group life waiver of premium - amazon s3...12 illustrative waiver reserve impacts benefit...

Group Life Waiver of Premium

Jennifer Fleck, Consulting Actuary, MillimanSteve Rulis, 2nd VP & Group Actuary, Munich Re

May 20, 2019 - GUAA

2019 Group Life Waiver of Premium Report

https://www.soa.org/resources/experience-studies/2019/group-life-waiver/

2

History of Group Life Waiver Studies

2019 Study 2005 Table Krieger Table

Year Published 2019 2005 1970

Study Years 2000-2015 1993-2002 1955-1965

Companies Included 20 18 (24 submitted) 12

Life Years Exposure 2,800,000 750,000 125,000

Gender M and F (50% F) M and F (39% F) Unisex (15% F)

Elimination Period 6 Month, 9 Month, Other

9 Months 9 Months

3

2019 Waiver Study Data Elements

4

Claimant Level Data

Age at Disability

Gender

Face Amount

Duration

Diagnosis

LTD Claim Linking

Plan Design Data

Coverage Type (Basic/Voluntary)

Definition of Disability

EP

Benefit Period

Group/Company Level Data

# of Lives

Industry

LTD Coverage

Carrier Size Segment

4

Waiver Study High Level Results

5

4-6 Month EP 7-9 Month EP

Deaths 53,676 61,982

Recoveries 97,951 62,140

Mortality Rate 49.6 per 1,000 54.0 per 1,000

Recovery Rate 89.5 per 1,000 54.3 per 1,000

A/E Mortality 95% 110%

A/E Recovery 230% 185%

5

6

Comparison of Rates to Past Studies7-9 Month EP Plans, by Count

7

Comparison of Mortality Rates to Past StudiesBy Years Disabled, 7-9 Month EP

0102030405060708090

100110120130140

1 2 3 4 5 6 7 8 9 10 Ultimate(11+)

Dea

th R

ate

Per T

hous

and

Years Disabled

M - Actual 2019F - Actual 2019M - Fitted 2005F - Fitted 2005Unisex - Krieger

8

Comparison of Recovery Rates to Past StudiesBy Years Disabled, 7-9 Month EP

0102030405060708090

100110120130140150160170180

1 2 3 4 5 6 7 8 9 10 Ultimate(11+)

Rec

over

y R

ate

Per T

hous

and

Years Disabled


9

Comparison of Mortality Rates to Past StudiesBy Age-at-Disability Onset, 7-9 Month EP

0

10

20

30

40

50

60

70

80

90

17 22 27 32 37 42 47 52 57 62 67 72

Dea

th R

ate

Per T

hous

and

Age Group


10

Comparison of Recovery Rates to Past Studies

0

10

20

30

40

50

60

70

80

90

100

17 22 27 32 37 42 47 52 57 62 67 72

Rec

over

y R

ate

Per T

hous

and

Age Group


By Age-at-Disability Onset, 7-9 Month EP

11

US Statutory Waiver Reserves

Actuarial Guideline 44 Specifies the use of the 2005 GTLW Mortality and Recovery tables Expected value of death benefit (not waived premiums) Appointed Actuary determines if company specific experience

should be blended with or replace the 2005 tables in their statutory reserve calculation. The committee calculated some illustrative reserve differences that

may be seen when this experience study results in a new reserve standard.

12

Illustrative Waiver Reserve Impacts

Benefit Elimination Disability Vs 2005 GTLWP Table, no margin Vs 1970 Krieger Table, no marginPattern Period Sex Incurral As of Claim Duration Year As of Claim Duration Year

Category Age Range 1 2 3 5 10 1 2 3 5 10Lifetime 1-6mos M 40-44 70% 80% 80% 90% 95% 65% 65% 65% 70% 75%Lifetime 1-6mos M 45-49 75% 80% 85% 90% 95% 65% 65% 70% 75% 80%Lifetime 1-6mos M 50-54 85% 90% 90% 95% 100% 70% 70% 75% 75% 85%Lifetime 1-6mos F 40-44 80% 85% 85% 90% 95% 50% 55% 55% 60% 65%Lifetime 1-6mos F 45-49 75% 85% 85% 90% 100% 55% 55% 60% 60% 70%Lifetime 1-6mos F 50-54 85% 90% 95% 95% 100% 60% 65% 65% 70% 75%Lifetime 7mos+ M 40-44 80% 85% 85% 90% 95% 70% 70% 70% 70% 75%Lifetime 7mos+ M 45-49 85% 85% 90% 95% 95% 70% 70% 70% 75% 80%Lifetime 7mos+ M 50-54 90% 90% 95% 100% 100% 75% 75% 75% 80% 85%Lifetime 7mos+ F 40-44 90% 90% 95% 95% 95% 60% 60% 60% 60% 65%Lifetime 7mos+ F 45-49 85% 90% 90% 90% 100% 60% 60% 60% 65% 70%Lifetime 7mos+ F 50-54 90% 90% 95% 95% 100% 65% 65% 65% 70% 75%

exhibitSex

Exhibit 6.2.2.1

Illustrative Reserve Factor Relativities Vs 2005 GWP @ 4.5% Discount

Gender Differentials, Incurral Ages 40-44

(Rounded to the nearest 5%)

