2014

• 2014 0114 - NAIC Proceedings  LATF CC - RE: IULISG – Indexed Universal Life Illustrations Subgroup
  • John Bruins (American Council of Life Insurers – ACLI) said there are a wide range of practices in the area of policy illustrations, particularly for indexed universal life (UL) policies.
• 2014 0812 - NAIC - IULISG – Indexed Universal Life Illustrations Subgroup -
  • Letter to LATF - Metropolitan Life Insurance Company, New York Life Insurance Company and Northwestern Mutual Life Insurance Company
    • We believe current illustrated rates are much higher than what is reasonably expected over the course of the policy and may lead to consumer disappointment, which could negatively impact the entire industry.
• 2014 0918 - NAIC - LATF, Life Actuarial Task Force, Conference Call
  • (6-155) - Mr. Ostlund asked if the ACLI has received input from consumers.
    • Mr. Bruins said the ACLI has not received input from consumers. He agreed to check with ACLI member companies to see if they have received any consumer input.
  • (p6-155) - Doug Wheeler (New York Life), representing the ACLI member companies that are not in support of the ACLI actuarial guideline proposal, introduced an alternative actuarial guideline for IUL illustrations (Attachment Eight-B). - (p
  • (p6-155) - Bobby Samuelson (MetLife) said the companies that are not in support of the ACLI proposal are not opposed to the IUL product but are opposed to the current illustration practices.
    • He clarified that the IUL product is strictly a general account product that uses general account returns to hedge the index risk within the product.
    • He said one of dissenting companies’ concerns is that IUL illustrated rates tend to be double the rates used to illustrate traditional universal life products.
    • He said the dissenting companies are also concerned about indexed loans, which can lead to significant leveraging within the policy. [Bonk: LIRP - Life Insurance Retirement Plan?]
  • (p6-155) - Sheryl Moore (Moore Market Intelligence) said she is concerned that some companies are increasing their insurance charges to subsidize their option budget.
    • She said she is also concerned that the practice of playing “bait-and-switch” with renewal rates is becoming more common among universal life products.
• 2014 1113 - NAIC - IULISG, Indexed Universal Life Illustrations Subgroup
  • Mike Yanacheck (IA) - Letter
    • It is my recollection and understanding that AG 49 was created in part due to a problem with ‘gamesmanship’ in IUL illustrations.
• 2014 11/14-15, NAIC Proceedings (6-63)
  • Greg Gurlick (Northwestern Mutual Life) said that if consumers are not satisfied with results of their IUL policies, it will not only impact the reputations of the companies selling the products but also the entire industry will be painted with a broad brush.
  • John Bruins (ACLI) said overall guidance will produce better education for consumers, highlight the nonguaranteed nature and provide consistency for contracts….
  • Mr. Ehren (Securian) said it is in the industry’s best interests to provide additional disclosures for IUL illustrations,
    • He said that, in the midst of developing the compromise, the question of how to estimate and illustrate the risk premium emerged as a new issue.
    • He said that issue should be handled separately from the issue of developing a guideline for IUL illustrations.
  • Anthony Ferraro (New York Life) said that one of the goals of the Life Insurance Illustrations Model Regulation (#582) is to make sure that illustrations do not mislead consumers.
    • He said a major aspect of consumer protection is the concept of supportability of illustrations.
    • He said it is important that supportability is included in the proposed guideline.
    • He emphasized that it is important that the accumulated cash flows that the customer sees in the illustration are supportable by the company.
  • seven guidelines provided by Mr. Andersen (Attachment Twenty-Seven)
• 2014 11/14-15 - NAIC - LATF, Life Actuarial Task Force, Conference Call
  • 17. Discussed the ACLI and Coalition Group Proposals for an Actuarial Guideline for IUL Illustrations
  • Mr. Birdsall shared the results of the Kansas Insurance Department survey (Attachment Twenty-Five) on IUL policies
  • (6-62) - Mr. Schirripa asked if information is available that compares the illustrated rates with the rates actually credited.
  • (6-63) - Mr. Birdsall asked if the agent compensation structure for IUL products provide greater incentives for agents than is provided by the compensation structure of traditional universal life (UL) products.
    • Bobby Samuelson (MetLife) said that a compensation study he had previously conducted found that, on average, IUL policies have a target premium 80% higher than the average target premium for UL products.