Challenge to life companies

[Robert L. Barney]

One of the problems I have always had with actuaries is that they speak in code. Remember that most of the people reading these postings do not know your code, and so it would be quite helpful if you could write accordingly.

It is my understanding that the "non-forfeiture" rules have to do with how big the reserves in the policy get, in relation to the face amount. For example, if the reserves (CSV's for clarification; I know, CSV's are always less than the reserves) become 25% of the face amount, the product must have cash values at which point lapse ratios become a much smaller benefit to the life company.

This is why the longer the level period on a policy, the lower the maximum issue age. In fact some companies, in some states, have smaller issue ages (particularly for male smokers), than they do in other states. This is to ensure the reserves do not pass the speed limit permitted by the non-forfeiture law.

Before I continue to comment this - could some actuary please confirm or correct my understanding to this point.

Be careful - I don't talk in actuarial code.

I want to make sure that if I decide to pound away on the regulators, I do so with a correct understanding of the problem that companies are facing.