AG 49-A is a National Association of Insurance Commissioners actuarial guideline, effective for policies sold on or after December 14, 2020, that limits the maximum interest rate an IUL illustration may assume, including for products with multipliers, bonuses, or other index enhancements.
The problem AG 49-A was written to fix
The NAIC first adopted Actuarial Guideline 49 in 2015 to stop IUL illustrations from projecting unrealistically high long-term interest rates, tying the maximum illustrated rate to a benchmark: a plain S&P 500 account's current cap, run through past stretches of index history. Some carriers responded by building products with multipliers or persistency bonuses applied on top of the index credit, and illustrating the enhanced result at a higher rate than the guideline's benchmark contemplated, since the enhancement itself was not directly addressed by the original text. That let two policies with similar underlying index strategies show very different long-term projections.
What AG 49-A changed
AG 49-A applies to illustrations of policies sold on or after December 14, 2020. It starts from a benchmark index account: the S&P 500, measured once a year from start to end, with a cap, a 0% floor, 100% participation and no bonus or multiplier. The benchmark's maximum illustrated rate is the average result of applying its current cap to every 25-year period in roughly the last 66 years of S&P 500 history, and it can never exceed 145% of the insurer's own net investment earnings rate.
Every other index account in the policy, including accounts with multipliers, bonuses or volatility-controlled indexes, is limited to the benchmark's illustrated rate plus only the extra credit that an explicit added charge pays for. AG 49-A also limits how an illustration shows borrowing: the rate credited on the value backing a policy loan can be illustrated at no more than 0.5 percentage points above the loan interest rate. The effect is that a bonus or multiplier can no longer make one product's illustration look far better than a comparable product without it.
What it does not do
AG 49-A does not set or limit the cap or participation rate a carrier actually offers, and it does not guarantee that a policy will earn its illustrated rate in any given year. It also does not apply retroactively to policies sold before its effective date, which can still use the standards in place when they were sold.
The NAIC has revised AG 49-A twice. For policies sold on or after May 1, 2023, a change often called AG 49-B further limited how much extra credit other index accounts can illustrate compared with the benchmark, aimed at designs that paired uncapped volatility-controlled indexes with fixed bonuses. For policies sold on or after April 1, 2026, the tables of past index results in an illustration may cover only the most recent 25 years, illustrations may not compare historical returns side by side with the maximum illustrated rate, and must state that historical index changes are not indicative of future returns.
Why this matters when comparing quotes
Two IUL illustrations run under AG 49-A should be projecting their non-guaranteed numbers on a comparable basis, which makes cap, participation rate, and policy charges a more useful comparison point than the illustrated rate alone. The illustrated number is still not a promise: only the guaranteed column of an illustration reflects what the contract actually commits to.
In short: AG 49-A is a ceiling on what an IUL illustration is allowed to project, not a rule about what the policy will actually credit. It makes illustrations harder to inflate with product features, but it does not remove the need to read the guaranteed column.
Frequently asked questions
What does AG 49-A actually regulate?
It regulates illustrations, the hypothetical projections shown when a policy is sold, not the interest an IUL is actually credited. It sets a formula insurers must use to cap the maximum illustrated rate.
Why was AG 49-A needed after the original AG 49?
The original 2015 guideline capped illustrated rates for standard index strategies, but some carriers began illustrating enhanced rates on multiplier or bonus features that were not clearly covered, letting those products show higher hypothetical numbers than peers with a similar underlying cap. AG 49-A closed that gap by limiting every other index account to the illustrated rate of a plain S&P 500 benchmark account, plus only what an explicit extra charge pays for.
Does AG 49-A guarantee what an IUL will actually earn?
No. It only limits the ceiling on the illustrated, non-guaranteed number. Actual crediting still depends on the policy's real cap, participation rate, and index performance each year, which can end up higher or lower than the illustrated assumption.
Written and reviewed by
James Forren Warren
Licensed Retirement Income Strategist · License #20551202
James Forren Warren is a licensed Retirement Income Strategist with Tax Free Wealth Plan. For the past five years he has helped individuals and families turn their savings into retirement income they can count on. He writes and reviews the annuity research on this site and keeps it plain: what a product does, what it costs you, and who it actually fits.
Sources
Educational only, not investment, tax or legal advice. Tax Free Wealth Plan LLC is a licensed insurance agency, not a registered investment adviser or broker-dealer. Indexed universal life is permanent life insurance. It is not an investment in the stock market or in any index. Caps, participation rates, charges and other non-guaranteed elements can change. Policy loans and withdrawals reduce the cash value and death benefit, and a policy that lapses with a loan outstanding can create taxable income. Illustrations are hypothetical and not guaranteed. Coverage is subject to underwriting. Guarantees are backed solely by the claims-paying ability of the issuing insurance company. Features, costs and availability vary by state and change over time; the policy and its disclosure documents govern.