The updated mortality tables
will require insurance companies to lower their payout rates in order to properly reflect longer life spans.
The new SOA mortality table
shows accelerated improvement in longevity.
The CSO tables are smooth mortality tables
used for conservative nonforfeiture value calculations for the protection of the insurer (a major concern of insurers and regulators) and do not anticipate extraordinary health changes in individuals but only anticipate aggregate group mortality change characteristics.
However, insurance companies typically use the mortality tables
elaborated by the Society of Actuaries (SOA), which are based on the demographic pattern of the USA and the accumulated experience of companies in the insurance market.
But by the early 2000s, it became clear that there was a significant difference between the mortality tables
that insurers used to price policies and the life expectancy reports that were used by the life settlement industry.
People have more detailed knowledge of their family history, lifestyle and general health than what mortality tables
can tell them.
Further, the transaction here did not violate Section 415, which excludes rollover contributions from the employee's annual benefit, because the value of the annuity was determined using the interest rate and mortality tables
provided in Section 417.
Another aspect to bear in mind is the need of constructing unisex mortality tables
as a consequence of the implementation of the European Union Directive 2004/113/WE.
But the revisions in the mortality table
changed that equation - at least for many eligible retirees hired before 1996, known as "tier one" employees.
The Plenary Committee adopted several changes needed to implement the ACLI's proposals regarding the use of preferred mortality tables
for any product covered by the 2001 CSO mortality tables
It requires calculations to be made on specified mortality tables
and interest rates.
As a result, preneed insurance policies issued on or after January 1, 2009, and before January 1, 2012 can use the 2001 CSO Mortality tables
that lists different mortality rates for men and women to determine the minimum standard for reserves and nonforfeiture benefits.