VL - Variable Life Insurance
- As you know, VAs have been around since the 1950s, and variable life insurance has been written since 1975 when the Equitable wrote the first policy.
-- John T. Adney, a founding partner of the law firm of Davis & Harman LLP in Washington, DC
2000 - SOA - Separate Account Products in the U.S. and Canada: Comparing Their Design, Regulation, and Taxation, Society of Actuaries - 28p
- 1984 - SOA - Variable Universal Life, Society of Actuaries - 22p
- The first area is state regulation. As you probably know, there was an NAIC model regulation adopted in December of 1982.
- Don Paquette will talk about the special problems with administering variable products.
- Steve Roth is a partner at Sutherland, Asbill & Brennen... He specializes in corporate and SEC areas, and he is an expert on the SEC regulation of insurance products and insurance companies. Steve is deeply involved in VLI (Variable Life Insurance) and instrumental in the development and submission of the industry proposals to the SEC
regarding the marketing of flexible premium VLI. - Stuart Grodanz - Travelers... involved with pricing, implementation, and developing actuarial factors.
- In the United Kingdom variable life assurance is known as "unit-linked" life assurance or merely "linked" life assurance.
- Its development was untidy and is not well documented, but over a period of about fifteen years it has grown from being an oddity to being a significant proportion (3.5 per cent) of the new-business premiums in the life assurance market).1
-- Sidney Benjamin, not a member of the Society, is a Fellow of the Institute of Actuaries
and partner in the consulting actuarial firm of Bacon and Woodrow in London
1974 - SOA - Digest of Discussion at Concurrent Session, Society of Actuaries - 150p
- 1971 03 - Variable Life Insurance: Current Issues and Developments, Proceedings of the National Conference on Variable Life Insurance, Philadelphia, Pennsylvania
- 2001 - Book - A Vocabulary of Variable Insurance Products, by Joan E. Boros & W. Randolph Thompson813 PLI/Comm 11, 35-36
- (7) The Variable Life Insurance and Variable Annuities (C4) Subcommittee has been in the process of drafting a model regulation covering variable life insurance.
1974-1, NAIC Proceedings
Commentary To Variable Life Insurance Model Regulation - Article II - Definitions
- 1976 - SOA - Current Individual Life Insurance Topics, Society of Actuaries - 18p
- 1983 - SOA - Flexible Premium Variable Life, Society of Actuaries - 20p
- 1984 - SOA - Variable Universal Life, Society of Actuaries - 22p
- 1985 - SOA - Variable Life Insurance in Canada and the United States, Society of Actuaries - 24p
- 1985 - SOA - Variable Universal Life Insurance, Society of Actuaries - 22p
- 1999 10 - AAA - Report of the American Academy of Actuaries Variable Life Reserving Guideline Work Group To the NAIC’s Life and Health Actuarial Task Force - 12p
- 2003 - SOA - Variable Life—Product and Distribution Issues, Society of Actuaries - [LIRP] - 28p
- 1971 - LR - Variable Annuities, Variable Insurance and Separate Accounts, Tamar Frankel - 227p
- 1975 - AP (ARIA) - Variable Life Insurance Product Design, Walter Miller - 17p
- 1975 - AP (ARIA) - Some Observations on Variable Life Insurance Product Design, Arthur L. Blakeslee, III
- 1973 - SEC - Variable Life Insurance and The Petition for the Issuance and Amendment of Exemptive Rules - [205p-GooglePlay]
- 1982 - NAIC adopted a new model variable life insurance regulation in December 1982
- Variable Products Advisory Committee
- 1983 - LR - Mason & Roth, “SEC Regulation of Life Insurance Products -- On the Brink of the Universal.” 15 Conn. L. Rev. 505, 551 n.186
- Before discussing the most current developments in Variable Life Insurance (VLI), I'd like to give a brief background to set those developments in perspective.
- After extensive hearings in 1972, the SEC issued Rule 3c-4 in January, 1973, which subjected VLI to the 1933 and 1934 Acts, and exempted VLI from the 1940 Act, subject to the states adopting regulations that would provide for protections substantially equivalent to the relevant protections of the 1940 Act.
- Under the rule, VLI was limited to products under which the insurance element was predominant.
- The NAIC adopted a Model VLI Regulation in December, 1973, that was responsive to Rule 3c-4.
- During that same year individual companies filed with the SEC Registration Statements (including prospectuses for their VLI products).
- Rule 3c-4 started to become undone when the so-called "Mutual Fund Group" contested the Rule late in 1973, and, after a series of interim positions, the SEC withdrew Rule 3c-4 in early 1975.
- The SEC indicated at that time its intention to propose a general rule exempting VLI from certain sections of the 1940 Act that were inappropriate for a life insurance policy.
- During the period 1973 to 1975, no companies had their Registration Statements declared effective by the SEC, and, thus, no companies were marketing VLI in the general market.
-- Jerome S. Golden, Monarch Life
1976 - SOA - Current Individual Life Insurance Topics, Society of Actuaries - 18p
- For a good summary of the development of the NAIC Model Variable Life Regulation, Rule 6e-2 and the state and federal issues associated with variable life insurance, I would refer you to a Connecticut Law Review article written by Paul Mason and Steve Roth of the Washington law firm of Sutherland, Asbill & Brennan.
- That article, entitled "SEC Regulation of Life Insurance Products - On the Brink of the Universal," appeared in Volume 15, No. 3, the Spring 1983 issue - <WishLists>
-- William A. Stoltzmann
1985 - SOA - Variable Universal Life Insurance, Society of Actuaries - 22p
- Maybe we can jiggle a bit with our cost of insurance rates.
-- MichaeI R. Tuohy, [Bonk: Tillinghast]
1985 - SOA - Variable Life Insurance in Canada and the United States, Society of Actuaries - 24p
- When the product was launched, SEC ruled that one was allowed to illustrate a variable life product assuming a growth rate of only 8 percent in the underlying funds.
- The resulting cash values were not much better than the old participating product.
- When Monarch Life filed their prospectus, they managed to persuade the SEC that 8 percent was out of date and that 12 percent should be used.
- Everybody used 12 percent, and the resulting variable product values were much better than those under the traditional participating product.
-- Michael R. Tuohy, [Bonk: Tillinghast]
1985 - SOA - Variable Universal Life Insurance, Society of Actuaries - 22p
- 1996 0602 - NAIC - Variable Life Illustrations Subgroup of the Life Disclosure (A) Working Group - New York, New York June 2, 1996
- Mr. Morse reported that under the current rules, a personalized illustration may be prepared using 0% and 12%.
- The 12% includes the current morality and expenses and the 0% illustration uses the maximum mortality and expenses allowed in the contract.
- Mr. Morse opined that this approach does not do consumers the best service. He saw two problems with this approach:
- (1) it does not do a good job of showing a consumer what the risks and results might be. The risks in a variable life product include:
- investment risks, a risk that the cost of insurance charges may go up, and a risk that the mortality costs may go up as time passes;
- (2) not all purchasers invest in an aggressive stock investment option.
- If 50% of the investment goes into treasury bills and 50% in stocks, the return shown should be 8% or 9% rather than 12%.
- (1) it does not do a good job of showing a consumer what the risks and results might be. The risks in a variable life product include:
- James Hunt (Consumer Federation of America) said that the illustrations of variable life that he had seen had been relatively cleaner than those illustrations of nonvariable life.
- He was unaware of the reason why the SEC chose 12%, because the highest average return he had seen for historical returns on stock funds was approximately 10%.
- Mr. Morse reported that under the current rules, a personalized illustration may be prepared using 0% and 12%.
