IUL - Indexed Universal Life

  • Fixed Indexed Universal Life
  • The ACLI’s Dolan says:
    • “Owners of this product must be aware of exactly how it works, because, unlike certain other types of life insurance, IULs have a fluctuating component to them.”

2020 0923 - Forbes - Sounding The Alarm On Indexed Universal Life Insurance - [link]

  • 2018 - SOA - Why Indexed Universal Life (IUL) Income Streams Need To Be Managed: Part 1, Society of Actuaries - 5p
  • 2019 - SOA - Why Indexed Universal Life Income Streams Need to Be Managed: Part 2, Society of Actuaries - 4p
  • 2020 - SOA - Issues with IUL Illustration Regulation and Possible Solutions, Society of Actuaries - 38p
  • From 2010 to 2014, IUL sales have increased 148% to over $2 Billion in annualized premiums.
  • IUL is 54% of all universal life premiums sold through 3Q 2015.

2016 0209 - CEFLI - HOT TOPICS Affecting Life Insurers - 78p

  • (p54) - The Report then describes the rapid growth of indexed universal life (IUL) insurance, which now accounts for approximately 20 percent of all individual life insurance premiums in the United States.
    • The distinguishing feature of IUL is that growth in the value of the policy is linked to the performance of an external market index such as the S&P 500.
  • IUL products are typically sold with illustrations of guaranteed an non-guaranteed values under different market scenarios.
    • State insurance regulators have developed Actuarial Guideline 49 to provide guidance in determining index-based crediting rates for IUL policy recommendations.
  • FIO encourages life insurers and the states to continue working cooperatively, and promptly, to adopt and implement a uniform framework for appropriate IUL illustrations.
  • Finally, the Report notes that IUL policies are not subject to suitability standards at either the federal or state level, and recommends that state insurance regulators consider whether uniform, national consumer protection standards should be adopted for IUL.
  • (p54) - Also, the target market for IUL consists of pre-retirees and retirees, many of whom would benefit from the protection provided by appropriate suitability standards.
    • Therefore, FIO recommends that state insurance regulators consider whether uniform, national consumer protection standards should be adopted for IUL.

2015 - FIO - Annual Report on the Insurance Industry, Federal Insurance Office - 105p

  • 24. Discussed Inconsistencies in Index-linked Universal Life Policy Illustrations
    • John Bruins (ACLI) discussed the inconsistencies, across a number of companies, in the illustration of index-linked universal life policies.
      • He said they would like the Task Force to consider an actuarial guideline or a change to a model regulation to address the matter.
    • Mr. Serbinowski suggested that the Task Force determine what type of change might be appropriate, prior to determining whether to address it through a guideline or a change to a model regulation.
    • Mr. Boerner said a conference call will be scheduled to gather information and decide on a direction.

2013- , NAIC Proceedings - NAIC Keyword: Index-Linked v IUL vs Indexed Universal Life

  • 1. Discussed Guidelines for Illustrations of Indexed Universal Life Policies
    • John Bruins (American Council of Life Insurers – ACLI) said there are a wide range of practices in the area of policy illustrations, particularly for indexed universal life (UL) policies.
      • He said the Life Insurance Illustrations Model Regulation (#582) is written generally and in many areas looks to the actuarial standard of practice to provide guidance for the illustration actuary and the unique interest crediting method for indexed UL policies at times leaves the actuary to interpret what needs to be done.
      • Mr. Bruins said that the ACLI’s first step to attempt to address this issue was to request that the Actuarial Standards Board revise the standard of practice.
      • He said it later became clear that a revised standard would not accomplish the national uniformity the industry is seeking.
        • He now thinks that an actuarial guideline may be a more appropriate means of addressing the issue.
      • Mr. Bruins pointed out that there is precedence.
        • An existing actuarial guideline provides guidance on variable policy illustrations.
      • The specific changes proposed by the ACLI will use investment rates from the most recent contiguous 25 year period to determine interest rates to be used in illustrations of indexed UL policies.
      • Additionally, a table that demonstrates how the crediting strategy for the product would work during different parts of the economic cycle should also be generated.
    • Tom Doruska (Global Atlantic Financial Group), representing the ACLI Indexed Universal Life Task Force, said while there are some details to be addressed, using the contiguous 25 year period does provide the desired consistency for illustrations.

2014 0116 - NAIC Life Actuarial (A) Task Force - Conference Call 

  • 2020 0923 - Forbes - Sounding The Alarm On Indexed Universal Life Insurance - [link]
    • And more than 20% of all new premiums written in 2019 were IUL policies, LIMRA said.
    • There are now at least 52 insurers selling indexed universal life insurance, says Barry Flagg, president of Veralytic, a life insurance products rating service.
      • Pacific Life is the biggest and holds about 19% of the market.
    • But critics say indexed universal life insurance is being sold dishonestly. “
      • They are complex products sold with false promises and deceptive marketing,” says Birny Birnbaum, director of the nonprofit Center for Economic Justice. “Stay away from them.”
    • The American Council of Life Insurers (ACLI), which represents 280 companies in the insurance industry, admits that IUL is not for everyone.
      • “But indexed universal life would not be increasing in popularity if millions of long-term planners and families were not finding the cost of owning the product to be a good value,” says ACLI spokesperson Jack Dolan.
    • Indexed universal life insurance is in the same class with other permanent life insurance  policies, such as whole life insurance.
      • This means that it won’t expire—the way term life will—provided the premiums you’re paying in and policy account values are enough to keep the policy in force.
    • The ACLI’s Dolan says the size of the premium depends on the returns on the options in the policy.
      • “The fact is, in a different (and better) economic environment, less in premiums would be paid than originally planned,” he notes. “Owners of this product must be aware of exactly how it works, because, unlike certain other types of life insurance, IULs have a fluctuating component to them.”
    • Fees Can Drain the Policy