Actuarial Guideline 49 is the National Association of Insurance Commissioners rule that caps how high an indexed universal life sales illustration can project index credits. It does not set the rate your policy will earn. It sets the highest rate a carrier is allowed to print on the illustration you see before you buy.
Carriers were illustrating IUL with assumed credits that looked like stock-market returns. Buyers treated those pages as a plan. AG 49, then AG 49-A and AG 49-B, pulled the illustrated rate back toward a disciplined benchmark so two policies can be compared on the same ceiling. At Local Life Agents we still read the guaranteed column and the current non-guaranteed column together, because a legal illustration is not a promise of future credits.
Key Takeaways
- Illustration cap, not a crediting rate. Actuarial Guideline 49 limits what the sales illustration may assume. The policy can credit more or less than that rate after issue.
- Benchmark index account. The ceiling is built from an S&P 500 annual point-to-point account with a cap, a 0% floor, and no multipliers or bonuses.
- Three versions. AG 49 set the original cap. AG 49-A addressed multipliers and bonuses. AG 49-B stopped other indexes from being illustrated above that benchmark.
- Guaranteed column still matters. The illustrated rate is a ceiling on the optimistic column. Lapse risk shows up when you read the guaranteed charges.
- Ask for a current illustration. An old printout can predate AG 49-A or AG 49-B and show rates the carrier is no longer allowed to illustrate.
What actuarial guideline 49 limits
Actuarial Guideline 49 limits the maximum illustrated crediting rate on an indexed universal life policy. The illustration may not assume a rate higher than the disciplined scale produced by a Benchmark Index Account.
That benchmark is an S&P 500 annual point-to-point account: 100% participation, a cap, a 0% floor, and no extra bonuses. The guideline looks back at how that style of account would have credited over historical periods and uses that lookback to set the highest rate the illustration can show. A carrier cannot pick a friendlier index, run a short hot streak, and print that average as the assumed rate for the next 30 years.
The rule applies to the illustration, not to the options budget inside the policy. After issue, the carrier credits whatever the chosen index strategy actually produces, subject to the cap and floor in the contract. Some years that credit is 0%. Some years it hits the cap. Neither result has to match the single rate on page one of the illustration.
What AG 49, AG 49-A, and AG 49-B each changed
Each update closed a way to illustrate a higher rate than the benchmark could support.
- AG 49 (2015). New IUL illustrations had to use a maximum rate tied to the S&P 500 benchmark lookback. Carriers could no longer illustrate an uncapped or hypothetical average that the benchmark account had not earned.
- AG 49-A. Multipliers, cap buy-ups, and persistency bonuses were being illustrated as if they stacked on top of an already maxed benchmark rate. AG 49-A stopped illustrations from showing those extras above the benchmark scale unless the same feature is in the benchmark account.
- AG 49-B. Volatility-controlled and other non-benchmark indexes were still being illustrated at higher rates than the S&P 500 benchmark. For illustrations under AG 49-B, those accounts cannot be shown at a rate above the benchmark maximum.
The contract can still offer a multiplier, a bonus, or a proprietary index. The sales illustration cannot assume that feature produces a higher long-run rate than the guideline allows.
| Version | What it stopped illustrations from doing |
|---|---|
| AG 49 | Showing a rate higher than the S&P 500 benchmark lookback |
| AG 49-A | Stacking multipliers and bonuses above that benchmark scale |
| AG 49-B | Illustrating other indexes above the benchmark maximum |
How to read an IUL illustration under AG 49
Start with the assumed crediting rate and ask which guideline version the illustration uses. Then read the guaranteed column on the same ledger. The non-guaranteed column is the one AG 49 caps. The guaranteed column uses the minimum interest and the maximum charges in the contract. Retirement income that appears only on the non-guaranteed column is not a plan.
Three checks matter more than the headline rate:
- Which index account is illustrated, and whether it is the benchmark or another strategy
- Whether the loan rate and the illustrated credit rate can diverge enough to erode cash value
- Whether planned premiums keep the policy in force if credits come in near the floor for several years
Our indexed universal life guide covers caps, floors, and policy loans. If the illustration is being used for retirement income, read it next to the IUL for retirement design rules: 10–15 years of funding before loans, and a premium above the cost of insurance.
Expert Tip: Ignore the single rate on page one
The number AG 49 caps is an assumption, not a credit you have earned. I look at the guaranteed ledger and a lower illustrated rate before I talk about retirement loans. If the policy only survives on the maximum illustrated rate, it is the wrong design.
—Ryan Wood
Who should care about actuarial guideline 49
You should care if someone is selling IUL from an illustration. The guideline is how you tell a current, comparable projection from an old printout that overstated the assumed rate.
The illustration is usable
- It states a maximum illustrated rate at or under the current AG 49 scale
- It shows the guaranteed column next to the non-guaranteed column
- Multiplier or bonus language is not illustrated above the benchmark cap
- You can rerun it at a lower assumed rate and the policy still stays in force
The illustration is a problem
- The only attractive income appears at the maximum illustrated rate
- The printout predates AG 49-A or AG 49-B and uses a higher assumed rate
- A proprietary index is illustrated as if it will outrun the S&P 500 benchmark every year
- Loans are scheduled in years when the guaranteed column already lapses
Conclusion
Actuarial Guideline 49 is why two IUL illustrations can be compared at all. We place policies with 30+ A-rated carriers, and the guideline is the same ceiling on every current illustration we run. What still differs is the cap in the contract, the charges, the loan design, and whether the policy holds up when credits come in below that ceiling. Ask for an illustration on current AG 49 rules, then read the guaranteed column before you fund it.
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