1988-2, NAIC Proceedings

• AAA - Report of the Committee on Life Insurance of the American Academy of Actuaries on the NAIC Life Insurance Yield Comparison Index

• N. Dissimilar Plans

  • It is a well known caveat that dissimilar plans should not be compared by using the typical cost comparison indices, e.g. IAC or Interest Adjusted Premium (IAP).

    • Evidence suggests that this is also true for the YI. 

  • Plans may be dissimilar for a multitude of reasons.

  • In this report two major sources of difference are discussed.

    • The first source is that the death benefits under the plans may be different.

    • The second source is premium as for flexible premium universal life plans the level of premiums paid can impact both the death benefit and the cash surrender values.

  • Hence, even if the nominal death benefits are the same but different premiums are paid, then the cash surrender values will be different.

  • In this case the actual death benefits could also be different due to the action of the DEFRA death benefit corridor.