ClaimBenefitEliminationRatio of Mean Industry ExperienceDifference vs 2005 GWPMale Diff

Duration PatternPeriodto 2005 GWP PV of $1,000(Ratio - 1)Less

Year CategoryMaleFemaleMaleFemaleFemale Diff

1Lifetime1-6mos70%80%-30%-20%-10%

1Lifetime7mos+80%90%-20%-10%-10%

1End at 651-6mos70%80%-30%-20%-10%

1End at 657mos+80%95%-20%-5%-15%

2Lifetime1-6mos80%85%-20%-15%-5%

2Lifetime7mos+85%90%-15%-10%-5%

2End at 651-6mos80%90%-20%-10%-10%

2End at 657mos+85%100%-15%0%-15%

10Lifetime1-6mos95%95%-5%-5%0%

10Lifetime7mos+95%95%-5%-5%0%

10End at 651-6mos105%100%5%0%5%

10End at 657mos+105%100%5%0%5%

exhibitElim

Exhibit 6.2.3.1


Elimination Period Differentials, Claim Duration Year 1


BenefitClaimantDisabilityRatio of Mean Industry ExperienceDifference vs 2005 GWPShort Elim Diff

PatternSexIncurralto 2005 GWP PV of $1,000(Ratio - 1)Less

Age RangeElim 1-6 MonthsElim 7+ monthsElim 1-6 MonthsElim 7+ monthsLong Elim Diff

LifetimeMale40-4470%80%-30%-20%-10%

LifetimeMale45-4975%85%-25%-15%-10%

LifetimeMale50-5485%90%-15%-10%-5%

LifetimeFemale40-4480%90%-20%-10%-10%

LifetimeFemale45-4975%85%-25%-15%-10%

LifetimeFemale50-5485%90%-15%-10%-5%

End at 65Male40-4470%80%-30%-20%-10%

End at 65Male45-4980%90%-20%-10%-10%

End at 65Male50-5490%100%-10%0%-10%

End at 65Female40-4480%95%-20%-5%-15%

End at 65Female45-4980%90%-20%-10%-10%

End at 65Female50-5490%95%-10%-5%-5%

Exhibit 6.2.3.2







LifetimeMale40-4480%85%-20%-15%-5%

LifetimeMale45-4980%85%-20%-15%-5%

LifetimeMale50-5490%90%-10%-10%0%

LifetimeFemale40-4485%90%-15%-10%-5%

LifetimeFemale45-4985%90%-15%-10%-5%

LifetimeFemale50-5490%90%-10%-10%0%

End at 65Male40-4480%85%-20%-15%-5%

End at 65Male45-4985%90%-15%-10%-5%

End at 65Male50-5495%100%-5%0%-5%

End at 65Female40-4490%100%-10%0%-10%

End at 65Female45-4985%95%-15%-5%-10%

End at 65Female50-5495%95%-5%-5%0%

Exhibit ##3







LifetimeMale40-4495%95%-5%-5%0%

LifetimeMale45-4995%95%-5%-5%0%

LifetimeMale50-54100%100%0%0%0%


LifetimeFemale45-49100%100%0%0%0%


End at 65Male40-44105%105%5%5%0%

End at 65Male45-49105%105%5%5%0%

End at 65Male50-54110%110%10%10%0%

End at 65Female40-44100%100%0%0%0%

End at 65Female45-49100%100%0%0%0%

End at 65Female50-54105%105%5%5%0%

graphRanged

Multi-Cell Graph (choosing multiple of gender, age, elim, and/or benefit… max of conservative, min of aggressive to present full range)

pvtgraph datagraph

comparison2005

incAgeRng(All)

sex(All)

elimRng(All)

if Cnt 1 for all cells DO NOT USE (you are stacking data cells)

benefit2experience

LifetimeLifetimeLifetimeEnd at 65End at 65End at 65

ValuesdurYraggressivemeanconservativeaggressivemeanconservative

Min of ratioRnd165%70%75%65%70%75%

275%80%85%75%80%85%

375%80%85%75%85%90%

585%90%95%85%90%95%

1095%95%100%95%100%105%

Average of ratioRnd177%83%87%81%87%93%

283%87%92%85%91%98%

385%89%93%87%94%100%

590%93%97%92%99%105%

1097%98%101%99%104%107%

Max of ratioRnd185%90%95%95%100%105%

290%90%100%95%100%110%

390%95%100%100%105%110%benefitLifetimeEnd at 65

595%100%100%110%115%120%DurationLifetime lowLifetime avgLifetime highEnd at 65 lowEnd at 65 avgEnd at 65 high

10100%100%105%105%110%110%165%83%95%65%87%105%

275%87%100%75%91%110%

375%89%100%75%94%110%

585%93%100%85%99%120%

1095%98%105%95%104%110%

skip… looks crazy and I'm not done yet.

