Life Insurance
In the U.S. life insurance industry, statutory reserves are most commonly computed using the Commissioner's reserve valuation method, or CRVM, the method prescribed by law for computing minimum required reserves.
The size of a CRVM reserve is affected by the age and sex of the insured person, how long the policy for which it is computed has been in force, the plan of insurance offered by the policy, the rate of interest used in the calculation, and the mortality table with which the actuarial present values are computed.
The Commissioner's reserve valuation method was itself established by the Standard Valuation Law (SVL), which was created by the NAIC and adopted by the several states shortly after World War II. The first mortality table prescribed by the SVL was the 1941 CSO (Commissioner's Standard Ordinary} table, at a maximum interest rate of 3½%. Subsequent amendments to the Standard Valuation Law have permitted the use of more modern mortality tables and higher rates of interest. The effect of these changes has in general been to reduce the amount of the reserves which life insurance companies are legally required to hold.
Read more about this topic: Statutory Reserve
Famous quotes containing the words life and/or insurance:
“City people try to buy time as a rule, when they can, whereas country people are prepared to kill time, although both try to cherish in their mind’s eye the notion of a better life ahead.”
—Edward Hoagland (b. 1932)
“Before I get through with you, you will have a clear case for divorce and so will my wife. Now, the first thing to do is arrange for a settlement. You take the children, your husband takes the house, Junior burns down the house, you take the insurance and I take you!”
—S.J. Perelman, U.S. screenwriter, Arthur Sheekman, Will Johnstone, and Norman Z. McLeod. Groucho Marx, Monkey Business, terms for a divorce settlement proposed while trying to woo Lucille Briggs (Thelma Todd)