Yield Index

  • Yield Index Advisory Committee - NAIC
  • 1989 - SOA - What Will Be The Life Insurance Products Of The Future, Society of Actuaries - 18p
  •  1987 - SOA - Regulatory Update, Society of Actuaries - 26p
    • The NAIC Yield Index Advisory Committee was started in the middle of 1984 at the behest of the regulatory community; notable among them is John Montgomery (California)
    • The main thing that triggered their interest in having such an advisory committee formed was what our committee came to call the big red 12% ad.
    • We have all seen lots of them.
      • "Buy the new Extravagance Plus policy with the Miller life --12%."
      • And if there is any other text in the ad it is probably not much and certainly little, if any, of the conditions that pertain to the base on which the 12% is credited. The regulatory community started to become concerned about that advertising then.
    • That concern continues because you still see a lot of the ads.
  • 3. Make Recommendations on Optional Form of the Life Insurance Disclosure Model Regulation with Yield Index
  • Mr. Foley explained that the concept of a yield index was very popular in the 1970s and early 1980s.
    • At that time the NAIC adopted a model regulation with an Optional Form of the Life Insurance Disclosure Model Regulation with Yield Index.
    • California was the only state that adopted the Yield Index and Mr. Summers noted that it has since been repealed.
    • Mr. Foley noted that when the Life Insurance Disclosure Model Regulation was revised at the Summer National Meeting all references to indices were deleted.
    • Mr. Batte moved, and Mr. Hartnedy seconded a motion to delete the Optional Form of Life Insurance Disclosure Model Regulation with Yield Index from the list of official NAIC model laws. The motion passed.

2000-3, NAIC Proceedings

  • 1984-2, NAIC Proceedings

    • 2. Adopted charges of advisory committee which include development of yield index (first priority) and study of test limits in the NAIC Model Life Insurance Disclosure Regulation.

  • 1988-1, NAIC Proceedings
    • Project No. 7a "Disclosure of Interest Yield Index:"
      • Questions had previously been raised as to whether the product rankings would be similar under the interest-adjusted index and the yield index for interest sensitive life insurance products, such as universal life plans.
  • 1991-2A, NAIC Proceedings
    • 5. Ratification of Amendments to the Optional Form of the Life Insurance Disclosure Model Regulation with Yield Index. Mr. Strauss explained that when the Life Insurance Disclosure Mode] Regulation amendments were adopted in December 1990, identical amendments should have been made to the Optional Form of the Life Insurance Disclosure Model Regulation With Yield Index. Upon motion duly made and seconded, the committee directed that the December 1990 amendments be made to the Optional Form of the Disclosure Regulation and directed that any future amendments to either model regulation be automatically made in the other model regulation unless there was specific wording to the contrary (Attachment Five-A).
  • 2000-3, NAIC Proceedings
    • Mr. Batte moved, and Mr. Hartnedy seconded a motion to delete the Optional Form of Life Insurance Disclosure Model Regulation with Yield Index from the list of official NAIC model laws. The motion passed.
  • John MacBain: I think the rationalization we're seeing in pricing is motivated by a lot of things.
    • But it's amazing how rational industry became when regulators started concentrating on solvency, and after the federal government started concentrating on our industry, after what happened to the savings and loans.
    • I think that has pushed us into more "rational behavior."
    • And I, for one, am pleased because it's brought the actuary much more into focus than a few years ago.
    • But I'm a little concerned that, if interest rates turn around and investment gains start to accrue, perhaps we will become less rational.
    • I'm glad to see that illustrations are becoming rational, although I'm not sure that what California did is rational, in terms of requiring this yield index, which absolutely nobody on the consumer side is going to understand.
    • But I'd be interested in getting a feel for whether the panel feels that, when the economy turns around and investment gains are more amendable, whether the pricing will continue to be as "rational"?

1994 - SOA - The Driving Forces Behind Participating - Universal Life (UL) - Nonguaranteed Element Product Development, Society of Actuaries - 12p