Illustrations and Premium Limits
The NAIC Life Insurance Illustrations Model Regulation requires a basic illustration to consist of a numeric
summary of the death benefits and values on three bases:
Here is an example. The policy illustrated below is $100,000 specified amount with a $60 policy load, assessed
monthly. The guaranteed interest rate is 6% in the first year, 4% in renewal years. The issue age is 45 and four risk
classes are examined.
The two numbers listed under 1980 CSO and 2001 CSO are (i) the guaranteed maturity premium or GMP, i.e.
that level premium paid at issue and annually thereafter which matures the policy for the specified amount (at
attained age 95 in this case) based on contractual guarantees of mortality, interest, loads and charges and (ii) the
20th year cash value, i.e. the cash value at attained age 65.
GMP / Cash Value PY 20
Risk 1980 CSO 2001 CSO Reduction
45 MNS $1,904/$37,954 $1,559/$33,056 18%/13%
45 MS $2,504/$41,017 $2,022/$36,433 19%/11%
45 FNS $1,597/$32,579 $1,279/$26,384 20%/19%
45 FS $1,875/$33,770 $1,761/$32,117 6%/ 5%
small talk - A New Platform for Universal Life
ISSUE 18 JUNE 2002
- Normally the format for these illustrations are left pretty much to the discretion of the company, but on the numeric summary, there also are two signed acknowledgments.
- One is signed by the client stating that he has been told that these values are not guaranteed and can change any time, and another acknowledgment is signed by the agent saying that he has not presented any values that differ from or are in violation of the disciplined current scale. (p36)
-- THADDEUS W. TRENTON
1996 - VALUATION ACTUARY - SYMPOSIUM PROCEEDINGS - SESSION 2 - Life and Annuity Valuation Issues, Society of Actuaries