For over a month now, producers and carriers alike have been busy adjusting products and procedures to comply with Actuarial Guideline 49 (AG49), a new rule adopted by the NAIC in mid-June of this year. After literally years of deliberation and input, AG49 implements more “realistic” guidelines for the illustrated crediting rate assumptions used by insurers and producers to market indexed universal life (IUL) contracts. For those that haven’t been following this issue, these new guidelines go into effect as of September 1st, 2015; however, insurance carriers are already rolling out new features and crediting rate assumptions to bring themselves into compliance.
In a nutshell, this new move will require insurance carriers to cap their IUL crediting rate assumptions to approximately 7.4% and below, and also require that carriers be able to maintain established crediting rates for the life of the contract. The new rule also makes an attempt to introduce more realistic loan scenarios by implementing provisions that affect policy loan rates and that place certain restrictions on loan leverages, eliminating situations where a policy offers a lower loan rate while simultaneously illustrating higher assumed crediting rates.
Despite the industry buzz that has been swirling around AG49, many producers are still wondering what the new regulations actually mean for their practices. In an effort to clarify how AG49 will directly affect you and your business, I have included some relevant resources below for you to explore. We welcome any questions and feedback you may have on AG49, and look forward to making the transition as seamless and simple as possible for you.