• 3. American Academy of Actuaries Subcommittee, Organization and Membership
• At its November, 1980, meeting, the (C4) Technical Subcommittee decided in favor of a proposal that a new American Academy of Actuaries subcommittee should be formed.
  • This American Academy of Actuaries subcommittee would work with the (C4) Technical Subcommittee on matters pertaining to life insurance.
  • This American Academy of Actuaries subcommittee was intended to be parallel to the existing American Academy of Actuaries Subcommittee for Liaison (Health Insurance).
  • Please see the accident and health topic "American Academy of Actuaries Subcommittee Studies" for more information about the parallel subcommittee.
  • The new American Academy of Actuaries Subcommittee for Liaison (Life Insurance) has now been organized. 
    • Ardian Gill is chairman. The other members of this new American Academy of Actuaries subcommittee are: Wilbur M. Bolton, Gordon C. Boronow, Gary E, Dahlman, Stephen H, Frankel, Richard W. Kling, William K. Krisher, and John C. Lounds.
  • This new American Academy of Actuaries subcommittee has already done useful work in reviewing certain proposed actuarial guidelines for the (C4) Technical Subcommittee.
  • The (C4) Technical Subcommittee has also asked this new American Academy of Actuaries subcommittee to study the topic "Completely Flexible Life Plans (Universal Life Insurance Plans)."
  • For additional information on these related topics, please see the topic headings "General Discussion of Life Actuarial Guidelines'' and ''Completely Flexible Life Plans (Universal Life Insurance Plans)" in this section of this report.

• 4.  Completely Flexible Life Insurance Plans (Universal Life Insurance Plans)
• This topic was discussed under the topic heading ''Special Life Insurance Plans'' in the (C4) Technical Subcommittee's December, 1980, report, along with certain other plans which are discussed under the topic heading "Other Special Life Insurance Plans" in this report.
  • The completely flexible life insurance plans typically provide for the retrospective determination of cash values, in a manner analogous to the usual determination of cash values for annuities.
  • The life insurance provided by these policies is paid for at regular intervals by deduction from the gross premium or the cash value which has already been built up, using the insured's current attained age and a special schedule of term insurance rates.
  • The policyholder has great flexibility in changing the benefit structure and the pattern of premiums under such policies.
  • The insurance company guarantees a specific rate of interest for accumulation of cash values at the date of issue of the policy, but the company may later declare interest at a higher rate.
• The completely flexible life insurance plans are sometimes called "universal life insurance plans."
  • Other names for such products are "total life insurance plans" and "open life insurance plans."
  • Such plans are relatively new, having been first developed in the last two or three years.
• It appears that many states are currently approving at least some of these plans, although there have been problems in trying to apply the standard valuation law and the standard Nonforfeiture law for life insurance to them.
• The December, 1980, revisions of the standard valuation law and the standard nonforfeiture law for life insurance allow the commissioner of insurance for each state to issue a regulation pertaining to these types of policies.
  • Thus, such policies would no longer have to be "forced into a mold," which was intended for more traditional plans, in the calculation of reserves and nonforfeiture values.

1981-2, NAIC Proceedings