Weekly Tip: Amendments to the Additional Standards for Overloan Protection Benefits ? What Changed

Weekly Tips

Amendments to the Additional Standards for Overloan Protection Benefits ? What Changed


Did you know that the Additional Standards for Overloan Protection Benefit(IIPRC-L08-I-LB-OLP) have been amended, and that Overloan Protection benefit (?OLP?) filings submitted on or after November 20 must comply with the updated Uniform Standards? In this week?s Weekly Tip, we will provide an overview of the two key changes that will have an impact on OLP features filed with the Compact, as well as a few actuarial pointers to keep in mind when putting together your filing.

The Additional Standards for Overloan Protection Benefit were subject to Phase 7 of the Five-Year Review. Amendments to the Uniform Standards were adopted by the Commission at the in-person joint meeting on August 5, and become effective on November 20. The amendments apply going forward; no action is required for previously approved forms. The red-lined version of the rule highlighting the changes made in the Five-Year Review may be found in the expanded Standard History section on the online Rulemaking Record.

Prior to the Five-Year Review, some companies interpreted ?3A(4) of the Additional Standards for Overloan Protection Benefit as optional, such that the company could choose to include specifics about whether the benefit would be exercised automatically or otherwise.

The revised Uniform Standards require that the benefit form state either:

(a) that the benefit will be exercised automatically once the conditions specified in the benefit form are met; or
(b) the company's procedure for notifying the owner when the benefit can be exercised and that the company will obtain the owner's approval to exercise the benefit.

The other key change to note in the revised Uniform Standards is that companies are now permitted to specify a minimum and/or maximum age required before exercising the OLP benefit. If the company has minimum and maximum age limitations, these ages must be noted on the specifications page and the form must include these requirements in the list of conditions that must be met in order to exercise the benefit.

In addition to those two changes resulting from the Five-Year Review, the Insurance Compact Review Team wanted to highlight a few things relating to filings with OLP features:

  • It is important to remember that the Insurance Compact can review and approve OLP features that are built into individual variable or non-variable adjustable life insurance policies or added to such policy forms by rider, amendment or endorsement.
  • The Insurance Compact is not able to review or approve OLP features for use with whole life policies.
  • Companies may assess a one-time charge when the OLP benefit is exercised. The form or specifications page shall state how any benefit charge is calculated, and the fact that there is no charge if the benefit is never exercised.
  • All OLP filings must include an actuarial memorandum prepared, dated and signed by the member of the American Academy of Actuaries who provides a numerical demonstration of how the OLP functions and that any minimum benefit requirements applicable under the benefit are met.


If you have any questions about the Additional Standards for Overloan Protection Benefit, or changes to the Uniform Standards resulting from Phase 7 of the Five-Year Review, please contact the Insurance Compact Office.