AG49-A Updates
In mid-June of 2015, the NAIC adopted Actuarial Guideline 49, officially titled “The Application of the Life Illustrations Model Regulation to Policies with Index-Based Interest.” AG 49 was developed to bring uniformity to the illustrations of policies tied to an external index or indices by providing a reasonable cap on the illustrated credited rate. Uniformity across illustrations helps clients to more easily compare the policies of different companies.
There are three primary goals of the AG49:
- Providing guidance in determining a maximum illustrated index credited rate and an earned interest rate for the Disciplined Current Scale (DCS),
- Limiting the amount of policy loan leverage for so-called indexed (or “participating”) loans, and
- Requiring additional disclosures not required in non-indexed UL illustrations.
AG49 represented a significant new event in illustrations of the industry’s fastest-growing product, but over time as innovation occurred, the original needed to expand to incorporate the new features available within these products. An updated Guideline AG49-A was finalized on August 14, 2020.
What does this mean for you?
- The insurance companies may need to adjust their illustrations to comply with AG49-A for any IUL products sold on, or after, December 14, 2020
- If you are managing existing IUL policies for your clients, in-force illustrations will remain the same
- Variable Universal Life policies – even with indexed accounts – are not affected by AG49 or AG49-A
