On February 24, the IUL Illustration (A) Subgroup of the Life Actuarial (A) Task Force approved proposed revisions to Actuarial Guideline 49 (A.G. 49) for exposure and comment. Among other things, A.G. 49, which was adopted by the NAIC in 2015, establishes a uniform methodology for determining the maximum rate of index-based interest that may be used to calculate policy values presented in Indexed Universal Life (IUL) illustrations.
The proposed revisions would clarify the maximum rate(s) of index-based interest permitted in illustrations for IUL policies that offer multiple index account options (the dual account issue). For example, the proposed revisions would clarify the account charges that must be taken into consideration when determining the maximum credited rate of index-based interest for each Benchmark Index Account. The proposed revisions would also provide additional direction for policies that may have account charges with different durations (e.g., a charge that applies only during the first 10 years a policy is in force). Refer to Sutherland’s November 9, 2015 Legal Alert entitled “NAIC IUL Illustration Subgroup Proposes Revisions to Actuarial Guideline 49” for an examination of the dual account issue and Sutherland’s June 10, 2015 Legal Alert entitled “NAIC Close to Adopting Guideline for IUL Illustrations” for an examination of the current requirements of A.G. 49.
The proposed revisions to A.G. 49 generally reflect comments submitted by the American Council of Life Insurers, as well as additional revisions discussed during the February 24 call. The proposed revisions do not address the more controversial issue of the application of A.G. 49 to in-force IUL policies, which will be revisited at a later time.
Comments on the proposed revisions are due by Monday, March 14. The IUL Illustration (A) Subgroup will meet on March 17 and it is anticipated that the Subgroup will adopt the proposed revisions and then submit them to the Life Actuarial (A) Task Force (LATF) and to the Life Insurance and Annuities (A) Committee for approval during the NAIC Spring Meeting.
Sutherland will continue to monitor and report on developments involving A.G. 49.
