1982-2

1982-2

New York reports that they have determined that Section 216 and 208, (a) and (b), and perhaps other sections of their law, prohibit the issuance of universal life type products. Their law is currendy being amended to permit such policies.

1982-2

Bill White, chief actuary, New Jersey, reported on their special project pertaining to universal life. Their commissioner, on June 25, 1982, declared an 81-day moratorium on “Universal-Flexible Factor” type of policies.

His staff was directed to (1) study the matter and issue a position paper on the subject; (2) conduct public hearings on March 10-11; (3) terminate the moratorium April 16 with the publishing of a set of guidelines. Reports and results have been mailed to each insurance department.

Some of the questions New Jersey conveyed included: (1) are these policies participating or non-participating; (2) the “Bait and Switch” potential; (3) disclosure; (4) Federal Income Tax aspects; (5) non-forfeiture values; (6) replacement problems.

 

The concern was not just with the “twisting” replacements, but was the impact of justified replacements on the solvency of replaced companies.

 

1982-2, NAIC Proc