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How Will AG 49A Affect IUL Illustrations?

Starting on November 25, 2020, regulation AG 49A will limit how carriers can illustrate their Indexed Universal Life (IUL) products in an effort to provide more transparency to consumers purchasing this type of life insurance. These changes were made to the original AG 49A regulation that governs IUL products and updated by the National Association of Insurance Commissioners (NAIC).

Before AG 49A, insurance carriers could illustrate certain product features used to enhance interest crediting rates such as indexed multipliers, cap buy-up accounts, and any other type of indexed-linked bonus structures that are funded through policy charges.

Financial professionals are well aware of IUL’s unique advantages – death benefit protection, plus potential cash value growth based on the movement of a stock market index while being subject to a floor and a cap, participation, and/or spread rate.

But not all IUL products are created equally, and neither are their illustrations. Generally, illustrations don’t include the negative effects of a down year. The performance of the cash value account may be dramatically different in down years. While a zero percent floor protects from negative cash value growth due to index performance, policy expenses can result in a negative growth.

However, AG 49A also only applies to the illustration. It does not impact the IUL policy’s actual performance or features. AIP Marketing Alliance has resources available from our multiple, top-rated carriers to assist you in sharing these changes with your downline agents.

If you would like access to these carrier updates, please contact the AIPMA Business Development team at (800) 783-5206 Press #2 or These materials are approved for financial professionals only.

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