Description: The Required Minimum Distribution [RMD] Working Group of the SOA Taxation Section has completed research identifying considerations for actuaries and annuity insurers in determing the actuarial present value of additional benefits for computing the RMD under a deferred annuity contract. This is the Appendix I spreadsheet for determining the Actuarial Present Value of an annuitization bonus. Please see the SOA website research for the full report and other associated spreadsheets.

Description: Initiated by the Financial Reporting Section, this paper explores rising interest rates. Following this path, the paper will look at implications of interest rate changes for the life insurance industry, current stress testing practices, and how a risk manager can proactively prepare for an uncertain future. A paper published in 2014 focused on why rates could stay low, and some aspects of this paper are similar (e.g., description of insurance products). This paper also uses a sample model office to help practitioners look at their own exposures. It includes typical interest-sensitive insurance products and how they might perform across various scenarios, as well as a survey to establish current practices for how insurers are testing interest rate risk currently.

Description: At retirement, people face a choice between annuitization and self-management of liquid wealth [also called self-annuitization]. A common belief is that annuitization provides longevity insurance at the cost of liquidity. This paper argues that the desire for liquidity is actually driven by bequest motives and estate value should be the measure on the liquidity of a given strategy. The authors demonstrate that self-annuitization give more estate within a critical duration [before life expectancy] while annuitization creates more estate after that. In their second result, they compute the expected ending estate at death under these two strategies and find that, on average, annuitization creates more estate than self-annuitization under reasonable assumptions. They conclude that, as long as the same fund is being used for these two strategies, annuitization and self-annuitization just create different patterns of estates over time. However, annuitization is usually better than self-annuitization for estate creation and liquidity, on average. This is somewhat counter-intuitive to popular belief because payout annuities without a certain period do not have cash surrender values. The creation of the balance stream and the results shown in this paper have important implications on new product and marketing strategies for payout annuities.

Description: The objective of this paper from the Transactions of Society of Actuaries 1964, Vol. 16, Pt. 1, No. 44 AB, is to illustrate some of the alternative approaches to making approximate probability statements about the present value of life annuities assuming a specified distribution of the random variable, time until death, and a fixed interest rate.

Description: This paper sets out the basic principles of federal income taxation of annuity payments, together with the general rules for determining which of two possible methods must be used and the general formulas to be used. From Transactions of Society of Actuaries 1968, Vol. 20, Pt. 1, No. 58.

Description: This paper discusses the calculation of minimum statutory non-forfeiture values for annuity contracts with stipulated annual payments under which contractual values are based on the 1937 Standard Annuity Table.

Description: We devise an approach, using tobit models for modeling annuity lapse rates. The approach is based on data provided by the Society of Actuaries’ Risk Management Task Force. Kim [2005a] models annuity lapse rates using a logit model and the same US data (he also used Korean data separately). We find that the tobit model is a more than suitable approach for all levels of the explanatory variables including interest rates, unemployment rates, and GDP growth rates. Specifically, policyholder behavior in the tail of the distribution of lapse rates is explained as well as it is in the normal range of lapse rates.