AG49-A

[Allen Trent]

It has already begun from what I read last month. In particular against a large producing California agency & possibly Pac.

Just like any such case, the net gets casted wider to bring in more carriers & more state AGs that impact even the carriers that were not participating in the tactic.

Can You File an IUL Lawsuit for False Marketing? | Top Class Actions

The Life Product Review – Independent and Objective Life Product Intelligence

 

[ATM]

It has already begun from what I read last month. In particular against a large producing California agency & possibly Pac.

Just like any such case, the net gets casted wider to bring in more carriers & more state AGs that impact even the carriers that were not participating in the tactic.

Can You File an IUL Lawsuit for False Marketing? | Top Class Actions

The Life Product Review – Independent and Objective Life Product Intelligence

IMO agents should not do business with these carriers because they are bad for the industry and ultimately bad for their own businesses. I know hundreds if not thousands of agents in the business and unfortunately, as I told my wife, there are very few I would recommend to her to deal with if I get run over by a garbage truck.

I actually have a list of five that I update occasionally for her, just in case. Also have investment advisors names too.

 

[Jason T Brown]

Whoa...let's pump the brakes a little bit. Some of this IS subjective, too. For example, it depends on what IUL products agents have been selling, HOW they've been illustrating them AND if they're even using enhancers or multipliers etc. Just saying. Furthermore, it is critical for everyone to remember that AG49-A still does not change the actual products, just rules for illustrations going forward etc. This is the 3rd variation of changes, too. Fortunately for agents I've been coaching and training for years haven't even been illustrating or selling multipliers, so we've avoid that specific issue entirely. Hopefully I'm not the only one that saw though this crap from day 1 and didn't take the bait! LOL Just wanted to throw in my 2 cents. Lastly, perhaps some carriers do deserve to get a good slap in the face for the crap they've allowed. I won't name names, but I'm not against that for a hand full of carriers that are the worst offenders. I refuse to work with those companies anyway!

 

[ATM]

Whoa...let's pump the brakes a little bit. Some of this IS subjective, too. For example, it depends on what IUL products agents have been selling, HOW they've been illustrating them AND if they're even using enhancers or multipliers etc. Just saying. Furthermore, it is critical for everyone to remember that AG49-A still does not change the actual products, just rules for illustrations going forward etc. This is the 3rd variation of changes, too. Fortunately for agents I've been coaching and training for years haven't even been illustrating or selling multipliers, so we've avoid that specific issue entirely. Hopefully I'm not the only one that saw though this crap from day 1 and didn't take the bait! LOL Just wanted to throw in my 2 cents. Lastly, perhaps some carriers do deserve to get a good slap in the face for the crap they've allowed. I won't name names, but I'm not against that for a hand full of carriers that are the worst offenders. I refuse to work with those companies anyway!

You aren't the only one but you and I both know that a large portion of agent did sell the multipliers AND we know exactly why companies designed the products - to get around the limitations of the original illustration regulations.

What they designed is criminal IMO. It's deceptive advertising and in the world of financial services that's especially bad and tarnishes the entire industry. The should be shunned like they have the Rona!

 

[Allen Trent]

Whoa...let's pump the brakes a little bit. Some of this IS subjective, too. For example, it depends on what IUL products agents have been selling, HOW they've been illustrating them AND if they're even using enhancers or multipliers etc. Just saying. Furthermore, it is critical for everyone to remember that AG49-A still does not change the actual products, just rules for illustrations going forward etc. This is the 3rd variation of changes, too. Fortunately for agents I've been coaching and training for years haven't even been illustrating or selling multipliers, so we've avoid that specific issue entirely. Hopefully I'm not the only one that saw though this crap from day 1 and didn't take the bait! LOL Just wanted to throw in my 2 cents. Lastly, perhaps some carriers do deserve to get a good slap in the face for the crap they've allowed. I won't name names, but I'm not against that for a hand full of carriers that are the worst offenders. I refuse to work with those companies anyway!

Agree in theory & philosophically. But once the legal cases & possible attention from AGs that need budget money start, they tend to impact everyone. Look at the FIA. Sure, the abusive carriers & agents were the target, but it impacted 100% of all carriers & agents across all annuity products even when they were not in the marketplace of those abusive products. regulatory costs, more staff, way longer applications. ironically, the most abusive carriers in the FIA 2 tiered Annuities came out OK after renaming products, sometimes renaming the carrier name, etc.

 

[CrustyVet]

That pretty much sums it up from what I can tell and have heard.

Participating Loan arbitrage will be limited to 0.5%. Imo, that is the most questionable part of it all, as I did not think 1% was a large amount. But I get it.

The multipliers that come with large internal loads were the main driver. Really any strategy that is increasing internal fees. The high cap/fee indexing strategies will be limited from max illustrated rates.

I agree that it has become an issue. Its almost like a race to the highest multiplier. If we replicate the last decade, then most of them will work out well. (assuming the policy is funded correctly) But if we replicate the decade before that, polices will get slaughtered.

All multipliers do is transfer more risk onto the client. And most clients do not fully comprehend the potential ramifications of that increased risk.

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I would like to see the industry take a more comprehensive approach to illustrated rates.

Any agent who truly understand the real risk of IUL knows its not index performance. Its carrier renewal rates. The carriers know this as well, and lobby to keep it out of illustrations.

I would like to see the calculation use a Cap dictated by a 10 or 20 year rolling average of renewal rate decreases. They could use a % based reduction of the current Caps using the average reduction across that product line.

For example: if a carriers renewal rates averaged out to be 20% lower than the first year rate, the current cap must be lowered by 20% to find the max illustrated rate.

They should also do something to show the effect of internal expenses. Such as including a 10 or 20 year rolling average for expense increases.

At minimum, make a separate section of the illustration showing these things.

Showing a constant rate is also an issue. The Indexed Annuity Industry has evolved away from illustrating a constant rate, instead they are showing past 10 or 20 year scenarios. Along with Lowest and Highest 10 year scenarios over a 40 year period. Its not perfect, but its certainly a more realistic representation of how it will look over a stretch of time. There is no reason in the world the IUL industry cant do something similar.... other than the fact it will kill off the boom in IUL sales....

Great comments... We know renewal rates have dropped across the board for all carriers due to market conditions, but is there a place one could find renewal rate histories by carrier?
Also, the constant rate thing needs to happen. It would certainly make illustrations more realistic, but also more credible. That increase in credibility should offset some of the drop off...maybe