Nonforfeiture

  • 1941 Guertin Report
    • NAIC's Committee to Study Nonforfeiture Benefits and Related Matters, chaired by Alfred N. Guertin, actuary of the New Jersey Insurance Department
  • 1942-Supplement, NAIC Proceedings - Reports and Statements on Non-Forfeiture Benefits and Related Matters
  • 1975 Unruh Committee
    • SOA, Special Committee on Valuation and Nonforfeiture Laws, chaired by Henry C. Unruh
  • 1983-1, NAIC Proceedings - Task Force on Valuation and Nonforfeiture Regulation for New Products
  • 1989-1, NAIC Proceedings
    • (p612-) - Attachment One-B
      To: Members Of The Society Of Actuaries
      Date: October 1988
      Re: Task Force On Nonforfeiture Principles Interim Report-Tentative Conclusions
    • This Task Force was formed in the spring of 1987 in response to a request from the NAIC Life and Health Actuarial Task Force that the Society of Actuaries establish a committee to review the underlying principles elicited by the Unruh Committee Report, considering concepts of equity and solvency as they relate to nonforfeiture benefits in the light of current and anticipated conditions.
    • After its formation in the spring of 1987, the Task Force has been actively examining all aspects of what is clearly a broad and tangled situation.
  • 1990s - NAIC - Second Standard Nonforfeiture Law 
  • 1996-1, NAIC Proceedings
    • 1941 Guertin Report
      • The NAIC's Committee to Study Nonforfeiture Benefits and Related Matters was chaired by Alfred N. Guertin, actuary of the New Jersey Insurance Department
      • The report, known as the Guertin Committee Report
    • 1975 Unruh Committee
      • The SOA Board of Governors appointed a Special Committee on Valuation and Nonforfeiture Laws, chaired by Henry C. Unruh, and assigned it:
        • (1) to study in-depth the underlying actuarial principles involved in, and the practical problems which arise in the application of these principles to, current regulations and practices with regard to valuation and nonforfeiture requirements; and
        • (2) to develop a report on its findings. In 1975 the Committee submitted its report on nonforfeiture, which included the following (underlined emphases added):
  • 1996-3v2, NAIC Proceedings
    • A Report to the NAIC Life and Health Actuarial Task Force on a Proposal Paper for a New Approach to Nonforfeiture Law
      • From the American Academy of Actuaries Working Group on Nonforfeiture Law - Committee on Life Insurance (AAA)
  • 1980 - SOA - Nonforfeiture and Valuation Concerns in the 1980's, Society of Actuaries - 16p
  • 1983 - SOA - Universal Life Valuation and NonForfeiture: A Generalized Model, by Shane A. Chalke and Michael Davlin, Society of Actuaries - 72p
  • 1988 - SOA - Update on Universal Life Reserves and Non-Forfeiture Values, Society of Actuaries - 36p
  • 1989 - SOA - Status Report on Standard Nonforfeiture Law Revisions, Society of Actuaries - 14p
  • 1995 - SOA - Nonforfeiture Laws Update (rsa95v21n4a20), Society of Actuaries - 18p
  • 1995 - SOA - Practical Illustrations and Nonforfeiture Values, Society of Actuaries - 14p
  • 1996 - SOA - Nonforfeiture Law Developments (rsa96v22n38pd), Society of Actuaries - 23p
  • 1998 03 - SOA - New Standard Nonforfeiture Law: Unsafe at Any Speed?, by Douglas C. Doll (p1), Product Development News, Society of Actuaries - 15p
  • The opinion that nonforfeiture benefits should be mandated was not completely unanimous among the Task Force.
  • Following is a presentation by Shane Chalke to a group of economists at The Institute For Humane Studies at George Mason University on June 29, which presents the opposing view.

1989-4. NAIC Proc.

  • One of the ideas that people have considered for life insurance is to have life insurance without a cash-surrender value, but a nonforfeiture value, either reduced, paid-up, or extended-term insurance, that would in some way make life insurance and annuity standard nonforfeiture a little bit closer.

