2017 Guaranteed Issue Mortality Tables Report

2017 Guaranteed Issue Mortality Tables Report

Joint Academy of Actuaries' Life Experience Committee and Society of Actuaries' Preferred Mortality Oversight Group's Guaranteed Issue/Simplified Issue/Preneed Working Group

March 2017

The American Academy of Actuaries is a 19,000+ member professional association whose mission is to serve the public and the U.S. actuarial profession. The Academy assists public policymakers on all levels by providing leadership, objective expertise, and actuarial advice on risk and financial security issues. The Academy also sets qualification, practice, and professionalism standards for actuaries in the United States. The Society of Actuaries (SOA) is an educational, research and professional organization dedicated to serving the public, its members and its candidates. The SOA's mission is to advance actuarial knowledge and to enhance the ability of actuaries to provide expert advice and relevant solutions for financial, business and societal problems. The SOA's vision is for actuaries to be the leading professionals in the measurement and management of risk.

Copyright ?2017 All rights reserved by the Society of Actuaries Copyright ?2017 All rights reserved by the American Academy of Actuaries

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2017 Guaranteed Issue

Mortality Tables Report

TABLE OF CONTENTS

Acknowledgements and Resources ...........................................................................................................................3 1. Data Selection................................................................................................................................................5

1.1 Description of Underwriting....................................................................................................................................5 1.2 Background...............................................................................................................................................................5 1.3 Analysis of Data, including Limitations....................................................................................................................6 1.4 Data Included in Study.............................................................................................................................................7 2. Unloaded Mortality Table ..............................................................................................................................8 2.1 Extent of Credible Data............................................................................................................................................8 2.2 Select Period and Other...........................................................................................................................................8 2.3 Graduation Choices Made .......................................................................................................................................8 2.4 Adjustments to Graduated Results .........................................................................................................................9

2.4.1 Adjustments for Ages 50 to 59 ................................................................................................................9 2.4.2 Adjustments for Ages 0 to 49 ................................................................................................................10 2.4.3 Adjustments for Ages 90-96 ..................................................................................................................10 2.5 Extension for Ages 97-120.....................................................................................................................................10 2.6 Interpolation and Slope Checks.............................................................................................................................10 2.7 Mortality Improvement .........................................................................................................................................11 2.8 2017 Basic GI ALB Mortality Tables.......................................................................................................................11 3. Loaded Mortality Table ................................................................................................................................12 3.1 Actual to Expected ("A/E") experience coverage analysis ...................................................................................12 3.2 Coverage for Various Loadings..............................................................................................................................12 3.3 Valuation and Nonforfeiture Recommendations .................................................................................................13 3.4 Final Loading...........................................................................................................................................................13 3.5 Additional Monotonicity Checks ...........................................................................................................................14 3.6 Loaded Gender-Blended Mortality Tables............................................................................................................14 3.7 Model Office Reserves and Graph ........................................................................................................................15 Appendix A. 2017 Basic Guaranteed Issue, Select and Ultimate, Composite Male Mortality Table, ALB ...................17 Appendix B. 2017 Basic Guaranteed Issue, Select and Ultimate, Composite Female Mortality Table, ALB................19 Appendix C. 2017 Guaranteed Issue Composite Ultimate Mortality Tables..............................................................21 Appendix D. 2017 Loaded Guaranteed Issue Composite, Ultimate, Gender Blended Mortality Tables, ALB .............23 Appendix E. 2017 Loaded Guaranteed Issue Composite, Ultimate, Gender Blended Mortality Tables, ANB .............25

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Acknowledgements and Resources

The Society of Actuaries and American Academy of Actuaries would like to thank the following companies who contributed data to this study:

Americo Life and Annuity Insurance Company New York Life

Columbian Mutual Life

Pekin Life

CUNA Mutual

Physicians Mutual

Kansas City Life

ReliaStar Life

Lincoln Heritage Life

Security Life of Denver

Motorists Life

Settlers Life

Mutual of Omaha

VantisLife

National Guardian Life

The Society of Actuaries and American Academy of Actuaries would like to thank the following members of the Guaranteed Issue/Simplified Issue/Preneed Working Group who volunteered their time in the creation of the tables and this report:

