Weekly Tip: Recent Amendments to Private Placement Plan Uniform Standards

 

Weekly Tips

Recent Amendments to Private Placement Plan Uniform Standards

11/16/17

For the third issue of the Weekly Tip series on the amendments to be effective on November 20th, this week the Insurance Compact will review the amendments made to both Private Placement Uniform Standards – the Additional Standards for Private Placement Plans for Individual Deferred Variable Annuity Contracts (IIPRC-AB-03-I-PP) and the Additional Standards for Private Placement Plans for Individual Variable Adjustable Life Insurance Policies (IIPRC-L-06-I-4). 

The first substantive amendment pertains to the various provisions within these two Uniform Standards that relate to what happens when an owner ceases to be a “qualified owner” as defined in the Uniform Standards. The Product Standards Committee made these amendments to add flexibility. If the owner ceases to be a “qualified owner,” the amendments allow the owner to retain the ability to exchange the contract or policy for one that does not require qualified owner status, or to transfer funds from an exempt fund to a non-exempt fund or the general account.

The second substantive amendment affects the liquidity and availability of funds in the Uniform Standards. The amendments include new definitions for contributions, liquidity, and redemption; update the existing provisions to address the availability of funds and deferral of payments, and add new provisions that address Contract Transactions for annuities and Policy Transactions for variable adjustable life policies.

The definition of “qualified owner” was also amended to clarify that the owner may be either an accredited investor or qualified purchaser or both. A new drafting note states that certain exempt funds may be available only to qualified owners who are also “qualified clients,” as defined by the Investment Advisors Act of 1940, or “qualified eligible purchasers,” as defined by the Commodities Futures Act.

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