-- Walter A. Neeves

1995 - SOA - Practical Illustrations and Nonforfeiture Values, Society of Actuaries - 14p

  • 6. Discussed the purpose and concepts relative to new nonforfeiture approaches and decided to draft a model patterned after the New York and New Jersey requirements relative to nonguaranteed elements pertaining to universal life policies, indeterminate premium products, and deferred annuities.

1998-2, NAIC Proc.

  • Finally, I just would like to make a small pitch for the "mystique" of whole life.
    • If we come up with a retrospective approach for nonforfeiture, then we are hastening the viewpoint that life insurance, no matter what kind is nothing more than term insurance plus a side fund.
  • I think the industry has some vested interest yet in keeping the impression that there is more to it than that.
    • It is not just term insurance plus a side fund.
  • If it is strictly term insurance plus a side fund, then we weaken our arguments for favorable tax and regulatory treatment.

-- Douglas Doll

1989 - SOA - Status Report on Standard Nonforfeiture Law Revisions, Society of Actuaries - 14p

  • Let me review again for the Society the history of insurance regulation in the United States and the prominence in that history of one Elizur Wright.
    • He went to England in the mid-1850's to study actuarial science and to examine the life insurance business.
    • One of the things that made a very indelible impression on him both in England, and to a limited extent in the United States, was the public auction of life insurance policies, level premium whole life insurance policies without cash values.
    • When the individual owners of those policies reached an advanced age and they no longer had the means to pay the premiums they could sell those policies in the open market for a market cash value.
    • The problem was that the purchaser then had an adverse interest in the continuing longevity of that policyowner.
      • It was those humiliating and actually dangerous transactions that brought Mr. Wright to develop the nonforfeiture aspect of the Massachusetts Insurance Law and historically bring about required cash values.
    • Well, either we've forgotten that history or we believe that man has grown more mature and can now cope with that more effectively. It may help to think a little on those origins when designing a permanent insurance product without cash values

--  Dale Gustafson, Northwestern Mutual

1980 - SOA - Treatment of Existing Life Insurance Policyholders in Times of Rapidly Changing Economic Conditions, Society of Actuaries - 16p

  • (p91) - THE "CASH" NON-FORFEITURE BENEFIT
    • The development of level premium whole life insurance, limited premium policies and policies on the endowment plan maturing in the policyholder's lifetime and, later, short-term endowment contracts on the single premium plan, has resulted in the requirement for the accumulation of substantial reserves.
    • It was recognized early by most life insurance companies that it was unconscionable to confiscate or cause the forfeiture of such reserves in their entirety.
    • On the other hand, for very satisfactory reasons it was not deemed an equitable procedure to compel a company to give the outgoing policyholder, in every case, ·the whole reserve held on the policy.
  • Term Policies
    • Policies written for a term of less than twenty years. are not now usually required to contain a non-forfeiture benefit.
    • If there is a substantial accumulation on any such policy, there is ho good reason why the insured should be deprived thereof.

1942-Supplement, NAIC Proceedings - Reports and Statements on Non-Forfeiture Benefits and Related Matters

  • (p100) - THE "Insurance" NON-FORFEITURE BENEFIT
    • The paid-up insurance option might· be described as the allowance upon lapse of a smaller amount of insurance on the whole life or endowment plan, similar to that provided for in the original policy, the amount of insurance being the variable depending upon the length of time premiums were paid, the plan of the original policy and other factors affecting the value of the original policy at lapse.
    • Under the extended insurance option, the amount of insurance is held at the same figure as in the original policy, subject to reduction on account of indebtedness, but the plan is changed to term insurance of such length that the value thereof is approximately equal to the value of the policy.

1942-Supplement, NAIC Proceedings - Reports and Statements on Non-Forfeiture Benefits and Related Matters

  • Whenever the plan or term of a policy shall have been changed, either by request of the insured or automatically in accordance with a provision of the policy, the date of inception of the changed policy, for the purpose of determining the cash surrender value, shall be the date as of which the rated age of the insured is determined under the changed policy.  (p158) 

1942-Supplement, NAIC Proceedings - Reports and Statements on Non-Forfeiture Benefits and Related Matters