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As of 03/24/2023

Upcoming Illustration Changes for Indexed UL Products (AG49-A update)

Minor revisions to Actuarial Guideline 49-A (AG49-A) were adopted by the National Association of Insurance Commissioners (NAIC) to update the existing AG49-A guideline that is applicable to all Indexed UL products. The changes will be effective on Monday May 1st, 2023. The updates will only impact illustrations for policies sold on or after 5/1/2023.

What is it?

The main points to know about the AG49-A updates are:

Intent of Regulators – Illustrations of volatility-controlled indices (VCIs) plus any fixed bonus should not illustrate more favorably than a traditional capped S&P 500 indexed account.

What's changing – There will be an additional component used to determine maximum illustrated rates for each individual account within IUL products. A ratio will be calculated between the historical lookback rate and hedge budget for the benchmark indexed account that will be applied to all accounts offered within a product. This additional component will be used in conjunction with the existing methodology to determine the maximum illustrated rate for each of the indexed accounts within the product.

What does this mean for you?

Illustration impacts – It is likely that these updates will mainly impact VCI accounts where the maximum rates will be reduced to not illustrate better than S&P Accounts within the product. While the updates were focused on bringing VCI accounts with fixed bonuses illustratively in line with S&P accounts, there is no change to the treatment of fixed bonuses. They remain additive to the maximum indexed illustrated rate. In some cases these changes will result in VCI accounts illustrating at lower maximum rates than the S&P accounts.

Policyholder impacts – The updated requirements are prospective only, therefore they will not apply to any new business or future in-force illustrations for any policies that meet the transition rules. The updates will only impact illustrations for policies sold on or after 5/1/2023. AG49-A does not specify what date should be considered as the policy’s “sold” date. It is up to each individual carrier to determine what date is considered “sold” for a new policy. This may lead to different methodologies for determining the “sold” date across carriers as it did with prior AG49 transitions.

How do you do business with Lincoln?

The changes will be effective on Monday May 1st, 2023.

Formal applications or tickets (with all solicitation forms) that are signed, dated and received by Lincoln’s home office in-good-order on or before April 30, 2023 will not be subject to the illustration guideline changes. Any IUL application/ticket received after April 30, 2023 will be subject to the new AG49-A illustration guideline changes.

For the following products, Lincoln DesignItSM will automatically update the maximum illustrated rates based on the illustration run date. Illustrations run prior to 5/1/23 will display the current maximum illustrated rates, while illustrations run on 5/1/23 or after will reflect the new maximum illustrated rates based on the AG49-A updates.

  • Lincoln WealthPreserve® 2 IUL (2020) – 2/13/23
  • Lincoln WealthPreserve® 2 SIUL (2022) – 2/13/23
  • Lincoln WealthAccelerate® IUL

Lincoln WealthAccumulate® 2 IUL (2020) 04/17/23 which is launching on April 17, 2023 will only reflect maximum illustrated rates that comply with the AG49-A updates.

Lincoln WealthAccumulate® 2 (IUL (2020) 05/10/21 (currently sold product) will only reflect maximum rates that comply with current AG49-A limits. Applications for this product must meet the transition guidelines. There will be no exceptions to allow applications after April 30, 2023.

For additional information on AG49-A, view our comprehensive Frequently Asked Questions.

Lincoln Financial Group® affiliates, their distributors, and their respective employees, representatives and/or insurance agents do not provide tax, accounting or legal advice. Please consult an independent professional as to any tax, accounting or legal statements made herein.

For financial professional use only. Not for use with the public.