association also asked the NAIC to take action to sensitize policyholders to the effect of a change in interest rates, and to mandate a signed disclosure statement where the consumer acknowledges he has read the illustration and understands it.

1993-1, NAIC Proceedings

  • [NALU - NAIFA] - William N. Albus, senior general counsel for the National Association of Life Underwriters, which represents life insurance sales agents, said illustrations of future benefits "are essential to explaining how a policy works."
    • He suggested that agents should be allowed to project current dividends into the future and include an example of how a policy would look if its dividends were reduced by one percentage point.

1994 0308 - NYT - Regulators Seek Limits on Insurer Sales Pitches, by Michael Quint  ---  [BonkNote]  ---  [link]

2000s

  • (p77) - Ron Panneton (National Association of Insurance and Financial Advisors—NAIFA) said this discussion reminded him of a similar discussion the Life Disclosure Working Group had on equity indexed products.
    • In response to that problem, a checklist was created to help regulators to become convinced that people are adequately prepared to describe the complexities of the product.

2000-1, NAIC Proceedings

  • 2003 0515 - GOV (House) - Retirement Security: What Seniors Need to Know About Protecting Their Futures, Richard H. Baker (R-LA)  ---  [BonkNote]
    • NAIFA - David F. Woods, CEO, National Association of Insurance and Financial Advisors - Testimony - 21p
      • (p9) - We have 800 local associations across the country representing 325,000 insurance agents, financial advisers and their staffs.
        • Our mission is to provide professional education and support to our members, to establish and to maintain ethical standards for them.
      • (p9) - Let me if I can just give you a very brief overview of the role that  an agent-adviser plays.
      • (p9-10) - And then to do the research, to find the appropriate products that may address those needs, and to bring those needs to their attention; to help them evaluate them; to provide competitive analysis for them, so that they can make an informed and intelligent decision about the products that are important in their lives.
      • (p25) - The other thing is, and Congressman Lucas can attest to this, he pointed out his credentials in the insurance industry, the best teacher of all, the best educator of all is a knowledgeable and qualified life insurance agent.
        • Consumer study after consumer study indicates that that is where people get their information, and they want to get their information from them.

2010s

  • In the early years of Single Premium Life (endowments), producers sold the heck out of them.
    • It took a while before the feds figured out they were being used as tax-shelters.
  • That epiphany led to the resurrection of the decades old debate about taxing the inside build-up in a life insurance contract, a war NAIFA has been fighting since 1913. - And won every battle.

2017 0803 - NAIFA-Washington - IFAPAC and MEC - [link]

  • Gary Sanders (National Association of Insurance and Financial Advisors—NAIFA) agreed that use of the term “cash value” was confusing.

2017 0207, NAIC Proceedings - LIBGWG, Life Insurance Buyer's Guide Working Group - Conference Call 

  • While life insurance is not a retirement strategy, it can help provide the opportunity for supplemental financial support in retirement.  (p23-24)

2018 - NAIFA - AdvisorToday - Bridging the Gap: An understanding of the potential uses for permanent life insurance can help clients see it as a tool to help fill gaps in their portfolio, By Jason Wellmann - 53p

  • Gary Sanders (NAIFA): And that leads to my second concern which is that consumer confusion... I think, and we fear, in large part is going to be translated into a lack of confidence or a lack of trust in their advisor.
    • And in some way or another, the consumer is going to end up with the feeling that the advisor did some form of misrepresentation initially to the consumer and now the truth is coming out. 
  • And I think that is a very big concern and not only would it harm the consumer's confidence in the producer, but it could have a lot of reputational damage to producer's as well.

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