Actuarial Science Flashcards

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1
Q

What is the CARVM methodology?

A

Greatest present value of guaranteed benefits over guaranteed premiums (gross considerations). “Greatest” indicates multiple possible outcomes.

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2
Q

What is the DET Certification Method?

A
  • One of two methods to pass DET.
  • For a group of converted policies (to products other than Term/VL/ULSG)…provide a certification by a qualified actuary that, total reserve for the policy reflects the additional anticipated mortality associated with the conversion.
  • Prudent provision for additional mortality associated with conversion.
  • Total reserve exceeds value of Deterministic Reserve that otherwise would have been calculated.
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3
Q

What is the Deterministic Net Premium Test?

A
  • One of two methods to pass DET.
  • The company demonstrates that the sum of the valuation net premiums for all future years for the group of policies […] is less than or equal to the sum of the corresponding guaranteed gross premiums for such policies. The test shall be performed on a direct or assumed basis.
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4
Q

Life Reserves: when determining the NYS floor, is the NYS reduced by the NYS DPA?

A

NYS reserve is not reduced by NYS DPA. Therefore report only NAIC DPA in VM-20 Supplement

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5
Q

Which aspect of JH reserves changed in 2020?

A
  • CSV excess over reserves not calculated correctly in Section G.
  • Calculated as excess of admin CSV over modeled reserves, which were already floored at modeled CSV, which can be less than admin CSV.
  • Therefore, full excess may not be captured in some cases.
  • New calculation is max(admin CSV, modeled CSV) over unfloored reserves
  • Increases section G reserve.
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6
Q

What is VM-22?

A

Statutory maximum valuation rate for income annuities.

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7
Q

What is the implied certain period?

A

Duration needed for owner to recoup premium paid into policy.

= refund amount / (modal amount * mode)

Can change if payment options are either life with installment refund or life with cash refund

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8
Q

Effect of dividend payments on LwIR/LwCR products

A

Dividends paid in cash and income payments reduce refund amount.

Dividends used to purchase PUIs increase modal payments

= refund amount / (modal amount & mode)

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9
Q

What is One Year Term insurance?

A

Discontinued dividend option where dividends are used to purchase one-year term insurance.

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10
Q

How is Prophet calculating One Year Term insurance?

A

1/2 Cx

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11
Q

2020 NYLIAC VM-20 Supplement

Why were SA reserves added to the supplement?

A
  • Non-SG VUL statutory reserves in GA were being shown as negative
  • GA only takes GA portion of pre-reinsurance gross reserves (COLI VUL), but allocates 100% of reserve credit
  • Looks better to show both GA and SA portions
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12
Q

What is the small amount of term reserves reported in NYLIAC VM-20 Supplement?

A
  • First-to-die and survivorship term riders offered on UL policies
  • Policy count is shown as “0” (counted in UL rows)
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13
Q

Regulation 33

A
  • Allocation of investment income to SMA and LOBs
  • Using Statutory accounting
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14
Q

Regulation 138

A
  • Establishment/reporting/treatment of SMA account
  • Calculation of shares of ownership of SMA - by maintaining notional account for each LOB
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15
Q

Variable Life Insurance
vs.
Variable Universal Life Insurance

A

Variable universal life insurance policies have the cash value structure of variable life insurance, but you can use the cash value to pay premiums. You can also pay a larger amount in premiums if you choose to do so.

Variable Life

  • May not have guaranteed rate of return, or low guarantee
  • Typically offers guaranteed death benefit
  • No premium flexibility

Variable Universal Life

  • Flexible premium payments (amount/frequency)
  • Can make lump sum payments, or use CV for payments
  • Can change death benefit depending on CV performance

https://www.guardianlife.com/life-insurance/variable-universal-life-insurance

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16
Q

What is the interest expense for Individual Life reported in the Exhibit of NII?

A

Borrowing cost on leverage that we have on real estate equity investments.

17
Q

Variable Life Insurance features

A

DB/CV/Premium

If the cash value performs well, it can be used to increase the death benefit, withdrawn as cash or used as collateral for a loan.

18
Q

Schedule BA Assets

A

Wide range of long-term assets:

Private equity
Hedge funds
Mineral rights
Transportation equipment
Surplus notes
Secured and unsecured loans
Housing tax credits

19
Q

Deferred Premium Asset

A
  • Adjust for the fact that mean reserves overstate reserves in the case of more frequent modes of premium payment
  • Deferred Premium: premium due after valuation date but before next anniversary
20
Q

Unearned Premium Reserve

A
  • Adjust for the fact that mid-terminal reserves understate reserves unless premium is paid monthly
  • Unearned Premium: premium that is paid past valuation date
21
Q

Why do banks purchase BOLI?
What is their objective?

A
  • To informally fund employee benefits
  • Maximize value of BOLI through cash accumulation
  • Hold as strong balance sheet asset
22
Q

Why is BOLI an attractive investment option?

A
  • Tax efficiency
  • CV growth is tax-deferred
  • DB proceed tax-free
23
Q

Why do corporations purchase COLI?

A
  • To informally finance employee benefits
  • Non-Qualified Deferred Compensation
  • Supplemental Executive Retirement Plans
24
Q

Why is COLI useful for companies?

A

Acts as an efficient asset/liability management tool for matching liabilities of retirement offerings

25
Q

Effect of NYLIAC NYS to NAIC basis change on SA CARVM EA

A
  • Changing from NYS to NAIC decreased the SA Exhibit 3 reserve
  • Lower reserve held (NAIC basis) vs. same account value
  • Higher CARVM EA