Actuaries Club of Boston Annual Meeting September 22, 2011. Kathryn Dowdell, FSA, MAAA Product Actuary, Director Product Compliance John Hancock. Recent Developments in Indexed Annuity Disclosure and Illustrations. Outline. Background Annuity Disclosure Updates
Kathryn Dowdell, FSA, MAAA
Product Actuary, Director Product Compliance
Recent Developments in Indexed Annuity Disclosure and Illustrations
"This illustration assumes the index will repeat historical performance and that the annuity’s current non-guaranteed elements, such as caps, spreads, participation rates or other interest crediting adjustments, will not change. It is likely that the index will not repeat historical performance, the non-guaranteed elements will change, and actual values will be higher or lower than those in this illustration but will not be less than the minimum guarantees.
The values in this illustration are not guarantees or even estimates of the amounts you can expect from your annuity. Please review the entire Disclosure Document and Buyer’s Guide provided with your Annuity Contract for more detailed information"
Michael L. Barsky, FSA
Assistant Vice President
Life Product Management
Recent Developments in Indexed UL Disclosures
To help applicants understand how the index would have performed over shorter/longer time periods
Describe the resulting rates as “hypothetical interest rates”
Example:Assumed Lookback Periods
10 yrs 20 yrs 25 yrs 30 yrs 40 yrsHypothetical Interest Rates*5.40% 7.35% 7.53% 7.43% 7.05%
*The non guaranteed values in this illustration are based on the hypothetical illustrated index credit rate not to exceed the maximum hypothetical illustrated rate, current cost of insurance rates, and current expense charges. The maximum hypothetical illustrated rate is 7.53%, based on a daily average of the annual compound index rates of return for a 25-year historical period through 12/31/2010. This maximum hypothetical rate applies current growth cap rates, participation rates and guaranteed minimum interest rates to the past performance. The hypothetical rate of return using the same methodology but with other historical reference periods are shown in the above tableDraft Summary of Recommendations