Any nonforfeiture model developed by regulators should recognize the economic value and the cash value in a life insurance contract, says William Koenig, a life actuary with Northwestern Mutual Life Ins. Co., Milwaukee.
Speaking at the spring meeting of the National Association of Insurance Commissioners, Koenig called the failure to recognize a contract’s economic value and offer cash in a contract “a step in the wrong direction.” So if a decision is made by regulators of the Life & Health Actuarial Task Force to continue to pursue a nonforfeiture model, then it should be developed keeping this goal in mind, he said.
Efforts to create a nonforfeiture model have been an on-again, off-again process for nearly 25 years.
Having a cash value in life insurance policies is important because “opportunistic” entities, including viatical and life settlements companies, are stepping in and offering cash to contract holders, he said.
“Some people want cash, and the life settlement market has grown up on the basis that people can’t get cash,” according to Koenig.