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.
female population
mortality tables over the period 1933-2007, as provided by the Human Mortality Database (as discussed above).
The final death blow to STOLI came in the fall of 2008, when, as previously mentioned, two of the dominant life expectancy underwriters adopted new
mortality tables and increased their life expectancies by some 25 to 30 percent.
Source: Society of Actuaries HP-2000
mortality tables and Alliance Bernstein Note: Table made from bar graph.
But the revisions in the
mortality table changed that equation - at least for many eligible retirees hired before 1996, known as "tier one" employees.
However, if the insurer elects to use the 2001 CSO
Mortality Tables as the minimum standard, the insurer must attach an annual written notification to their actuarial opinion memo addressed to the insurance supervisory official of the state or jurisdiction where the company is located.
As Gordon Sharp, a director at KPMG and chairman of the Pensions Board of the Actuarial Profession, puts it: "The big issue is that every time we produce new
mortality tables, we find that mortality rates are actually improving at a faster rate than we anticipated with our previous projections of future mortality rates.
Premium rates are still based on
mortality tables from 1941, thereby costing disabled veterans more for government life insurance than is available on the commercial market.
However, large companies are permitted to use plan-specific
mortality tables for minimum contribution calculations.
Instead of using
mortality tables, a beta random number generator for mortality is used.
Beginning in the 1930s, many of our parents and grandparents unknowingly purchased policies that were often coded "substandard" and based on
mortality tables that showed them to have shorter life expectancies.
