The Big Apple-ton and Other Unique New York Regulations
By Jeffrey Ling, LifeTrends Product Analyst
New York has always been well-known in the industry as a state with unique characteristics. While each
state has its own set of regulations, New York stands out with heavily consumer-focused rules. It’s like
when your mom made you put on sunscreen in the summer heat but also made you put on sunscreen
the rest of the year because she said you can never be too safe. So, you did it anyway. Though New York
might seem like an over-protective parent, it is one of the most populous states in the U.S, so it cannot be
ignored for the sake of convenience and costs.
We are often asked about New York availability, so we looked at the most common life insurance solutions
to provide some clarity. Three out of four carriers offer at least one New York-specific product. For
universal life (UL), indexed UL (IUL), variable UL (VUL), whole life (WL), and term, we compared any
products that had New York availability to their non-New York counterparts. Among the 252 products we
reviewed, fewer than half had New York offerings. Of those that did, 75% run under the same name with
mostly identical pricing. These are typically simpler products, such as term and current assumption UL.
The other 25% of products were completely different from their non-New York counterparts, and typically
have the most varied pricing.
This group of New York-specific products are generally more complicated, such as IUL and VUL products.
They have a lower rate of availability, but at the same time, have some of the largest differences in
values. This is likely due to the variety of other investments that a customer has access to, which limits
the way indices-valued products can be allocated. A benefit to creating a New York-specific product is to
account for New York’s longer approval process. This is especially helpful when considering new policies,
such as principle-based reserves (PBR) or the updated CSO mortality tables.
The regulations that shape New York-specific products are: capped compensation, restrictions on
allocations for investments, and higher requirements for capital adequacy. Capped compensation is
commissions plus charges being limited to a certain percentage of the first-year premium. When it comes
to investment and capital restrictions, the IUL market deviates most often and in greater amount. Given
the more consumer-centric mindset, it might be expected that customers would prefer conservative
pricing. Yet this is not always the case. In one example, John Hancock’s and American National’s
accumulation products have, respectively, a 66% decrease and a 40% increase for income. This shows the
potentially wide gap between New York versus non-New York offerings. It is also helpful to know that the
state has the Appleton Rule, which requires resident producers to substantially comply with practices in
other states as well. The rule is generally intended to provide further protection to potential and current
In the end, the pricing can go in either direction depending on how the company might navigate
regulation. Interest-sensitive solutions, such as IUL, have larger differences compared to UL and term.
Thus, they are often treated as separate products by the carrier. Ultimately, though, the majority of New
York-available products maintain general continuity from their non-New York counterparts.