Exhibit ##: Illustrative Reserve Factor

Range of Change vs 2005 Factors w/o Margin

Both Sexes, Incurral Age 40-54, Elim 1+ mos,

Lifetime Benefit, 4.5% discount

Lifetime low1235100.650.750.750.850000000000000090.95000000000000007Lifetime avg1235100.825000000000000180.866666666666666810.891666666666666720.92916666666666670.97499999999999998Lifetime high1235100.950000000000000071111.05End at 65 low1235100.650.750.750.850000000000000090.95000000000000007End at 65 avg1235100.86666666666666670.912499999999999980.93750.987499999999999931.0416666666666667End at 65 high1235101.051.10000000000000011.10000000000000011.20000000000000021.1000000000000001

Reserve Factor Ratio

appendixTable1

Group Term Life Premium Waiver Appendix B.1

Illustrative Reserve Factor Relativities @ 4.5% Discount


BenefitElimination DisabilityVs 2005 GTLWP Table, no marginVs 1970 Krieger Table, no margin

PatternPeriodSexIncurralAs of Claim Duration YearAs of Claim Duration Year

Category Age Range123510123510

Lifetime1-6mosM40-4470%80%80%90%95%65%65%65%70%75%

Lifetime1-6mosM45-4975%80%85%90%95%65%65%70%75%80%

Lifetime1-6mosM50-5485%90%90%95%100%70%70%75%75%85%

Lifetime1-6mosF40-4480%85%85%90%95%50%55%55%60%65%

Lifetime1-6mosF45-4975%85%85%90%100%55%55%60%60%70%

Lifetime1-6mosF50-5485%90%95%95%100%60%65%65%70%75%

Lifetime7mos+M40-4480%85%85%90%95%70%70%70%70%75%

Lifetime7mos+M45-4985%85%90%95%95%70%70%70%75%80%

Lifetime7mos+M50-5490%90%95%100%100%75%75%75%80%85%

Lifetime7mos+F40-4490%90%95%95%95%60%60%60%60%65%

Lifetime7mos+F45-4985%90%90%90%100%60%60%60%65%70%

Lifetime7mos+F50-5490%90%95%95%100%65%65%65%70%75%

End at 651-6mosM40-4470%80%85%95%105%60%65%60%65%70%

End at 651-6mosM45-4980%85%90%95%105%60%60%60%65%70%

End at 651-6mosM50-5490%95%95%105%110%65%60%60%65%70%

End at 651-6mosF40-4480%90%90%90%100%45%45%45%45%50%

End at 651-6mosF45-4980%85%90%90%100%50%45%45%45%50%

End at 651-6mosF50-5490%95%95%100%105%50%50%50%50%50%

End at 657mos+M40-4480%85%90%95%105%65%65%65%65%70%

End at 657mos+M45-4990%90%90%100%105%70%65%65%65%70%

End at 657mos+M50-54100%100%105%115%110%70%65%65%70%70%

End at 657mos+F40-4495%100%100%100%100%55%50%50%50%50%

End at 657mos+F45-4990%95%95%95%100%55%50%50%50%50%

End at 657mos+F50-5495%95%100%105%105%55%50%50%50%50%

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appendixTable2


Illustrative Reserve Factor Relativity Ranges @ 4.5% Discount

Decrement confidence intervals used to estimate a range of potential outcomes from graduation


BenefitElimination DisabilityExperience-Based Table / 2005 GTLWP Table, no margin

PatternPeriodSexIncurralAs of Claim Duration Year


Lifetime1-6mosM40-4465% - 75%75% - 85%75% - 85%85% - 95%95% - 100%

Lifetime1-6mosM45-4970% - 80%75% - 85%80% - 90%90% - 95%95% - 100%

Lifetime1-6mosM50-5480% - 85%85% - 90%90% - 95%95% - 100%100% - 100%

Lifetime1-6mosF40-4470% - 85%80% - 95%80% - 95%85% - 95%95% - 100%

Lifetime1-6mosF45-4975% - 80%80% - 90%85% - 90%85% - 95%95% - 100%

Lifetime1-6mosF50-5480% - 90%85% - 95%90% - 95%95% - 100%100% - 105%

Lifetime7mos+M40-4475% - 85%80% - 90%80% - 90%85% - 95%95% - 100%

Lifetime7mos+M45-4980% - 90%85% - 90%85% - 95%90% - 95%95% - 100%

Lifetime7mos+M50-5485% - 95%90% - 95%90% - 95%95% - 100%100% - 100%

Lifetime7mos+F40-4480% - 95%85% - 100%85% - 100%90% - 100%95% - 100%

Lifetime7mos+F45-4980% - 90%85% - 95%85% - 95%90% - 95%95% - 100%

Lifetime7mos+F50-5485% - 95%85% - 95%90% - 95%95% - 100%100% - 105%

End at 651-6mosM40-4465% - 75%75% - 85%75% - 90%85% - 100%100% - 105%

End at 651-6mosM45-4975% - 85%80% - 90%85% - 95%90% - 100%100% - 110%

End at 651-6mosM50-5485% - 90%90% - 100%90% - 100%100% - 110%105% - 110%

End at 651-6mosF40-4475% - 90%80% - 100%80% - 100%85% - 100%95% - 105%

End at 651-6mosF45-4975% - 85%80% - 95%80% - 95%85% - 95%95% - 105%

End at 651-6mosF50-5485% - 95%90% - 100%90% - 100%95% - 105%100% - 105%

End at 657mos+M40-4475% - 90%80% - 95%80% - 95%90% - 105%100% - 105%

End at 657mos+M45-4985% - 95%85% - 95%85% - 100%95% - 105%100% - 110%

End at 657mos+M50-5495% - 105%95% - 105%100% - 110%110% - 120%105% - 110%

End at 657mos+F40-4485% - 105%90% - 110%90% - 105%90% - 105%95% - 105%

End at 657mos+F45-4985% - 95%90% - 100%90% - 105%85% - 100%95% - 105%

End at 657mos+F50-5490% - 100%90% - 100%95% - 105%95% - 110%100% - 105%

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appendixTable3





BenefitElimination DisabilityExperience-Based Table / 1970 Krieger Table, no margin



