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WHAT'S NEW

Phase 2 of AG 49

Effective March 1st, 2016, carriers will be required to meet the additional "phase two" requirements of the NAIC's Actuarial Guideline 49 meant to further define - and refine - indexed universal life (IUL) illustration practices. Here are the notable details:

  1. Illustrations must show current, alternate, and guaranteed rates with the alternate rate no higher than the fixed interest account rate
  2. On loans – indexed crediting rates can be no more than 1% higher than the loan rate charged for account values backing the loan.

So what does that mean exactly? Let's look at one carrier's example - let's say you want to illustrate an index crediting rate of 7.5%, variable loan rate of 5.5%, and fixed account rate of 4%:

  1. Current assumptions column calculations: Unloaned account values will be credited 7.5%, account values backing loans will be credited 6.5%, and the loan rate will be 5.5%.
  2. Alternate assumptions column calculations: Unloaned account values will be credited 4%, account values backing loans will be credited 4%, and the loan rate will be 5.5%.
  3. Guaranteed assumptions column calculations: Unloaned account values will be credited 3%, account values backing loans will be credited 3%, and the loan rate will be the maximum Variable Rate Loan rate for the product. There are no changes to the Guaranteed assumptions column calculations due to AG49 so this will function as it has in the past.


Call us today to get updated illustrations for your IUL applications. 1-800-991-6695