AG 49 was adopted by the NAIC in 2015 to rein in Indexed Universal Life illustrations which were showing consumers unrealistic returns. The idea behind the regulation was to put carriers on a level playing field by using a standard crediting methodology. A few insurers almost immediately got around the new rules by offering bonus credits and multipliers on their Indexed UL products.

Five years later, AG 49-A, which is scheduled to go into effect on December 14, 2020, was introduced. AG49-A mandates that products with multipliers, high cap accounts or persistency credits are no longer allowed to illustrate a higher performance than products without these options. It is important to note that insurers are not required to eliminate these features; they are, however, limited as to how they can illustrate them. AG49-A also requires that the loan crediting rate on participating loans to be no more than .5% higher than the loan interest rate.

AG 49-A will provide an actuarial formula for each carrier to utilize in order to calculate their new maximum illustrative rate. The formula is based on a non-disclosed benchmark rate as well as a historical look back rate. As carriers interpret and digest the new regulation each will need to determine how to best address them within their own product portfolio. Some carriers will be eliminating enhancement features altogether; others will be keeping the enhancements but adapting their maximum illustrative rate accordingly. Since the formula is complicated and, in part, subject to interpretation, many carriers have still not announced how they plan on complying with AG-49 A.

Your Premier team realizes this is extremely important information for you and your clients and will continue to monitor the carriers as they announce their crediting methodology.

A current list can be found below (click on the carrier name to view their crediting methodology):

Accordia/Global Atlantic
AIG
American General
Equitable
John Hancock
Lincoln Financial  Updated 11-9-2020
Nationwide
Penn Mutual  Updated 11-12-2020
Principal
Protective
Prudential
Securian
Symetra
United of Omaha
Zurich

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