Proposed IUL Rules Address ‘Guardrail’

By Arthur D. Postal
InsuranceNewsNet

WASHINGTON – The so-called “guardrail” that limits the expected yield that can be illustrated for index universal life (IUL) insurance prospects is among the factors that will be affected by proposed new rules governing IUL illustrations.

New rules governing the illustrations to be used in selling (IUL) products took another step closer to implementation Thursday when the National Association of Insurance Commissioners’ Life Actuarial (A) Task Force (LATF) approved compromise language on the proposal.

The final steps include passage by the NAIC Life Insurance (A) Committee.

It is likely that the proposal will begin phase-in on Sept. 1 and will be completed March 1, 2016

Under the proposed phase-in, provisions dealing with currently payable scale methodology, as well as the so-called “guardrail” that limits the expected yield that can be illustrated for IUL prospects, will go into effect Sept. 1.

The proposed rules would allow agents to show prospects a document that supported crediting rates in the 6 to 7 percent range, although so-called “guardrails” mandated by the proposal could limit actual likely yields to as low as 4.5 percent. The proposal also puts limits on loan leveraging.

Provisions detailing information on policy loans and establishing additional standards will go into effect for all new illustrations on policies sold on or after March 1, 2016.

The final deal was hammered out in March between the regulators, the American Council of Life Insurers (ACLI) and representatives of MetLife, Pacific Life, Allianz and New York Life.

InsuranceNewsNet Washington Bureau Chief Arthur D. Postal has covered regulatory and legislative issues for more than 30 years. He can be reached at .

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