Before 2015 an IUL illustration could show almost anything. An illustration is the spreadsheet an agent hands you that projects your policy out forty or fifty years. Carriers picked a crediting rate they liked. They layered a multiplier on top. They showed a loan earning more than it cost. The result was a projection that made one product look twice as good as another, when the economics underneath were nearly the same. It was a sales arms race, and the illustration was the weapon.
Regulators took three swings at it. The first was Actuarial Guideline 49, in 2015. It tied the highest rate a carrier could show to that carrier's own option budget. The option budget is the money a carrier has each year to buy the options that produce your index credit. AG 49-A followed in December 2020. It went after bonuses the carrier never guaranteed, and it capped illustrated loan arbitrage at half a percentage point. Loan arbitrage means the gap between what your loan costs and what your money keeps earning while the loan is out. AG 49-B took effect May 1, 2023, and closed the last gap. No index account can be shown earning more than the benchmark account, and any bonus or multiplier has to fit inside the illustrated rate rather than sit on top of it.
The result is that illustrated rates across carriers squeezed together. The index accounts that used to show the best numbers took the biggest cut. Two illustrations from two different companies now land much closer together than the products behind them actually are.
A ceiling on what can be shown doesn't make the products underneath it the same. It moves the differences somewhere the illustration can't display them. Take two policies that both show 5.9%. One can cap its charges lower than the other. One can promise a higher floor. Their loan terms can differ. And the two carriers can have very different track records with the people who already own the thing. None of that shows up in the projection column, and all of it decides what you get.
So the comparison moves to the contract. Look at the guaranteed column rather than the current one, because the guaranteed column is the only promise in the document. Look at the guaranteed maximum cost of insurance and the guaranteed maximum expense charges. Those set the ceiling on what the carrier can charge you in year twenty-five. Look at whether the loan provision is spelled out in the contract or left to the carrier's discretion. And ask what the company has actually done to renewal caps on existing policies over the last fifteen years. A cap is the most you can be credited in a year, and caps move. They were higher fifteen years ago than they are right now, they came down, and some have come back up. How a carrier treated its existing policyholders through all that is the closest thing to evidence you'll get about how it will treat you.
One more thing people misread. A lower illustrated rate is not proof of a worse product. Under these rules, a careful carrier can show a low rate and still run the better contract. The one that pushed its number up to the ceiling may be the weaker deal. An illustration is a marketing document that regulators keep on a leash. Use it to check that your funding plan holds together, and use the contract to decide whether the company deserves your money. More on the gap between the number on the page and the number you get is in why an IUL never really earns the straight-line number and how to read a policy illustration without getting fooled.