Benefits - Actuarial

  • 2017 1115 - Letter - AAA to NAIC LIBGWG  - Re: Life Insurance Buyer’s Guide Q&A Draft 8/1/17, American Academy of Actuaries, Life Insurance Buyer's Guide Working Group (A) - 2p
    • Universal life also allows for flexibility in policy benefits, not just premium payments.
  • Maybe he is not getting all the disclosure he needs, as far as the continuing benefit is concerned, when the interest rates change from that illustrated. 

--  Gary P. Monnin, Senior Vice President, Chief Actuary of American Founders Life Insurance Company

1982 - SOA - Universal Life (rsa82v8n111), Society of Actuaries - 14p

  • C. Universal Life
    • The agent and prospect have the ability to choose almost any pattern of benefits and premiums.
    • No longer is the sale limited to one of several fixed plans of insurance from a ratebook.

1991-1992 - SOA - Final Report* of the Task Force for Research on Life Insurance Sales Illustrations, Society of Actuaries - 142p

  • The purpose of the "r" factor, however, is really quite simple.
    • If the actual account value is less than the GMF [Guaranteed Maturity Fund], then future guaranteed policy benefits will run out before the maturity date.
    • This is true because the GMF is that amount which is exactly on target to mature the policy.
    • Therefore, anything less than the GMF will be insufficient to mature the policy on a guaranteed basis. 
    • It was felt that in order to reserve adequately for all policy guarantees, it would be desirable to make sure that any projection of benefits extends until the maturity date of the policy.

--  Shane Chalke

1984 - SOA - NAIC Update, Society of Actuaries - 24p 

  • Product designs can be complex, with benefits contingent on a range of potential risks that may vary over time, as well as with certain guarantees made by the insurer.

2009 1124 - AAA to GOV (House) (Barney Frank (D-MA) / Spencer Bachus (R-AL)) - Financial Regulatory Reform Task Force of the American Academy of Actuaries - 3p

  • The typical "present value of future benefits less the present value of future net premiums" formula is challenging to apply to flexible premium universal life policies...
  • ...since neither "future premiums" nor "future benefits" are known for any particular policy.   

2018 - Book - Statutory Valuation of Individual Life and Annuity Contracts, page 323 | 5th Edition, Claire, Lombardi and Summers

  • The key to our proof was to bundle the product back up and to look at the guaranteed future benefits.
  • When we did this, we made some interesting discoveries.
  • Perhaps the most important was that the role of the account value and mortality and interest guarantees to define what the policy's guaranteed death and endowment benefits are at any time.
    • These elements form what we called the cost structure of the policy.
    • In order to obtain a certain pattern of guaranteed benefits, how much does the policyholder have to put in his account value?
    • If a company decides to charge mortality rates twice those of 1980 CSO, a larger account value is required to generate a given pattern of guaranteed benefits than would be the case if the company charges 1980 CSO rates.
    • In other words, one product would be more expensive than the other.

--  Michael F. Davlin

1983 - SOA - Universal Life (rsa83v9n32), Society of Actuaries - 22p