CA Comments on VM Maintenance Agenda Item 2017-16
VM-51 is in need of some expansion and clarifications, and this comprehensive APF is a great step in that direction.
We have some minor comments and questions; they are given here numbered according to the “ITEM” number in the left hand column of the grid in VM-51.
Item 8: As to the Drafting Note being added, is there indeed a need for an age next birthday mortality table, given that we are not dealing here with Industrial business? If there is, could the Drafting Note be expanded to say why?
Item 10: When the policy is a permanent policy issued as a result of a term conversion, it was not clear to us whether the Issue Date to be inserted here was to be the original term policy’s issue date or the new policy’s issue date. The deleted sentence did not make it quite clear enough (Does “converted policy” mean the old one or the new one?) , and deleting the sentence does not help either.
Item 18: Should a code 3 (“issued with temporary flat extra that has since expired”) be added, in order to implement the vague suggestion in the last sentence? If not, where/how is the suggested identification to be accomplished?
Item 19: It might be wise to expand the heading of codes 071 to 078 to “Universal Life (Other than VUL) Plans with Secondary Guarantees” or perhaps “Non-Variable Universal Life Plans with Secondary Guarantees”. Codes 061 to 068 could use a similar change in their heading too.
Item 22: The sentence being newly added is good. Should the same sort of sentence be added to items 29, 32, 36, 38, 40, and 44?
Item 24: Fundamentally it needs to be decided what the proper handling of denied claims (e.g. suicide and contestable claims) is supposed to be. Either they get excluded from the study, in which case it would seem that item 24 should always be the face amount (without regard to the amount paid), or they do not, in which case item 24 should call for the “lesser of the face amount and the amount that was paid (e.g. refund of premium)” and not the “face amount that was paid”.
Item 32: In the title of the item, it might be clearer if “at the Beginning” were changed to “as of the Beginning”. Likewise for items 33, 36, and 37.
Item 38: Should the shadow account be reported gross of loan, or net of loan? Likewise for items 39, 40, and 41.
Item 42: Mightn’t there be reasons why surrender charge patterns could conceivably be relevant to studies of policyholder behavior on business that is not ULSG or VLSG? Likewise for item 43.
Item 46: Whose domicile? Policyowner? Insured? Insurance company? If the policyowner or insured, could it say “Residence” instead of “Domicile”? (Does an instruction need to be given here to cover foreign residents?)
Ben Bock, FSA, MAAA
Senior Life Actuary
California Department of Insurance
(213)-346-6011