Individual Term Reprices and Other Product Changes

Please share this weekly tip with your actuaries.

Are you repricing your term product?  For individual term products already approved by the Insurance Compact, you may need to file a Supporting Documentation Update with the Insurance Compact to provide a revised actuarial memorandum and possibly a revised Statement of Variability.

Many term products have premiums that change after a specified level term period. The slope of premiums over the entire lifetime of the product affects the nonforfeiture calculations included in the actuarial memorandum. This means that if the premiums change, it’s likely that new nonforfeiture testing is needed, along with a revised actuarial memorandum that includes an updated certification. The actuary must certify that the nonforfeiture values provided under the new schedule of premiums continue to be at least as great as the minimums required by NAIC Model 808 for all ages, rate classes and durations and must also address compliance with Actuarial Guideline 22, if applicable. The revised actuarial memorandum must be complete and include the information required by Section 1B(1) of the Individual Term Life Insurance Policy Standards. A full premium schedule should not be filed.

In general, if any product is changing in a way that is outside of the previously approved actuarial memorandum, a revised actuarial memorandum with an updated certification is needed.  Many of these may also necessitate a revised Statement of Variability. Common examples include:

  • Expanding the issue age range
  • Decreasing the minimum issue amount
  • Changing non-level premiums
  • Adding a new level term period or premium payment period
  • Changing the maturity / expiry age
  • Changing the nonforfeiture mortality or interest basis
  • Changing level premiums where the premiums affect the death benefit (e.g. for a graded death benefit whole life)
  • Note that a post-filing marketing restriction (such as narrowing the issue age range, raising the minimum issue amount, or no longer selling a level term period option) does not require a revised memorandum.

For additional information on how to complete a Supporting Documentation Update filing, please see Filing Information Notice 2017-1: Process for Revisions to Forms and Supporting Documentation in Compact Filings, as well as the associated FAQ.

If you have any questions about making a submission or the Insurance Compact in general, please contact the Insurance Compact Office

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