By Matt Kaas, Life Marketing Consultant
It should be no surprise that people today are living longer than ever before. According to the American Council of Life Insurers, the crude death rate (annual deaths per 1,000 population) has decreased from 17.9 in 1940 to 7.5 in 2010. Mortality is decreasing and life expectancy is increasing: a 25-year-old male living at the start of the 1900s was expected to live an additional 39.1 years, compared to an additional 54.8 years for a 25-year-old male in 2013.
Although mortality is decreasing and longevity has seen a significant increase, insurance carriers are still using the 2001 Commissioner’s Standard Ordinary (CSO) Mortality Table when underwriting their life insurance products. But there is good news for both you and your clients: starting January 1, 2017, insurance carriers will be able to use the 2017 CSO Mortality Table when determining mortality rates.
The CSO mortality table is used actuarially by insurance companies to determine the amount of net premium reserves they are required to hold for every life insurance policy they have currently in force. Insurance companies align their maximum costs of insurance with the CSO mortality tables based on required premium reserves. Therefore, lower mortality rates mean less premium reserves that insurance companies are required to hold, and potentially, lower life insurance premiums for your clients.
Protection-oriented products, those with underlying guarantees, will see the largest reduction in required reserves and therefore the potential for biggest decrease in premiums. A study done by the Society of Actuaries on the impact of the 2017 CSO table concluded that level term products will have the largest reduction on premium reserves. Across all level term durations premium reserves were reduced anywhere from 30-50% depending on risk class structure.
Now, I’m not saying that on January 1st level term premiums are going to be reduced by 30-50%, but what I am stressing is the importance of annual reviews and discussions with your clients about life insurance. If you have clients that are healthy, it might make sense to evaluate their life insurance needs and see whether they may now be able to afford coverage, if their premiums can be lowered, or their death benefit protection increased where suitable.
For more information on the 2017 CSO Mortality Tables and to get quotes for your clients to see if the new mortality tables could save them some money, please give me a call at 800.321.3924.
Matt Kaas | Life Marketing Consultant
Ann Arbor Annuity Exchange
Ph: 800.321.3924 x133 | Dir: 734.786.6133
Guarantees are backed by the financial strength and claims-paying ability of the issuing insurance company.
 “2015 Life Insurers Fact Book” American Council of Life Insurers. 19 Nov 2015. Web. Accessed on 10 Oct. 2016 at https://www.acli.com/Tools/Industry%20Facts/Life%20Insurers%20Fact%20Book/Pages/RP15-010.aspx
 Bahna-Nolan, Mary. “2017 CSO Implementation: Product Implications and Considerations.” Society of Actuaries. Product Matters, Issue 104. Jul 2016. Web. Accessed on 10 Oct. 2016 at https://www.soa.org/Library/Newsletters/Product-Development-News/2016/july/pro-iss104-bahna-nolan.aspx
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