• Critical to this approach is the assumption that companies will price their product in a rational manner.
  • Unfortunately, not only is illogical pricing an academic possibility, it has become reality for some companies and products.
  • An excellent example is a "Modified Premium Whole Life" type plan under which ultimate premiums purport to be ''whole life" premiums but which actually are set simply to be sufficiently high relative to premiums in prior years that minimum values will be as low as desired and deferred as long as desired.

To: NAIC (C) Committee Technical Task Force
From: Bradford S. Gile, A.S.A., M.A.A.A., Life and Health Actuary - State of Wisconsin Dept. of Insurance - October 17, 1979
(ATTACHMENT F)  - re: Nonforfeiture Values for Life Insurance Contracts Having Premiums' which Vary by Policy Duration

1980-1, NAIC Proc.