4 Percent

  • Chalke and Davlin point out that a policy that provides whole life benefits assuming 10 percent interest is not a whole life plan if the guaranteed cash value is only 4 percent.
    • Such a plan is term insurance only for a period of years. 

--  Thomas G. Kabele

1983 - SOA - Universal Life Valuation and NonForfeiture: A Generalized Model, by Shane A. Chalke and Michael Davlin, Society of Actuaries - 72p

  • First, the average premium per thousand is going down as a result of companies introducing products based on the 4% valuation interest rate basis.

--  Jesse M. Schwartz

1983 - SOA - Individual Life Insurance, Society of Actuaries - 22p

  • The basic assumptions in each of these examples is the individual buying the insurance is 35 years old; the insurance company is guaranteeing a return of 4 percent, and that is the assumed rate on each of these examples.

--  John E. Chapoton, Assistant Secretary for Tax Policy, Department of the Treasury

1983 0510, 0511 and 0728 - GOV (House) - Tax Treatment of Life Insurance, Pete Stark (D-CA)  ---  [BonkNote]

  • The suggested rule keys this additional exemptive relief to a "guideline annual premium."
    • This concept is defined as the level annual premium, payable to the highest attained age at which a premium may be paid, that would provide the future benefits under the policy based on (i) the 1958 Commissioners' Standard Ordinary Mortality Table, (ii) an assumed interest rate of four percent, and (iii) the expenses specified in the policy.6
  • In short, Petitioner states, the guideline annual premium equals the annual premium necessary to keep the policy ·inforce for the life of the insured.
    • 6Petitioner states that the guideline annual premium concept is derived from the 101(f) of the International Revenue Code [I.R.C. 101(f)(1982)[ relating to exclusion from gross income the proceeds of a flexible life policy payable by reason of death.
    • [Bonk: Petitioner = ACLI]

1983 1130 - Federal Register, Vol.48 No. 231 - 234p

  • Then, again, they say they are willing, as I understand, to put up a reserve sufficient to meet the claim at 4 1/2 or 4 percent, whichever it may be, but they want our reports to show that their capital is unimpaired.
  • Well, it is a very fair proposition upon its face.
  • But what is the proposition?
    • As I understand it, it is simply this: "That you, Messrs. Commissioners, will please help us advertise our company."

1871-1, NAIC Proc. 

  • In most states, 4% interest is now permitted for cash values; the report of the special committee, which so far seems to be receiving favorable comments from NAIC and has created a favorable first impression with the Actuarial Committee of the ALIA, puts forth the concept of establishing minimums at high interest rates as well as other changes that could dramatically affect cash values.
    • Do you perceive changes in cash value patterns which might be a result of the continuing march towards interest adjusted cost disclosure methods?
    • Mr. Astley, you referred in your remarks on consumerism to high early cash values. Are there some more thought processes there that you would like to share with us?

--  Thomas F. Eason

1976 - SOA - Individual Life Products, Society of Actuaries - 24p