Lifetime1-6mosM40-4460% - 70%60% - 70%60% - 70%65% - 75%75% - 80%

Lifetime1-6mosM45-4960% - 70%65% - 70%65% - 75%70% - 75%80% - 80%

Lifetime1-6mosM50-5465% - 70%70% - 75%70% - 75%75% - 80%80% - 85%

Lifetime1-6mosF40-4445% - 55%50% - 60%50% - 60%55% - 60%65% - 70%

Lifetime1-6mosF45-4950% - 55%55% - 60%55% - 60%60% - 65%70% - 75%

Lifetime1-6mosF50-5460% - 65%60% - 65%60% - 65%65% - 70%75% - 75%

Lifetime7mos+M40-4465% - 75%65% - 75%65% - 75%70% - 75%75% - 80%

Lifetime7mos+M45-4970% - 75%70% - 75%70% - 75%75% - 80%80% - 80%

Lifetime7mos+M50-5470% - 75%70% - 75%75% - 80%75% - 80%80% - 85%

Lifetime7mos+F40-4455% - 65%55% - 65%55% - 65%60% - 65%65% - 70%

Lifetime7mos+F45-4955% - 65%55% - 65%60% - 65%60% - 65%70% - 75%

Lifetime7mos+F50-5460% - 65%60% - 65%65% - 70%70% - 70%75% - 75%

End at 651-6mosM40-4455% - 65%55% - 70%55% - 65%60% - 70%65% - 70%

End at 651-6mosM45-4955% - 65%55% - 65%60% - 65%60% - 65%70% - 75%

End at 651-6mosM50-5460% - 65%60% - 65%60% - 65%60% - 65%65% - 70%

End at 651-6mosF40-4440% - 50%45% - 50%40% - 50%45% - 50%50% - 55%

End at 651-6mosF45-4945% - 50%45% - 50%45% - 50%45% - 50%50% - 55%

End at 651-6mosF50-5450% - 55%50% - 55%45% - 50%45% - 50%45% - 50%

End at 657mos+M40-4460% - 75%60% - 75%60% - 70%60% - 70%65% - 70%

End at 657mos+M45-4965% - 70%60% - 70%60% - 70%65% - 70%70% - 75%

End at 657mos+M50-5465% - 75%65% - 70%65% - 70%65% - 70%65% - 70%

End at 657mos+F40-4450% - 60%45% - 55%45% - 55%45% - 55%50% - 55%

End at 657mos+F45-4950% - 60%50% - 55%45% - 55%45% - 50%50% - 55%

End at 657mos+F50-5455% - 60%50% - 55%50% - 55%50% - 55%45% - 50%

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13

Illustrative Waiver Reserve Impacts

Benefit Elimination Disability Vs 2005 GTLWP Table, no margin Vs 1970 Krieger Table, no marginPattern Period Sex Incurral As of Claim Duration Year As of Claim Duration Year

Category Age Range 1 2 3 5 10 1 2 3 5 10End at 65 1-6mos M 40-44 70% 80% 85% 95% 105% 60% 65% 60% 65% 70%End at 65 1-6mos M 45-49 80% 85% 90% 95% 105% 60% 60% 60% 65% 70%End at 65 1-6mos M 50-54 90% 95% 95% 105% 110% 65% 60% 60% 65% 70%End at 65 1-6mos F 40-44 80% 90% 90% 90% 100% 45% 45% 45% 45% 50%End at 65 1-6mos F 45-49 80% 85% 90% 90% 100% 50% 45% 45% 45% 50%End at 65 1-6mos F 50-54 90% 95% 95% 100% 105% 50% 50% 50% 50% 50%End at 65 7mos+ M 40-44 80% 85% 90% 95% 105% 65% 65% 65% 65% 70%End at 65 7mos+ M 45-49 90% 90% 90% 100% 105% 70% 65% 65% 65% 70%End at 65 7mos+ M 50-54 100% 100% 105% 115% 110% 70% 65% 65% 70% 70%End at 65 7mos+ F 40-44 95% 100% 100% 100% 100% 55% 50% 50% 50% 50%End at 65 7mos+ F 45-49 90% 95% 95% 95% 100% 55% 50% 50% 50% 50%End at 65 7mos+ F 50-54 95% 95% 100% 105% 105% 55% 50% 50% 50% 50%

exhibitSex

Exhibit 6.2.2.1


Gender Differentials, Incurral Ages 40-44


ClaimBenefitEliminationRatio of Mean Industry ExperienceDifference vs 2005 GWPMale Diff

