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:
“Continual success in obtaining those things which a man from time to time desireth, that is to say, continual prospering, is that men call FELICITY; I mean Felicity of this life. For there is no such thing as perpetual Tranquillity of mind, while we live here; because Life it self is but Motion, and can never be without Desire, nor without Faeroe, no more than without Sense.”
—Thomas Hobbes (1579–1688)
“In taking out an insurance policy one pays for it in dollars and cents, always at liberty to discontinue payments. If, however, woman’s premium is a husband, she pays for it with her name, her privacy, her self-respect, her very life, “until death doth part.””
—Emma Goldman (1869–1940)