A.2 Misc Q&A on VM20

Question 1

Products NOT covered under VM20

Answer 1

Pre-need life insurance products
• Industrial life insurance products
• Annuity products
• Deposit-type products
• Health insurance products
• Credit life and disability
• Claim reserves and waiver of premium

Question 2

Are riders and supplements attached subject to VM20??

Answer 2

• if there is a separate charge, riders on the named insured must be included in base policy; else treat as a standalaone
• no separate charge: include with base policy

Question 3

How would actuaries approach the calculation of the minimum reserve requirement
under VM-20?

Answer 3

1. Determine policies in scope of VM-20. assign policies to the 3 groups: term, ULSG, and
   other life
2. Determine model segments within each group
3. Allocate existing assets to each model segment
4. Build asset/liability model
5. Determine Assumptions - anticipated experience, investment expenses, prudent estimates for non prescribed
6. calc NPR, SR, and DR (based on exclusion tests)
7. calc the min VM20 reserves for each product group =
   NPR + max(0, max(SR, DR) - (PBR - DPA))
8. Total min VM20 reserves =
   SUM[min rsvs for each product group]