Duration PatternPeriodto 2005 GWP PV of $1,000(Ratio - 1)Less

Year CategoryMaleFemaleMaleFemaleFemale Diff

1Lifetime1-6mos70%80%-30%-20%-10%

1Lifetime7mos+80%90%-20%-10%-10%

1End at 651-6mos70%80%-30%-20%-10%

1End at 657mos+80%95%-20%-5%-15%

2Lifetime1-6mos80%85%-20%-15%-5%

2Lifetime7mos+85%90%-15%-10%-5%

2End at 651-6mos80%90%-20%-10%-10%

2End at 657mos+85%100%-15%0%-15%

10Lifetime1-6mos95%95%-5%-5%0%

10Lifetime7mos+95%95%-5%-5%0%

10End at 651-6mos105%100%5%0%5%

10End at 657mos+105%100%5%0%5%

exhibitElim

Exhibit 6.2.3.1







LifetimeMale40-4470%80%-30%-20%-10%

LifetimeMale45-4975%85%-25%-15%-10%

LifetimeMale50-5485%90%-15%-10%-5%

LifetimeFemale40-4480%90%-20%-10%-10%

LifetimeFemale45-4975%85%-25%-15%-10%

LifetimeFemale50-5485%90%-15%-10%-5%

End at 65Male40-4470%80%-30%-20%-10%

End at 65Male45-4980%90%-20%-10%-10%

End at 65Male50-5490%100%-10%0%-10%

End at 65Female40-4480%95%-20%-5%-15%

End at 65Female45-4980%90%-20%-10%-10%

End at 65Female50-5490%95%-10%-5%-5%

Exhibit 6.2.3.2







LifetimeMale40-4480%85%-20%-15%-5%

LifetimeMale45-4980%85%-20%-15%-5%

LifetimeMale50-5490%90%-10%-10%0%

LifetimeFemale40-4485%90%-15%-10%-5%

LifetimeFemale45-4985%90%-15%-10%-5%


End at 65Male40-4480%85%-20%-15%-5%

End at 65Male45-4985%90%-15%-10%-5%

End at 65Male50-5495%100%-5%0%-5%

End at 65Female40-4490%100%-10%0%-10%

End at 65Female45-4985%95%-15%-5%-10%

End at 65Female50-5495%95%-5%-5%0%

Exhibit ##3







LifetimeMale40-4495%95%-5%-5%0%

LifetimeMale45-4995%95%-5%-5%0%

LifetimeMale50-54100%100%0%0%0%




End at 65Male40-44105%105%5%5%0%

End at 65Male45-49105%105%5%5%0%

End at 65Male50-54110%110%10%10%0%

End at 65Female40-44100%100%0%0%0%

End at 65Female45-49100%100%0%0%0%

End at 65Female50-54105%105%5%5%0%

graphRanged

Multi-Cell Graph (choosing multiple of gender, age, elim, and/or benefit… max of conservative, min of aggressive to present full range)

pvtgraph datagraph

comparison2005

incAgeRng(All)

sex(All)

elimRng(All)

if Cnt 1 for all cells DO NOT USE (you are stacking data cells)

benefit2experience

LifetimeLifetimeLifetimeEnd at 65End at 65End at 65

ValuesdurYraggressivemeanconservativeaggressivemeanconservative

Min of ratioRnd165%70%75%65%70%75%

275%80%85%75%80%85%

375%80%85%75%85%90%

585%90%95%85%90%95%

1095%95%100%95%100%105%

Average of ratioRnd177%83%87%81%87%93%

283%87%92%85%91%98%

385%89%93%87%94%100%

590%93%97%92%99%105%

1097%98%101%99%104%107%

Max of ratioRnd185%90%95%95%100%105%

290%90%100%95%100%110%

390%95%100%100%105%110%benefitLifetimeEnd at 65

595%100%100%110%115%120%DurationLifetime lowLifetime avgLifetime highEnd at 65 lowEnd at 65 avgEnd at 65 high

10100%100%105%105%110%110%165%83%95%65%87%105%

275%87%100%75%91%110%

375%89%100%75%94%110%

585%93%100%85%99%120%

1095%98%105%95%104%110%

skip… looks crazy and I'm not done yet.

Exhibit ##: Illustrative Reserve Factor

Range of Change vs 2005 Factors w/o Margin

Both Sexes, Incurral Age 40-54, Elim 1+ mos,

Lifetime Benefit, 4.5% discount

Lifetime low1235100.650.750.750.850000000000000090.95000000000000007Lifetime avg1235100.825000000000000180.866666666666666810.891666666666666720.92916666666666670.97499999999999998Lifetime high1235100.950000000000000071111.05End at 65 low1235100.650.750.750.850000000000000090.95000000000000007End at 65 avg1235100.86666666666666670.912499999999999980.93750.987499999999999931.0416666666666667End at 65 high1235101.051.10000000000000011.10000000000000011.20000000000000021.1000000000000001

Reserve Factor Ratio

appendixTable1


Illustrative Reserve Factor Relativities @ 4.5% Discount


BenefitElimination DisabilityVs 2005 GTLWP Table, no marginVs 1970 Krieger Table, no margin

