Universal Life and Related Plans of Life Insurance and Annuities - NAIC

Ill. FUNDED PLANS OF LIFE INSURANCE (UNIVERSAL LIFE) AND ANNUITIES (LATER CHANGED TO UNIVERSAL LIFE AND RELATED PLANS OF LIFE INSURANCE AND ANNUITIES)

A. General Features

  • The Technical Staff Actuarial Group discussed the appropriateness of the name given to this topic on the agenda.
  • Other names considered were: "Universal Life and Indeterminate Premium Plans," or "Adjustable Life Policies."
  • It was decided to use the title "Universal Life and Related Deferred Annuities."
  • Mr. Montgomery suggested that the words, "Plans valued on a retrospective basis," could be added.

1982-1, NAIC Proceedings

3. Universal Life and Related Plans of Life Insurance and Annuities

This is another topic which the Life Insurance (A) Committee assigned to the group on December 17, 1981.

It corresponds to the specific instruction that "A review of special plans with unusual characteristics should be continued."

  • The group feels that this review of special plans would also authorize work on "Other Special Plans," which is listed separately as the next topic heading in this report.
  • The December 1980 version of the model Standard Valuation Law and the Standard Nonforfeiture Law for Life Insurance contemplates that regulations will be issued pertaining to minimum reserves and minimum nonforfeiture values for universal life plans and related plans. Such regulations would be issued by the commissioner of insurance in each state, but it is hoped that there will be considerable uniformity among the different states.

1982-2, NAIC Proceedings

For the time being, the subtopics listed under this topic heading on the agenda for the group's Winter 1982 meeting have been left unchanged. Please see Attachment One-A to this report.

However, at the present time, the group does intend to discontinue any independent effort to develop its own recommendation for a model regulation on universal life insurance policies.

  • The group is still continuing its study of the question of proper minimum reserves and minimum forfeiture benefits for universal life insurance policies, since it has not received any contrary instructions from the Life Insurance (A) Committee up to the present time.
  • In particular, the group has been reviewing the work done by a task force of the American Council of Life Insurance (ACLI). This is the ACLI task force on Valuation and Nonforfeiture Regulation for New Products.
  • William T. Tozer, of Kentucky Central Life Insurance Company, in Lexington, Kentucky, serves as chairman of this ACLI task force. Attachment One-} to this report is a package of material recently distributed by this ACLI task force, and it reflects the current position of the ACLI task force.
  • This material is intended to cover "indexed plans" (where the benefits are guaranteed to be at least as high as those determined from a formula which depends on the subsequent performance of an outside index), as well as the "non-indexed plans'' (where any excess interest is declared entirely at the discretion of the insurance company).
  • Attachment One-J should be construed as preliminary drafts.
  • Attachment One-I to this report is also relevant to this topic, as well as to the topic "Minimum Surplus and Actuarial Opinions Regarding Adequacy of Reserves."
  • It would seem to be advisable for the group to await clarification or further instructions from the Life Insurance (A) Committee before attempting to set a target date for completing work on this topic.
  • It should also be noted that actuarial guidelines may possibly be needed in connection with this topic, even after a model regulation is adopted by the NAIC.

1983-1, NAIC Proceedings

  • Agenda for Meeting of the NAIC Life, A&H Technical Staff Actuarial Group
    • 3. Universal Life and Related Plans of Life Insurance and Annuities Regulation
      • (1) Interest and indexed plans
      • (2) Reserves and nonforfeiture values
      • (3) Surrender charges
      • (4) Reporting requirements
      • (5) Disclosure to policyholders
        • b. Distinguishing features as compared to variable life insurance and variable annuities
        • c. Other matters

1983-1, NAIC Proceedings

  • Prior to adjournment, a subgroup of Jim Jackson and Rick Williams was appointed to come up with a working draft of a definition of "universal life insurance" to be presented for discussion at the next meeting.

1983-2, NAIC Proceedings

  • 1986-1, NAIC Proc. - So policy value would then be completely defined for its use in the Montgomery Method.
    • The Reserve Adjustment Factor (RAF)
  • (EX5) Task Force. The Actuarial Task Force requested that the Universal and Other New Plans (A) Task Force adopt the following six recommendations contained in the report:

1986-2 NAIC Proc.

  • FIRST: 1983-2, NAIC Proc.
  • LAST: 1988-2, NAIC Proc.
  • 1983
    • 1983-2, NAIC Proc.
  • 1984
    • 1984-2, NAIC Proc.
    • 1984-4, NAIC Proc.
      • EXECUTIVE (EX) COMMITTE
  • 1985
    • 1985-1, NAIC Proc. 
      • EXECUTIVE (EX) COMMITTEE
      • TECHNICAL SERVICES (EX5) SUBCOMMITTEE; Life and Health Actuarial (EX5) Task Force
    • 1985-2, NAIC Proc.
    • 1985-4, NAIC Proc.
      • TECHNICAL SERVICES (EX5) SUBCOMMITTEE; Life and Health Actuarial (EX5) Task Force
  • 1986
    • 1986-1, NAIC Proc.
    • 1986-2, NAIC Proc. 
      • TECHNICAL SERVICES (EX5) SUBCOMMITTEE; LIFE AND HEALTH ACTUARIAL (EX5) TASK FORCE
    • 1986-4, NAIC Proc.
      • TECHNICAL SERVICES (EX5) SUBCOMMITTEE; Life and Health Actuarial (EX5) Task Force
  • 1987
    • 1987-2, NAIC Proc.
    • 1987-4, NAIC Proc.
  • 1988
    • 1988-1, NAIC Proc.
    • 1988-2, NAIC Proc.