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
M - Actual 2019F - Actual 2019M - Fitted 2005F - Fitted 2005Unisex - Krieger
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
M - Actual 2019F - Actual 2019M - Fitted 2005F - Fitted 2005Unisex - Krieger
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
M - Actual 2019F - Actual 2019M - Fitted 2005F - Fitted 2005Unisex - Krieger
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
Illustrative Reserve Factor Relativities Vs 2005 GWP @ 4.5% Discount
Elimination Period Differentials, Claim Duration Year 1
(Rounded to the nearest 5%)
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
Illustrative Reserve Factor Relativities Vs 2005 GWP @ 4.5% Discount
Elimination Period Differentials, Claim Duration Year 2
(Rounded to the nearest 5%)
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
LifetimeMale40-4480%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
Illustrative Reserve Factor Relativities Vs 2005 GWP @ 4.5% Discount
Elimination Period Differentials, Claim Duration Year 10
(Rounded to the nearest 5%)
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
LifetimeMale40-4495%95%-5%-5%0%
LifetimeMale45-4995%95%-5%-5%0%
LifetimeMale50-54100%100%0%0%0%
LifetimeFemale40-4495%95%-5%-5%0%
LifetimeFemale45-49100%100%0%0%0%
LifetimeFemale50-54100%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
Group Term Life Premium Waiver Appendix B.1
Illustrative Reserve Factor Relativities @ 4.5% Discount
(Rounded to the nearest 5%)
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
Group Term Life Premium Waiver Appendix B.2
Illustrative Reserve Factor Relativity Ranges @ 4.5% Discount
Decrement confidence intervals used to estimate a range of potential outcomes from graduation
(Rounded to the nearest 5%)
BenefitElimination DisabilityExperience-Based Table / 2005 GTLWP Table, no margin
PatternPeriodSexIncurralAs of Claim Duration Year
Category Age Range123510
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
Group Term Life Premium Waiver Appendix B.3
Illustrative Reserve Factor Relativity Ranges @ 4.5% Discount
Decrement confidence intervals used to estimate a range of potential outcomes from graduation
(Rounded to the nearest 5%)
BenefitElimination DisabilityExperience-Based Table / 1970 Krieger Table, no margin
PatternPeriodSexIncurralAs of Claim Duration Year
Category Age Range123510
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
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
Illustrative Reserve Factor Relativities Vs 2005 GWP @ 4.5% Discount
Elimination Period Differentials, Claim Duration Year 1
(Rounded to the nearest 5%)
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
Illustrative Reserve Factor Relativities Vs 2005 GWP @ 4.5% Discount
Elimination Period Differentials, Claim Duration Year 2
(Rounded to the nearest 5%)
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
LifetimeMale40-4480%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
Illustrative Reserve Factor Relativities Vs 2005 GWP @ 4.5% Discount
Elimination Period Differentials, Claim Duration Year 10
(Rounded to the nearest 5%)
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
LifetimeMale40-4495%95%-5%-5%0%
LifetimeMale45-4995%95%-5%-5%0%
LifetimeMale50-54100%100%0%0%0%
LifetimeFemale40-4495%95%-5%-5%0%
LifetimeFemale45-49100%100%0%0%0%
LifetimeFemale50-54100%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
Group Term Life Premium Waiver Appendix B.1
Illustrative Reserve Factor Relativities @ 4.5% Discount
(Rounded to the nearest 5%)
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
Group Term Life Premium Waiver Appendix B.2
Illustrative Reserve Factor Relativity Ranges @ 4.5% Discount
Decrement confidence intervals used to estimate a range of potential outcomes from graduation
(Rounded to the nearest 5%)
BenefitElimination DisabilityExperience-Based Table / 2005 GTLWP Table, no margin
PatternPeriodSexIncurralAs of Claim Duration Year
Category Age Range123510
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
Group Term Life Premium Waiver Appendix B.3
Illustrative Reserve Factor Relativity Ranges @ 4.5% Discount
Decrement confidence intervals used to estimate a range of potential outcomes from graduation
(Rounded to the nearest 5%)
BenefitElimination DisabilityExperience-Based Table / 1970 Krieger Table, no margin
PatternPeriodSexIncurralAs of Claim Duration Year
Category Age Range123510
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
Months 10-12 Y02 Y03 Y04 Y05 Y06 Y07 Y08 Y09 Y10
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
Months 10-12 Y02 Y03 Y04 Y05 Y06 Y07 Y08 Y09 Y10
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
Months 10-12 Y02 Y03 Y04 Y05 Y06 Y07 Y08 Y09 Y10
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