BGF - Benefit Generating Function

  • BGA - Benefit Generating Account
  • BGF - Benefit Generating Function
  • Premium Calculation
  • One thing to keep in mind is that you can take a traditional whole life policy and determine an underlying benefit generating function, because the cash values are simply there.
    • You can fix one item and say, "We are charging 1980 CSO mortality and 6% interest," and then solve for the effective nonforfeiture net premium.

--  Douglas DOLL

1989 - SOA - Status Report on Standard Nonforfeiture Law Revisions, Society of Actuaries - 14p

  • 6. THE CONCEPT OF THE BENEFIT GENERATING ACCOUNT (BGA)
    • We have mentioned several times that the function of the account value is to determine future benefits.
    • Again we stress the fact that the account value may bear no simple relation to the reserve or the cash value required by law.
    • For this reason (and to avoid confusion) we will refer to the account value as the benefit generating account (BGA). This term aptly describes the account value's primary purpose.
    • The set of rules that determine the guaranteed benefits that the BGA will produce we will refer to as the benefit generating function (BGF).
    • The BGF includes such items as the method of determining the term charge and amount at risk, the portion of the gross premium credited to the BGA, the method by which BGAs accumulate, and those policy guarantees defining future minimum BGAs. The portion of the gross premium actually credited to the BGA we will term the BGF premium.
    • If we restate the three necessary conditions for the Classical UL Model in terms of the BGA and the BGF, they become the following:

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

  • CHARLES E. RITZKE: I, too, agree in principle about Mr. Doll's prospective approach being the most appropriate.
    • One concern I would have is the elements of the benefit generating function.
    • When you start talking about regulating elements of benefit generating functions, it is important also to find a benefit generating function for traditional products and regulate the same functions and the same pieces in order to maintain a level playing field.
  • Douglas DOLL: One thing to keep in mind is that you can take a traditional whole life policy and determine an underlying benefit generating function, because the cash values are simply there.
    • You can fix one item and say, "We are charging 1980 CSO mortality and 6% interest," and then solve for the effective nonforfeiture net premium.

1989 - SOA - Status Report on Standard Nonforfeiture Law Revisions, Society of Actuaries - 14p