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© 2016 Society of Actuaries
11 Simple Withdrawal Study Example .............................................................................................................. 56
11.1 Period Study ....................................................................................................................................................... 56
11.1.1 Exposure Calculation ........................................................................................................................ 56
12 Actual To Expected Analysis ........................................................................................................................ 58
12.1 Period Study with Deaths and Withdrawals .................................................................................................... 59
12.2 Amount-Weighted Period Study ....................................................................................................................... 59
12.3 Period Study with Calendar Year ...................................................................................................................... 60
12.4 Half-Year Study .................................................................................................................................................. 60
12.5 Half-Year Study with Daily Decrement Rates ................................................................................................... 61
13 Central Rates ............................................................................................................................................... 63
13.1 Annual Period Study .......................................................................................................................................... 64
13.2 Force of Decrement........................................................................................................................................... 65
14 Dependent Rates ......................................................................................................................................... 66
14.1 Cohort Study with Deaths and Withdrawals .................................................................................................... 66
14.2 Period Study with Deaths and Withdrawals .................................................................................................... 67
14.3 Population Projection ........................................................................................................................................ 69
14.4 Formula Derivation ............................................................................................................................................ 70
15 Utilization Studies ....................................................................................................................................... 72
15.1 Frequency and Severity ..................................................................................................................................... 72
15.2 Utilization of Maximum Limits .......................................................................................................................... 73
15.3 Loss Ratio ............................................................................................................................................................. 74
15.4 Variable Annuity Withdrawal Utilization .......................................................................................................... 74
16 Exposure and Rate Comparisons .................................................................................................................. 76
17 Practical Considerations .............................................................................................................................. 78
17.1 Amount-Weighted Distortions.......................................................................................................................... 78
17.2 Data Extracts for Multi-Year Studies ................................................................................................................ 78
17.3 Homogeneity of Data ........................................................................................................................................ 78
17.4 Reporting Lags ................................................................................................................................................... 79
17.5 Non-Uniform Distribution of Events ................................................................................................................. 80
17.6 Partial Policy Years ............................................................................................................................................. 80
17.6.1 Overview ........................................................................................................................................... 80
17.6.2 Inclusion of Partial Policy Years ........................................................................................................ 81
17.6.3 Overview of Exposure Methods ....................................................................................................... 81
17.6.4 Annual Exposure Method ................................................................................................................. 81
17.6.5 Distributed Exposure Method .......................................................................................................... 82
18 Product-Related Considerations .................................................................................................................. 84
18.1 Individual Life Insurance ................................................................................................................................... 84
18.1.1 Grace Period ...................................................................................................................................... 84
18.1.2 Compromised and Denied Claims .................................................................................................... 84
18.1.3 Study Variables Changing Over Time ............................................................................................... 84
18.1.4 Treatment of Reinsured Amounts ................................................................................................... 85
18.1.5 Use of Net Amount at Risk ............................................................................................................... 85
18.1.6 Inclusion of Substandard or Uninsurable Lives ............................................................................... 85
18.1.7 Backdated New Business .................................................................................................................. 85
18.2 Group Life Insurance ......................................................................................................................................... 86
18.3 Morbidity Products ............................................................................................................................................ 86
18.3.1 Claim Incidence Studies .................................................................................................................... 87
18.3.2 Claim Severity Studies ...................................................................................................................... 87
18.3.3 Claim Termination Studies ............................................................................................................... 87
18.4 Disability Income ............................................................................................................................................... 88
18.4.1 Elimination Periods ........................................................................................................................... 88