PatternPeriodSexIncurralAs of Claim Duration YearAs of Claim Duration Year


Lifetime1-6mosM40-4470%80%80%90%95%65%65%65%70%75%

Lifetime1-6mosM45-4975%80%85%90%95%65%65%70%75%80%

Lifetime1-6mosM50-5485%90%90%95%100%70%70%75%75%85%

Lifetime1-6mosF40-4480%85%85%90%95%50%55%55%60%65%

Lifetime1-6mosF45-4975%85%85%90%100%55%55%60%60%70%

Lifetime1-6mosF50-5485%90%95%95%100%60%65%65%70%75%

Lifetime7mos+M40-4480%85%85%90%95%70%70%70%70%75%

Lifetime7mos+M45-4985%85%90%95%95%70%70%70%75%80%

Lifetime7mos+M50-5490%90%95%100%100%75%75%75%80%85%

Lifetime7mos+F40-4490%90%95%95%95%60%60%60%60%65%

Lifetime7mos+F45-4985%90%90%90%100%60%60%60%65%70%

Lifetime7mos+F50-5490%90%95%95%100%65%65%65%70%75%

End at 651-6mosM40-4470%80%85%95%105%60%65%60%65%70%

End at 651-6mosM45-4980%85%90%95%105%60%60%60%65%70%

End at 651-6mosM50-5490%95%95%105%110%65%60%60%65%70%

End at 651-6mosF40-4480%90%90%90%100%45%45%45%45%50%

End at 651-6mosF45-4980%85%90%90%100%50%45%45%45%50%

End at 651-6mosF50-5490%95%95%100%105%50%50%50%50%50%

End at 657mos+M40-4480%85%90%95%105%65%65%65%65%70%

End at 657mos+M45-4990%90%90%100%105%70%65%65%65%70%

End at 657mos+M50-54100%100%105%115%110%70%65%65%70%70%

End at 657mos+F40-4495%100%100%100%100%55%50%50%50%50%

End at 657mos+F45-4990%95%95%95%100%55%50%50%50%50%

End at 657mos+F50-5495%95%100%105%105%55%50%50%50%50%

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appendixTable2





BenefitElimination DisabilityExperience-Based Table / 2005 GTLWP Table, no margin



Lifetime1-6mosM40-4465% - 75%75% - 85%75% - 85%85% - 95%95% - 100%

Lifetime1-6mosM45-4970% - 80%75% - 85%80% - 90%90% - 95%95% - 100%

Lifetime1-6mosM50-5480% - 85%85% - 90%90% - 95%95% - 100%100% - 100%

Lifetime1-6mosF40-4470% - 85%80% - 95%80% - 95%85% - 95%95% - 100%

Lifetime1-6mosF45-4975% - 80%80% - 90%85% - 90%85% - 95%95% - 100%

Lifetime1-6mosF50-5480% - 90%85% - 95%90% - 95%95% - 100%100% - 105%

Lifetime7mos+M40-4475% - 85%80% - 90%80% - 90%85% - 95%95% - 100%

Lifetime7mos+M45-4980% - 90%85% - 90%85% - 95%90% - 95%95% - 100%

Lifetime7mos+M50-5485% - 95%90% - 95%90% - 95%95% - 100%100% - 100%

Lifetime7mos+F40-4480% - 95%85% - 100%85% - 100%90% - 100%95% - 100%

Lifetime7mos+F45-4980% - 90%85% - 95%85% - 95%90% - 95%95% - 100%

Lifetime7mos+F50-5485% - 95%85% - 95%90% - 95%95% - 100%100% - 105%

End at 651-6mosM40-4465% - 75%75% - 85%75% - 90%85% - 100%100% - 105%

End at 651-6mosM45-4975% - 85%80% - 90%85% - 95%90% - 100%100% - 110%

End at 651-6mosM50-5485% - 90%90% - 100%90% - 100%100% - 110%105% - 110%

End at 651-6mosF40-4475% - 90%80% - 100%80% - 100%85% - 100%95% - 105%

End at 651-6mosF45-4975% - 85%80% - 95%80% - 95%85% - 95%95% - 105%

End at 651-6mosF50-5485% - 95%90% - 100%90% - 100%95% - 105%100% - 105%

End at 657mos+M40-4475% - 90%80% - 95%80% - 95%90% - 105%100% - 105%

End at 657mos+M45-4985% - 95%85% - 95%85% - 100%95% - 105%100% - 110%

End at 657mos+M50-5495% - 105%95% - 105%100% - 110%110% - 120%105% - 110%

End at 657mos+F40-4485% - 105%90% - 110%90% - 105%90% - 105%95% - 105%

End at 657mos+F45-4985% - 95%90% - 100%90% - 105%85% - 100%95% - 105%

End at 657mos+F50-5490% - 100%90% - 100%95% - 105%95% - 110%100% - 105%

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appendixTable3





BenefitElimination DisabilityExperience-Based Table / 1970 Krieger Table, no margin



