In-Force Illustrations

4/15/15
Letter to LATF		 Lessing, Brian [mailto:Brian.
Lessing
@axa.us.com] 		However, we believe that all sections of the guideline should apply to all inforce life insurance illustrations after some effective date, regardless of when the policies were sold, since if the new limitations on the illustrated crediting rate are appropriate for new business, similar reasoning implies that they should also be appropriate for all inforce policies.
“I’d like to take that one step further. What I noticed was there is a requirement for in-force illustrations, and people may have thought they bought one thing and whenever you have to give them an in-force illustration with a current disciplined scale, they’re going to realize they bought something else. I think many companies will have serious problems with policyholder retention.”   MR. MARK J. GREENE |
1995, Society of Actuaries, PRACTICAL ILLUSTRATIONS AND NONFORFEITURE VALUES “There should be a lot more focus on the need for in-force illustrations. The policies
that we selltoday have so many moving parts and require frequent monitoring on an
ongoing basis to make sure that the program is remaining viable, that enough
premium is going into these policies to sustain them, and that the death benefits or
cash values are structured the way that the policyholder expects them to build. So, I
think there’s going to be a lot more focus on in-force illustrations in the future.” JUDY FAUCETT
1993, SOA, Sales Illustrations – We Can’t Life with Them, But We Can’t Life Without Them!

Illustrations as Roadmaps

The Larry Gorski Amendment that was adopted says in-force illustrations cannot be less favorable than sales illustrations or the actuary would have to disclose that; the idea is that buyers would be able to find out that a company was utilizing a bait-and-switch strategy in its illustrations.

1996 – Update on Life Insurance Illustrations, Society of Actuaries

“Finally, we need to provide the agent the capability to do in-force illustrations. That

way we can keep policyholders up to date, we can provide fair comparison when the

policyholder is trying to decide whether to buy a new policy, and enable the agent to

provide follow-up service to clients. This is an expensive service as we’ve all seen

with in-force illustrations, but it is necessary if you want happy customers.”

1993, SOA, Sales Illustrations – We Can’t Life with Them, But We Can’t Life Without Them!