C.3 SNF Annuities

Question 1

NF required for Annuities

Answer 1

• must provide a paid up benefit to contract owners who stop making payments, or request
• company can pay the CSV instead of providing a benefit
• Companies can wait up to 6 months to pay CSVs
• Must disclose the mortality and IR used
• must state that NF values are not less than SNL min
• the company may terminate and payout CSV on contracts where the owner hasnt paid considerations in 2 years, or monthly ben < $20

Question 2

Calculate Min NF values for annuities

Answer 2

-the value of the paid up annuity benefit or CSV must be no less than the min NF values

min NF amount = (previous min amount + 87.5% Consideration - 50 - Prem Tax) * (1 + i) - withdraws - PolicyLoan

• Min SNL IR = 5 year constant maturity treasury - 1.25%
• Floor/Cap = 1% / 3%
• subtract an additional 1% for EIA, still subject to floor

Question 3

CSV relation to Contract maturity value

SNF Annuities

Answer 3

in CSV >= Gt Maturity Value / (1 + r) ^ (T - t)

Gt maturity value = gt CV of any paid up annuity benefit available at maturity T based on the considerations paid through maturity

r = gt accumulation rate in the contract, up to 1%