FSC Weighs Allowing Principal-Protected FIA and IUL Products

Fixed indexed annuities, or FIAs, and indexed universal life insurance, or IUL, link returns to market indexes while limiting downside risk through principal protection or minimum guarantees. The products combine life insurance coverage with asset accumulation, but their structures and fees are more complex. Whether to permit domestic sales therefore has implications for policyholder rights and life insurers’ product strategies.

The Life Insurance Association of the Republic of China has formally proposed allowing FIA and IUL products, and the Insurance Bureau of the Financial Supervisory Commission is reviewing supporting regulations and sales-management rules. IUL is currently available only through offshore insurance units, or OIUs. No domestic launch date or sales amount has been announced, and any expansion to domestic policyholders will depend on whether the supporting framework is sufficiently comprehensive.