Earlier this year, the National Association of Insurance Commissioners (NAIC) adopted uniform standards for Indexed Universal Life (IUL) policy illustrations. The intention was to provide “more realistic” guidelines for the illustrations that can be used to market IUL policies to prospective customers.
The new actuarial guideline establishes a uniform methodology that must be followed in determining the maximum annual rate of index-based interest that can be used to calculate policy values in IUL illustrations, based on the historical performance of the S&P 500 Index.
It also limits the maximum spread between the interest rates that may be credited and charged for policy loans to ensure that illustrations do not overstate the effect of any interest rate arbitrage that may be achieved, and requires disclosure of additional information intended to make consumers more aware of the potential variability of interest rates that may be credited under IUL policies. This blog was originally published on LifeHealthPro.
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