What Life Insurers Are Telling the SEC About the 2017 CSO Shift

2. Some mentions relate to how the coverage will work.

RiverSource Life Insurance Company, an arm of Ameriprise Financial Inc., filed a registration statement that mentions the 2017 CSO tables in April.

In the prospectus included in the filing, RiverSource mentions that the RiverSource Variable Universal Life 6 Insurance policy will use the 2017 CSO Smoker and Nonsmoker Mortality Tables, Age Nearest Birthday, to set the policyholder’s rates.

The company includes a special note about how it will use the 2017 tables to set rates for policyholders in Montana.

Massachusetts Mutual Life Insurance Company mentions the 2017 tables in July, in a discussion about how it will set rates, and unisex rates, in provision in the prospectus in the registration statement for its Variable Universal Life III policy.

3. Some mentions hint at possible future tax battles.

Several companies, such as American General Life Insurance Company, which is a unit of American International Group Inc., talk about 2017 CSO-related tax issues in variable product filings.

American General says, in a prospectus filed in June, for its Platinum Choice VUL 2 flexible premium variable universal life policies, that the company will keep the policyholder from making policy changes that could cause the policy to stop meeting the IRS definition of “life insurance” under Section 7702 of the Internal Revenue Code.

The company also warns that, although the policy provides an option for policyholders to extend their coverage beyond age 121, “the tax consequences of extending the maturity date beyond the age 121 termination date of the 2017 CSO Mortality Tables are unclear.”

“You should consult your personal tax advisor about the effect of any change to your policy as it relates to Section 7702 and the termination date of the mortality tables,” American General says.

AXA Equitable Life Insurance Company, an arm of AXA Equitable Holdings Inc., says in a prospectus filed with the SEC in May, for the Incentive Life Optimizer II policy, that this policy is using the old, 2001 mortality tables for certain IRS tax testing purposes, under an IRS safe harbor rule that lets policies sold up until Dec. 31, 2019, use  the 2001 tables.

AXA Equitable intends to refuse some policyholder-requested transactions that could cause a policy to lose the ability to use the 2001 mortality tables for tax testing purposes, the company says.

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