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Protective Life 7702/7702A product updates in California

December 16, 2021


We're dedicated to simplifying everything, building trust and providing quality service to you and your clients. Part of that dedication is ensuring you are informed and remain compliant with the regulatory updates within our industry.


Like many carriers, we will be updating our product portfolio in 2021 for the 7702 and 7702A (Tax Law) changes that were included in the Consolidated Appropriations Act, 2021 (CAA 2021). As one of our valuable partners, you are receiving this information now to help you plan for a smooth transition for you and your clients.


Portfolio Changes:
We will be introducing a variety of changes, driven by the 7702/7702A changes on September 8, 2021. This primarily impacts cash value accumulation test (CVAT) death benefit factors, guideline premiums and Modified Endowment Contract (MEC) (7 Pay) premiums. At the time, the state of California had not yet approved the new product versions.


Below, you will find a summary of the products that are approved in California as of Dec. 13 and the associated changes.

Product

Protective Advantage ChoiceSM UL

Minimum Guaranteed Interest Rate Change?
Yes, to 2.0%
Pricing Change?
Yes

Transition Rules:
Clients will receive current (prior to December 13, 2021) product versions, if they:

  1. Submit a signed application (includes completing the TeleLife® interview) and illustration, if necessary.
  2. Ensure the policy has an effective date of December 12, 2021, or earlier.

Any policy issued with an Effective Date of December 13 or later will receive the new product version.


Illustrations: As of December 13, 2021, the product will no longer be available for new illustrations except through the Protective Life Sales Desk.


Special Considerations:
If a policy is already in the underwriting process, and if you would like to retain the previous product (the product issued prior to December 13, 2021), underwriting may continue past December 13, 2021 if the policy is issued with a policy effective date of December 12, 2021 or earlier.


Standard backdating rules will apply if an effective date of December 12, 2021 or earlier is requested, including premiums being due from the effective date to the current date (of issue).

Frequently Asked Questions

Can we allow policies to be backdated to allow the sale of the previous product?
Yes, we can backdate to allow the sale of the product up to six months.
Will Protective make an exception to allow issuance of the previous product, with a current date on applications received after December 13, 2021 if Cash with App?
No, we will not make any exceptions.
Will Protective allow the previous product to be retained, if the application was received prior to December 13, 2021 but closed as (postponed/incomplete, etc.) during Underwriting?
Backdating rules will apply to retain the previous product. Backdated modal premium(s) will be due at time of placement. If the backdating period has expired (more than six months, if applicable in the application state) you must apply for available product upon reopening of file.
If funds are returned/refunded during the Underwriting process, will Protective allow the client to retain the previous product?
Backdating rules will apply to retain the previous product. Backdated modal premium(s) will be due at time of placement. If the backdating period has expired (more than six months, if applicable in the application state) you must apply for available product upon reopening of file.
Must the file be placed in force within a specific period to qualify for the previous product? What about if you are waiting on 1035 funds?
If 1035 funds are received after December 13, 2021, Protective will allow the previous product as long as the effective date adheres to the backdating rules. If a modal premium is illustrated, all backdated modal premium(s) will be due at the time of placement. If the backdating period has expired (more than six months, if applicable in the application state) you must apply for the available product upon reopening of the file.
At a high level, what are the impacts of the Tax law changes?
The changes are being made to the statutory interest rates in the tax code. By lowering these rates for 2021 and 2022, the Guideline and MEC premiums should generally allow higher contributions for the same face amount. Also, the CVAT death benefit factors should be reduced so that corridor percentages are lower, resulting in generally smaller death benefit increases when a CVAT contract enters corridor.
If I want a product prior to December 12, 2021, how would I get an illustration of that product after December 12, 2021?
Contact the Home Office Sales Desk, they will be the only source for those illustrations.
What is the pricing change for Protective Advantage Choice UL?
Broadly, the Protective Advantage Choice UL product is being repriced due to the continued low interest rate environment.

Please contact the Protective Life Sales Desk at 800-628-6390 with any illustration requests or additional questions.


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Protective is a registered trademark and Advantage Choice is a trademark of Protective Life. Life insurance products are issued through Protective Life Insurance Company (PLICO) in all states except New York where they are issued through Protective Life and Annuity Insurance Company (PLAIC). PLICO is located in Nashville, TN. and PLAIC is located in Birmingham, AL.


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