Advisor Tells Regulators That Life Illustrations Are Just Too Simple
March 28, 2023 by Allison Bell
The current illustrations for all kinds of universal life insurance policies are just too simple, and they fail to convey how much all kinds of changes could affect policy performance, a life insurance veteran told insurance regulators Tuesday.
Richard Weber, the principal at The Ethical Edge, a life insurance advisory firm in Pleasant Hill, California, made the case for updating permanent life policy illustration standards in a presentation to the National Association of Insurance Commissioners’ NAIC/Consumer Liaison Committee.
Click HERE to read the full story via ThinkAdvisor
Wink’s Moore on the Market: I about had a coronary when I read the title on this one.
WHO THE HECK THINKS LIFE ILLUSTRATIONS ARE SIMPLE?!?
They are anything BUT.
Given that, Richard Weber and I recently had a discussion that revealed we are both in agreement on so many issues in this industry.
For starters, we both feel that the National Association of Insurance Commissioners (NAIC) needs to re-open reg #582, the Life Insurance Illustration Model Regulation.
We are also on the same page when it comes to the belief that ” illustrations often imply that policy factors that can change, such as interest crediting rates, expense fees and the limits on the percentage of index or investment gains flowing into the crediting rate, are fixed.”
SN: They’re not. Non-guaranteed elements of life insurance and annuities, can and do, change.
Honestly, I’m still not sure what I think about using “statistical modeling tools and talk more in terms of the probability” for life insurance products though.
So, let’s get ugly.
What do YOU think is the best way to handle illustrations on a product where the excess interest is an unknown? Where the insurance charges, loan rates, divdend scales, and credited interest can change…what do you think?
Thanks to Allison Bell at ThinkAdvisor for the discussion fodder. -sjm
