![]() On December 4, 2020, anticipating a few days in advance the NAIC’s adoption of the lower interest rate, the Compact invoked a 120-day stay in accepting product filings with a 0.15% guarantee. Most carriers today file their products for approval with the Interstate Compact, so they view the key implementation question to be whether or not the Compact will accept and be able to approve annuity product filings with a 0.15% guarantee. But use of this structure is likely to continue for a while because of the need for state adoption of the NAIC’s change.Īnnouncements from the Interstate Insurance Product Regulatory Commission (i.e., the Compact) If the 0.15% minimum rate language in the SNFL were universally in effect, we would probably see companies no longer using this two value design structure, as it is a bit complex for consumers to understand and for companies to administer. This 1% interest is guaranteed for the life of the contract, and this secondary value assures that the product complies with the SNFL.Ĭarriers provide a guarantee that if the account value less surrender charge and any market value adjustment is less than the nonforfeiture value, then the nonforfeiture value is used as the cash surrender value. It is typically 87.5% of the premium, less any withdrawals, accumulated at 1% interest.
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