Weekly Tip: Steps to Keep in Mind When Preparing an Annuity Filing


Weekly Tips

Steps to Keep in Mind When Preparing an Annuity Filing


In 2012, the Compact experienced a 45% growth in individual annuity filing submissions with most of the increase attributable to more variable and equity-indexed annuity filings. This weekly tip focuses on some recommended steps to take when preparing your annuity filing.

The Compact has core Uniform Standards for individual deferred and immediate variable and non-variable (fixed) annuities and Uniform Standards for a wide array of annuity benefit features which are located on the Compact's Rulemaking Record of its website. Filers are encouraged to closely study the scope section of the applicable Uniform Standard(s) to determine its applicability to the company's product design. The form-fillable Reviewer Checklists are now located next to the Uniform Standards on the website allowing the filer to check-off the applicable requirements while preparing a Compact filing.

Utilizing the Additional Benefits field is also encouraged when preparing a Compact annuity filing. SERFF developed this field, in response to its Product Steering Committee, and the Compact was the first to implement. This field is found on the General Information tab in the SERFF Filing Wizard and filers are encouraged to describe annuity benefit features in the product including index linking, market value adjustments, and guaranteed benefits, among others. Identifying these elements will help the Compact review team to assess and understand your product filing and ensure that your product is reviewed using the appropriate Uniform Standards. It is also useful to Member States understanding and tracking the types of Insurance Compact products placed into their respective marketplaces. This may avoid market regulation questions in the future as your Insurance Compact product moves through its life cycle.

Filers should also review the Compact's Filing Information Notices to determine if there are any applicable to their annuity filing submission. FINs are issued by the Insurance Compact Office to provide guidance, instruction, and best practices in order to facilitate the submission of compliant product filings to the Insurance Compact and minimize objections and review time. We have the following FINs relating to certain annuity products:

  • FIN 2013-1: Guaranteed Living Benefit Amounts Contingent on Inability to Perform Activities of Daily Living
  • FIN 2012-2: Rider Charges for Guaranteed Living Benefit Compliance with Non-Variable Annuity Nonforfeiture Requirements
  • FIN 2011-1: Individual Variable Life and Annuity and Modified Guaranty Annuity Filings
  • FIN 2010-2: Bonus Feature for Deferred Annuities Product
  • FIN 2010-1: Disclosure Statement for Termination upon Sale or Assignment of Guaranteed Annuity Benefit Features

Here are a few other compliance items to be mindful of as you prepare your Compact filing

  • Index-Linked annuities that contain a market value adjustment feature cannot include a surrender charge schedule that exceeds 7%. Under the Additional Standards for a Market Value Adjustment Feature Provided through the General Account, IIPRC-A-07-I-2, index-linked annuities are not considered a "Multi-Year Interest Rate Guarantee Annuity" ("MYGA"). As such, the prospective test of Appendix B in this Uniform Standard provides that surrender charges associated with non-MYGAs cannot exceed 7 years and 7%. (Appendix B (2)(ii)).
  • Index-based options must indicate that the index is publicly-available to policyholders and changes to the indexed must be submitted for prior approval.
  • Under the current GLB Uniform Standards and individual Long-Term Care Uniform Standards, a Guaranteed Living Benefit (GLB) form cannot increase GLB amounts due to confinement, terminal illness, or Activities of Daily Living (ADL) triggers without also being subject to and reviewed under the individual Long-Term Care Standards, IIPRC-LTC-I-CORE.
  • Guaranteed Minimum Death Benefits (GMDB) associated with Non-Variable (Fixed) Annuities are not reviewable by the Interstate Compact at this time and the Product Standards Committee is currently accepting comments on a draft Uniform Standard for Additional Standards for Incidental Guaranteed Minimum Death Benefits for Individual Deferred Non-Variable Annuities.

Filers are encouraged to contact the Compact reviewers with any questions about the Uniform Standards or filing requirements as they are preparing their Compact filing as the Compact's goal is to work with a filer both before and during the review of a Compact filing to minimize objections and achieve full compliance with the applicable Uniform Standards.