The Index-Linked Variable Annuity Subgroup was created last year by a National Association of Insurance Commissioners task force to focus solely on the index-linked annuity products -- known variously as structured, buffered or registered indexed-linked annuities.
While classified as variable annuities, the indexed-linked products do not fit into Model 250, which includes the nonforfeiture rules that determine how much money a contract holder can get back if they give up the annuity.
The new indexed-linked annuities do not fit neatly into Model 250 because their daily values are not based on the value of units of a separate account. Rather, the daily values are based on formulas set forth in the contract.
The subgroup developed an actuarial guideline for technical changes to values that would bring the products in line with traditional VAs. Subgroup members held a call Monday to go over the fourth draft exposure of the guideline.
"Our concern with having that sentence in there restricting market value adjustments to partial withdrawals and surrender increments is that it's inconsistent," Berends explained.
Withdrawals above the maximum penalty-free amount are subject to a market value adjustment for the period the surrender charges apply.
"That certainly happens on partial withdrawal and surrender, but it also happens on vest, annuitization and transfer," Berends said.