NAIC begins looking at AG 49 and carriers use of IUL Illustration ‘Multipliers’

The NAIC IUL illustration subgroup has a 2019 charge to "provide recommendations for modifications to AG 49 to the Life Actuarial (A) Task Force”. One topic the subgroup is reviewing are IUL multipliers, which did not exist when AG 49 was adopted.

AG 49, developed in 2015, provides insurance carriers a method for calculating maximum illustrated rates on IUL products and to help consumers better understand index life insurance product illustrations.

AG 49 states that: "If an insurer engages in a hedging program for index-based interest, the assumed earned interest rate underlying the disciplined current scale shall not exceed 145% of the annual net investment earnings rate."

Today some contend that index performance multipliers on Indexed UL products are used to skirt this requirement while others suggest that the feature needs better disclosure and explanation to consumers.

To read more about the recent NAIC IUL illustration subgroup meeting, click here.