Timothy C. Pfeifer, FSA, MAAAPfeifer Advisory LLC

Interest Rates

Mortality (esp. improvement, older ages)

Reinsurer Participation

2

Principle-based approaches

Demographic trends

Sales compensation

Technology

3

Risk Free Rates Steer Return Potential

Investment Earnings Rates on Assets

Funding Costs for Capital Solutions

Competitiveness of Alternative Products

Steadily Increasing Interest Rates will Provide Some

Pricing Relief

General view is that term life will benefit from PBR

4

PBR

MCEV Rating Agency expectations 20-30 year term bigger

beneficiaries Need for high ART period?

Related Issues

Competing products may be disadvantaged

5

ImprovementCommon today in pricing, but tempered in future, particularly at very young, very old ages

Stabilization of risk class numbers allows for more robust, consistent data

Dichotomy in views surrounding slope of older age mortality

Mortality jump may be tempered by lower premium spike

Refinement

Older Ages

End of LPP

6

Emerging “sweet spot” not traditional

term zone

Longer working lives extends need for life

coverage

Less time than money?

Reaching ethnic, female,

unemployed, rich

Less likely to be source for capital relief (coinsurance)

More likely to be partner providing underwriting and mortality guidance and earnings smoothness

May provide avenues to keep ROP in the game, riders

Trend of increasing retention limits will slow/stop

Profits beyond the level premium period, survivorship term

7

Levelizing compensation less likely to impact prices much on base term

Compensation on policy fees, favorable experience, post LPP re-underwritten

Greater compensation for term conversions in preferred windows

Agent-owned reinsurance rebirth

8

• Speed-medical records• Drug databases• Lifestyle databases• Smart algorithms

9

UnderwritingUp-Selling

Policy Issuance

Conversion Programs

Internet-Friendliness

A. Prices will drop slightly at ages 40-60; same or higher elsewhere

B. 30-year Comeback

C. Process/Technology Improvements broaden market

D. Structures to retain customers after LPPE. Pivotal product as long as economic climate

viewed as harsh

10