IUL Illustration Complication: Helping Clients See Past the Hype

Indexed universal life (IUL) insurance has surged in popularity over the past decade, but regulators warn that the way these products are illustrated often sets clients up with unrealistic expectations.

For years, regulators, actuaries, and consumer advocates have flagged one issue time and again: illustrations that look far too good to be true. Now, with new revisions to Actuarial Guideline 49-A (AG 49-A) under review, the National Association of Insurance Commissioners (NAIC) is taking steps to bring IUL projections back down to earth.

Key takeaways

1. 1. Regulatory proposals are more closely targeting misleading IUL illustrations, including back-tested data and inflated historical averages.
   2. Proprietary indices without long-track records of performance present a risk for unrealistic client expectations.
   3. Financial professionals and licensed agents who frame illustrations realistically build stronger, more lasting client trust.