Weekly Tip: Recent Amendments to Longevity or Deferred Income Annuity Uniform Standards


Weekly Tips

Recent Amendments to Longevity/Deferred Income Annuity Uniform Standards


Continuing the series on the recent amendments to certain individual life and annuity benefit feature Uniform Standards that become effective on November 20th, the second Weekly Tip in this series will review the changes to the Individual Deferred Paid-Up Non-Variable Annuity Contract Standards (Commonly Marketed as Deferred Income Annuities or Longevity Annuities) (IIPRC-A02-I-LONG). There were several substantive changes, and a few clarification amendments.

The substantive amendments affect three different provisions within the Uniform Standards:

  1. The Scope was amended to include a statement that income payable on the commencement date is payable for the annuitant’s lifetime (with or without a guaranteed period) or for a stipulated period of time. This change will allow annuity products with payments for a period certain to be submitted and reviewed under these Uniform Standards. Specifically, §3G.(3) of this Uniform Standard was amended to include a minimum of five (5) years and a maximum deferral period of twenty (20) years for any stipulated period certain.
  2. Commutation provisions were added, but are subject to limitations –
    1. Contracts may not provide for the commutation of future dividend payments or for the commutation of life-only income benefit options;
    2. For life income options with a period certain, the commutation is limited to the lesser of 100% commutated value or 60% of the combined life and period certain income benefits; and
    3. Period certain-only income shall be limited to 60% of the commuted value of the period certain income
  3. Dividends Used to Purchase Paid Up Additions was amended to allow dividends used to purchase additional guaranteed income payments benefits to be determined using current annuity purchase rates or the same interest and mortality rates schedule used at the time of the premium payment to which the dividend is related was paid and the attained age at the time of the dividend is paid. As a result of this amendment, there was a reformatting of the provision which will draw attention to the requirements.

Additionally, two other provisions – the Additional Purchase Payments After Issue and the Actuarial Requirements – were amended to provide clarification.

If you have any questions about this Weekly Tip, or the Insurance Compact, please contact the Insurance Compact Office.