Critics, Carriers Weigh in on Fractious Debate Over Indexed Life Illustrations
August 2, 2022 by Aaron Smith
“I believe that a hard cap should be applied, with a range of returns that fluctuate on an outside benchmark, which is a barometer for prevailing interest rates,” said Sheryl Moore, CEO of market research firm Wink, in an email.
Moore and Bobby Samuelson, president of Life Innovators and executive editor of The Life Product Review, and also five life insurers, submitted letters to the indexed universal life illustration subgroup of the National Association of Insurance Commissioners, outlining their thoughts on what should be done.
Moore and Samuelson, in a joint-authored letter, criticized illustration tactics used by life insurers, including using “lookback-based illustrated option profits far in excess of BIA,” or the benchmarked index account.
“The net effect is non-BIA account options that illustrated significantly better than the BIA but, in the real world, will very likely perform worse,” said Moore and Samuelson.