FROM NEW YORK LIFE…
Since the Consolidated Appropriations Act (CAA) was signed into law on December 27, 2020, we have been preparing to transition our life product portfolio to ensure continued compliance with all regulations. The CAA impacts the interest rates used in Internal Revenue Code (IRC) Section 7702 and Section 7702A. These interest rates are used in the calculation of Definition of Life Insurance (“DOLI”) testing and Modified Endowment Contract (“MEC”) premiums. Additionally, the allowable Nonforfeiture Interest Rate used to determine the minimum cash value on certain products has also changed. All products must be in compliance by January 1, 2022 and policies that do not comply cannot be issued in 2022.
Whole Life Suite to be updated in 2021
- On November 6, 2021, AD121 Whole Life (WL), Custom Whole Life (CWL), and Custom Survivorship Whole Life (CSWL) will be introduced reflecting a new guaranteed cash value interest rate. A Network News will be published closer to the launch date of the new product series with full details.
- With the launch of the new products, the Children’s Insurance (CI) rider will be discontinued. To issue a policy with a CI rider, the year-end processing rules outlined below must be followed.
AD117 WL and CWL, and AD119 CSWL, cannot be issued in 2022. To issue all applicable AD117 WL and CWL, and AD119 CSWL policies by the end of the year the following deadlines have been established:
- For AD117 WL and CWL, and AD119 CSWL, eLife applications must be signed/submitted by November 5, 2021. Applications with a Part I application date of November 6, 2021 or later will receive the AD121 series of the product.
- A complete application package (Part 1 and 2), including all underwriting requirements, must be submitted and received by December 6, 2021 to position our underwriting teams to complete their review and issue these cases by year-end.
- AD117 WL and CWL or AD119 CSWL policies cannot be issued after year end. No exceptions can be made.
Impact of 7702 Transition on Contractual Term Conversion Options
Original age term conversions (OATC) on term policies issued on or before November 5, 2021 will continue to be allowed to convert to an AD117 WL or CWL product on or after January 1, 2022. The contractual provision maintains the original term insurance issue date and makes available the WL product that was available for sale at that time. Any term insurance issued on or after November 6, 2021 will have a contractual original age conversion privilege to AD121 products.
Find out more about these changes from New York Life…