Get Ready for AG 49-B!

By David Baldwin, Watermark Life Dir. of Internal Sales

Regardless of the name, know that AG 49-B is coming and with that, new restrictions and mandates on Index Universal Life products.

The NAIC Life Actuarial Task Force (LAFT) has been meeting to address new concerns on Index Universal Life products (IUL) that have risen since AG 49-A became effective on or after Dec. 14, 2020. These specific concerns are Volatility Controlled Funds, Proprietary Indices, Illustrated Guaranteed and Non-Guaranteed participation rates and fixed interest bonuses. Personally, I do not think they will have the desired change the NAIC is trying to accomplish.

What they are doing is creating immediate demand for current IUL policies because of the possible higher performance products, and regardless of whatever change is made, know that anything purchased now will more than likely be grandfathered in, giving agents the reason to sell them now. For those who do not know, carriers are using proprietary indices with a hypothetical historical lookback, which is generating higher returns and lower option costs. In other terms, they are potentially misleading clients with the possible returns on the products themselves.

What LAFT has taken out of the conversation is the writing agent. Most agents are educated enough to understand the product,  the performance and explain the highs and lows to the insureds/clients along with the risk and possible rewards. Ultimately, carriers are trying to increase profit margins without continuing to raise insurance costs, driving consumers to products that aren’t permanent (term insurance).

I personally want and need carriers to be inventive to create and design new products that could help the insureds/clients. If they don’t, we will have products that are 30 and 40 years old that really aren't progressing with the world. What needs to happen is more disclosures and more carrier product training, along with limitations of illustrated performance regardless of the indices, participation rate or performance methods they use.

So now you know what’s coming and why … But what should you do?

Let Watermark help you get clients into the right IUL products now, before things change. We illustrate at conservative rates and choose products that we believe will perform over time. Now is the time to be looking at IUL policies for permanent insurance needs, talking about with your Watermark reps and selling it.

If you want to know more,  please reach out to your marketer or anyone here at Watermark Life.