Mary J. Bahna-Nolan, FSA, MAAA, CERA, Chair

Joseph J. Hogan, FSA, MAAA, Guaranteed Issue Sub-group Chair*

Mark William Birdsall, FSA, FCA, MAAA* Jennifer L Brady, FSA, MAAA William M. Brummond, FSA, MAAA* Donna R. Claire, FSA, CERA, MAAA* Keith A. Dall, FSA, MAAA Andy Ferris, FSA, FCA, MAAA* Jean-Marc Fix, FSA, MAAA Monique N. Hacker, FSA, MAAA* Catherine Ho, ASA, MAAA Jeffrey E. Johnson, ASA, MAAA Leslie M. Jones, ASA, MAAA *members of the Guaranteed Issue sub-group

Tony Randall Litterer, FSA, MAAA Gregory Lee Mitchell, FSA, MAAA David Moran, FSA, MAAA Edward James Mullen, FSA, MAAA* Kyle John Nodurft, FSA, MAAA W. Michael Reese, ASA, MAAA* Tomasz Serbinowski, FSA, MAAA Lloyd M. Spencer Jr., FSA, CERA, MAAA* Michael J. Villa, ASA, MAAA D. Joeff Williams, FSA, MAAA Josh Windsor, FSA, FIA, MAAA

The Guaranteed Issue sub-group would like to express its appreciation to Katherine Mullins, ASA for providing modeling assistance and support to this project.

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The SOA supplied funding to secure MIB's Actuarial and Statistical Research Group to collect, validate and compile the data for this work. The SOA also supplied staff support through the following individuals: David B. Atkinson, FSA, MBA (independent consultant) John A. Luff, FSA, FCIA, MAAA Cynthia MacDonald, FSA, CFA, MAAA Korrel Rosenberg

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1. Data Selection

1.1 Description of Underwriting A data call was issued on March 11, 2011 for guaranteed issue (GI), simplified issue and Preneed mortality data for observation years 2005 to 2009. Preneed business written on a guaranteed issue basis was included in the Preneed study and not in this guaranteed issue study. However, for ages under 50 and over 90, where GI data was sparse, Preneed mortality patterns were used to extend GI rates. Excluding duration 1, Preneed and GI exhibited somewhat comparable levels of mortality.

The Preneed mortality study and table development were prepared concurrent with the GI study by the Preneed Subgroup with data collected over an identical exposure period. The full report and rates for the Preneed study can be found under `Individual Mortality' at:

.

For purposes of this study, a guaranteed issue (GI) policy was defined as a policy or certificate where the applicant must be accepted for coverage if the applicant is eligible and the premium is paid. Exceptions for not allowing coverage including ineligibility due to issue age ranges or lack of membership in the eligible group (e.g., association group) will not disqualify the policy or certificate from being considered guaranteed. If any of the following risk selection criteria are required, then the coverage should not be considered guaranteed issue:

Actively at work requirement. Acceptance based on any health related questions or information. Waiving of underwriting requirements based on minimum participation thresholds, such as for

worksite marketing.

1.2 Background The SOA hired MIB to compile the data collected for the guaranteed issue study. MIB performed numerous syntax and validation checks and worked with SOA staff to ensure that company confidentiality was protected in the production of any data views that were provided to the Joint American Academy of Actuaries Life Experience Committee and Society of Actuaries Preferred Mortality Oversight Group (POG) for the development of the mortality tables.

The SOA's confidentiality guidelines state that any data released for analysis should not have any one company dominating the experience data. To meet this guideline, some companies' data submissions had to be scaled down. The guidelines also state that any potential subset or extract of the data should contain multiple companies' experience in order to prevent the identification of any one company's experience.

Because the guaranteed issue business is not homogenous in terms of the combination of factors (i.e., distribution channel, distribution method, premium payment method, etc.) that were collected to describe the business, the data released to the POG was very limited in terms of the number of factors that could be analyzed in combination. For example, the factors of distribution channel and distribution method could not be provided in the same view of the data because at least one of the combinations of

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