AG 49: Have we gone too far in limiting illustrative rates on IULs?

March 24, 2016 by Tom Martin

Recent regulations have addressed “overly optimistic” assumed rates in indexed universal life (IUL) contracts in order to curb “abusive” illustrations. Prior to NAIC AG 49, the maximum illustrative rate was set by the insurance carrier and was normally based on an average look-back of 20 to 30 years. AG 49limits the maximum illustrative rate to the average rate based on stochastic modeling of 25-year holding periods going back to 1950.

While the prior model could be criticized for including mostly bullish periods by going back to the mid 80s or 90s, is it truly realistic to go all the way back to 1950? The fact is, today’s markets are vastly different than they were mid-century. Click HERE to read more…

Originally Posted at LifeHealthpro on March 23, 2016 by Tom Martin.