VUL Illustration and Preliminary Information Guidance
Guidance Date: 3/9/2021
A variable universal life policy, which is a variable life policy with a fixed option, is a combination universal life and variable life product that must comply with both universal life requirements and variable life requirements because the policy provides both fixed and variable account options. The requirements and guidance in the Individual Universal Life Product Outline apply to the fixed options of a variable universal life insurance policy. The requirements and guidance in the Variable Life Product Outline apply to the variable life benefit. For a variable life product with no fixed options, only the Variable Life Product Outline applies.
“Fixed options” are any options other than those defined in 11 NYCRR 54.1(e) and include IL Section 4232(b) options such as traditional fixed or index accounts, whether written out of the general account or a separate account.
Regulation 77 at 11 NYCRR 54.10(d) provides that illustrations shall be in a form and content acceptable to the Superintendent. IL Section 3209(l) provides that for policies marketed with an illustration which complies with the regulations promulgated pursuant to subsection (k), no preliminary information or policy summary shall be required pursuant to the provisions of IL Section 3209. Consistent with IL Section 3209(l), Regulation 74 at 11 NYCRR 53-3.5(d) provides that a basic illustration or revised illustration shall satisfy the requirements for preliminary information and the policy summary required by IL Section 3209.
If a company does not provide a policy summary or preliminary information document for a variable universal life policy in reliance on Section 53-3.5(d) of Regulation 74, the illustration provided must comply with Subpart 53-3 of Regulation 74. If the illustration is not in compliance with Regulation 74, then the company must provide a separate preliminary information and policy summary document as required by IL Section 3209.
For a variable universal life policy, an insurer must always provide either:
- preliminary information and a policy summary that comply, to the extent applicable, with IL Section 3209 and Regulation 74 at 11 NYCRR 53-2.1 and 2.2, or
- an illustration that complies, to the extent applicable, with the illustration requirements in Regulation 74.
All applicable sections of Regulation 74 at 11 NYCRR Subpart 53 should be complied with for a variable universal life policy that has been designated to be illustrated in compliance with Regulation 74. Note that some provisions would be applicable only to the fixed option.