Lifetime1-6mosM40-4460% - 70%60% - 70%60% - 70%65% - 75%75% - 80%

Lifetime1-6mosM45-4960% - 70%65% - 70%65% - 75%70% - 75%80% - 80%

Lifetime1-6mosM50-5465% - 70%70% - 75%70% - 75%75% - 80%80% - 85%

Lifetime1-6mosF40-4445% - 55%50% - 60%50% - 60%55% - 60%65% - 70%

Lifetime1-6mosF45-4950% - 55%55% - 60%55% - 60%60% - 65%70% - 75%

Lifetime1-6mosF50-5460% - 65%60% - 65%60% - 65%65% - 70%75% - 75%

Lifetime7mos+M40-4465% - 75%65% - 75%65% - 75%70% - 75%75% - 80%

Lifetime7mos+M45-4970% - 75%70% - 75%70% - 75%75% - 80%80% - 80%

Lifetime7mos+M50-5470% - 75%70% - 75%75% - 80%75% - 80%80% - 85%

Lifetime7mos+F40-4455% - 65%55% - 65%55% - 65%60% - 65%65% - 70%

Lifetime7mos+F45-4955% - 65%55% - 65%60% - 65%60% - 65%70% - 75%

Lifetime7mos+F50-5460% - 65%60% - 65%65% - 70%70% - 70%75% - 75%

End at 651-6mosM40-4455% - 65%55% - 70%55% - 65%60% - 70%65% - 70%

End at 651-6mosM45-4955% - 65%55% - 65%60% - 65%60% - 65%70% - 75%

End at 651-6mosM50-5460% - 65%60% - 65%60% - 65%60% - 65%65% - 70%

End at 651-6mosF40-4440% - 50%45% - 50%40% - 50%45% - 50%50% - 55%

End at 651-6mosF45-4945% - 50%45% - 50%45% - 50%45% - 50%50% - 55%

End at 651-6mosF50-5450% - 55%50% - 55%45% - 50%45% - 50%45% - 50%

End at 657mos+M40-4460% - 75%60% - 75%60% - 70%60% - 70%65% - 70%

End at 657mos+M45-4965% - 70%60% - 70%60% - 70%65% - 70%70% - 75%

End at 657mos+M50-5465% - 75%65% - 70%65% - 70%65% - 70%65% - 70%

End at 657mos+F40-4450% - 60%45% - 55%45% - 55%45% - 55%50% - 55%

End at 657mos+F45-4950% - 60%50% - 55%45% - 55%45% - 50%50% - 55%

End at 657mos+F50-5455% - 60%50% - 55%50% - 55%50% - 55%45% - 50%

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2019 SOA Waiver Study Segmentation Variables

14

Many of the same segmentation variables as SOA 2016 LTD Study

2005 Study 2019 Study – same as 2005 plus 13 new variablesGender Study Year Elimination Period

Age at Disability Definition of Disability Benefit Period

Duration Since Disability

Group Size Initial Face Amount Band

2 Digit SIC Industry Grouping

Collar Color Coverage Type (Basic, Supp, Combined)

Diagnosis LTD Coverage Indicator

Carrier Size (6 Small, 7 Medium, 7 Large) based on death benefits exposed in study

Three Questions while working on Waiver Tables

1. How has linking LTD and Group Life Waiver impacted Waiver claim cost?

2. Have Waiver recoveries closed the gap versus recent LTD recovery studies?

3. How should underwriters and actuaries use this new info when pricing/renewing cases?

2016 SOA Waiver Incidence Study – Impact of LTD Linking

Roughly 2/3 to ¾ of Waiver claims are linked to LTD

Linking has grown by +/- 10% to 20% over past decade

Waiver claims with 6 month EP incrementally more likely to be linked to LTD

Observations from 2019 Waiver Termination Study

0.69

0.79

0.34

0.53

0.61

0.32

0.59

0.68

0.33

0.00

0.10

0.20

0.30

0.40

0.50

0.60

0.70

0.80

0.90

Total Linked with LTD Not Linked

Waiver Incidence Rates ($ amount)

Female All Ages Male All Ages Grand Total

Polling question at 2017 SOA Group Life & Disability Talk Shop

Key Takeaways of Segmentation

• Gap between 2016 LTD and 2005 Waiver recoveries cut roughly in half

Comparison to LTD

• Waiver recovery rates increasing over time – even steeper than LTD increases

Study Year

• 3 distinct tiers in Waiver recoveries, while LTD large and medium quite similar

Carrier Size

Diagnosis and Case Size material predictors of Waiver terminations

18

From 2016 LTD Study – Comparison to 2005 Waiver

19

2019 SOA Waiver Study – Comparison to LTD Recoveries

20

0

100

200

300

400

500

600

Months 10-12 Y02 Y03 Y04 Y05 Y06 Y07 Y08 Y09 Y10

Annualized Recovery Rates per Thousand

2018 Waiver 2005 Waiver 2016 LTD

2019 Waiver Recoveries With/Without LTD

21

0

100

200

300

400

500

600


Annualized Recovery Rates per Thousand

Waiver: No LTD Coverage Waiver: Also have LTD claim LTD Rates

2019 SOA Waiver Study – Comparison to LTD Deaths

22

0

20

40

60

80

100

120


Annualized Mortality Rates per Thousand

2018 Waiver 2005 Waiver 2016 LTD

Trends by Calendar Year – A/E Recoveries “ The 2016 LTD Study showed a pronounced upward trend in A/E recovery rates by calendar year.

Specifically, the A/E ratio graded steadily upward from nearly 100% in 2004 to more than 125% in 2012.”

