AG 38 and how it affects you and your clients

The National Association of Insurance Commissioners (NAIC) approved changes to actuarial guideline 38 (AG 38) requiring life insurance carriers to hold more reserves for products that contain a “secondary guarantee” or long term death benefit guarantee.  These changes were adopted September 12, 2012 and will go into effect for new products dated on or after January 1, 2013. This change will not affect policies of this nature that are already in force before this date.

Changes ahead for most carriers

From what we are seeing, premium rates for most of the various carriers offering Universal Life products that contain long term guarantees will increase. Most carriers are busy making these changes now and others will delay somewhat and make the needed changes soon after the first of the year. We doubt that many companies will escape having to make rate increase adjustments due to these new requirements and the continued low interest rate environment.

The perfect time to secure & save

As always, rate increases don’t come as great news. But it does offer you and your clients the opportunity of securing the lower GUL pricing while available. We encourage you to take this opportunity to review your own needs and those of your clients today. We view this as not so much of a fire sale but as a prompt to act on something that may be needed anyway.

We encourage you to contact us and/or your dedicated Designs in Life marketing manager if you have further questions on AG 38. All of us at Designs in Life are here to help!