23

143%

184%

128%

90%

100%

110%

120%

130%

140%

150%

160%

170%

180%

190%

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Change in A/E Ratio, Standardized

Waiver LTD

2016 LTD Recoveries by Carrier Size

24

2019 Waiver Recoveries by Carrier Size

25

2019 Waiver and 2016 LTD Deaths by Diagnosis

26

0

50

100

150

200

250

300

350

400

450

500


Annualized Mortality Rates per Thousand

Waiver Cancer Waiver Other LTD Cancer LTD Other

2018 Waiver Recoveries by Diagnosis

0

100

200

300

400

500

600

700

Q01 Q02 Q03 Q04 Q05 Q06 Q07 Q08

Num

ber o

f Rec

over

ies

Per T

hous

and

Duration

Durational Recovery Rates by Diagnosis:Duration Years 1-2

Total Cancer Back

Circulatory Diabetes Digestive

Infectuous Diseases Injury (not back) Maternity

Mental/Nervous Nervous System Other musculoskeletal

Respiratory Other Missing/Invalid

27

0

50

100

150

200

250

300

Y03 Y04 Y05 Y06 Y07 Y08 Y09 Y10

Num

ber o

f Rec

over

ies

Per T

hous

and

Duration

Durational Recovery Rates by Diagnosis:Duration Years 3-10

Total Cancer Back

Circulatory Diabetes Digestive

Infectuous Diseases Injury (not back) Maternity

Mental/Nervous Nervous System Other musculoskeletal

Respiratory Other Missing/Invalid

2016 LTD Terminations by Case Size (deaths + recoveries)

28

2019 Waiver Recoveries by Case Size

29

0

50

100

150

200

250

300

Months 10-12

Y02 Y03 Y04 Y05 Y06 Y07 Y08 Y09 Y10

2019 Waiver Recoveries per Thousand by Case Size

1-99 100-999 1000-4999 5000+

Other Segmentation Observations

Collar Color

LTD blue/grey collar recoveries increasing faster than white, but no material difference in Waiver recoveries by collar

Waiver deaths notably lower for white collar

Salary/Face Amount

LTD recovery rates drop roughly 50% as monthly salary increases from less than $2,500 to more than $7,500

Need to select very high Waiver face amounts ($500K +) to observe roughly 35% drop in Waiver recovery rates

Elimination Period

2016 LTD recovery A/Es improved as EPs increased

2018 Waiver had slightly higher recoveries for 6 month EP versus 9 month

Definition of Disability 2018 Waiver had faster recoveries for Any Occ versus 2 Year Own Occ

30

Group Life Case UW/Pricing Implications

1. Waiver recoveries rates increasing sharply year over year

Thus, Waiver reserves from 3-5 years ago may now be overstated

2. Expect Waiver incidence to increase materially if linked with LTD

Linked Waiver recoveries also significantly faster, so net of two likely a slight claim cost bump

Majority of Waiver claims are now linked with LTD

Can draw some group case level Waiver insights from the group’s LTD experience

Recoveries on linked Waiver claims may tied to economy

3. Waiver recoveries and reserves do vary from carrier to carrier

Carrier size

Are reserves based on 2005 Tables or a blend with company experience?

May be justifiable to adjust prior carrier Waiver reserves 31

32

Next Steps

A new workgroup is starting that will create a new valuation table based on this experience study. The process is expected to take 2 – 3 years to complete.

Share this study with your actuaries to determine if changes can be made to your pricing basis to reflect this latest industry data.

Thank you

Jennifer [email protected] [email protected]

Slide Number 12019 Group Life Waiver of Premium ReportHistory of Group Life Waiver Studies2019 Waiver Study Data ElementsWaiver Study High Level Results Comparison of Rates to Past StudiesComparison of Mortality Rates to Past StudiesComparison of Recovery Rates to Past StudiesComparison of Mortality Rates to Past StudiesComparison of Recovery Rates to Past StudiesUS Statutory Waiver ReservesIllustrative Waiver Reserve ImpactsIllustrative Waiver Reserve Impacts2019 SOA Waiver Study Segmentation VariablesThree Questions while working on Waiver Tables 2016 SOA Waiver Incidence Study – Impact of LTD LinkingPolling question at 2017 SOA Group Life & Disability Talk ShopKey Takeaways of SegmentationFrom 2016 LTD Study – Comparison to 2005 Waiver 2019 SOA Waiver Study – Comparison to LTD Recoveries 2019 Waiver Recoveries With/Without LTD2019 SOA Waiver Study – Comparison to LTD Deaths Trends by Calendar Year – A/E Recoveries � “ The 2016 LTD Study showed a pronounced upward trend in A/E recovery rates by calendar year. � Specifically, the A/E ratio graded steadily upward from nearly 100% in 2004 to more than 125% in 2012.”2016 LTD Recoveries by Carrier Size2019 Waiver Recoveries by Carrier Size 2019 Waiver and 2016 LTD Deaths by Diagnosis 2018 Waiver Recoveries by Diagnosis 2016 LTD Terminations by Case Size (deaths + recoveries) 2019 Waiver Recoveries by Case SizeOther Segmentation ObservationsGroup Life Case UW/Pricing ImplicationsNext StepsSlide Number 33

group life waiver of premium - amazon s3...12 illustrative waiver reserve impacts benefit...

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