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Milliman Study

On behalf of Wilton Re, Milliman recently conducted a comprehensive mortality study of the final expense marketplace.  The study is called the Milliman Final Expense Study (MFES) and highlights of the study are shown below.

  • 20 companies participated, generating over 11 million policy years of exposure and over 322,000 deaths during the 2000-2009 study period.
  • The focus of the study was on the level death benefit policies since they represented 94% of the exposure.  The level death benefit policies had an Actual to Expected (A/E) ratio of 120% by face amount, using the Society of Actuaries 2001 VBT ultimate rates as the expected.
  • There was significant variation in results by issue age.
  • There was a general trend of improving A/E ratios by calendar year.  The improvement in all durations was likely due to the introduction of new underwriting tools.  The improvement in durations 1-2 was also likely due to an improvement in claims management.
  • The impact of the use of various underwriting tools was studied across all death benefit structures.  The three tools found to provide the most protective value were: automatically declining those with a “yes” answer to an application question, the Rx database, and the APS (Attending Physician’s Statement).
  • Companies that did not move to smoker distinct rates had less favorable experience.
  • The career agent/multiple line distribution channel had the worst experience, mostly due to higher A/E ratios in durations 1-2.  This was likely due to fewer rescissions in that channel.
  • Rescissions play an important role in most final expense business.  There was a large difference in rescission rates among the companies, impacting individual companies’ overall results.
  • Cardiovascular, cancer, and respiratory disease were the three leading causes of death across all death benefit structures.

Questions regarding the study or if you are interested in purchasing MFES, please contact either:

Al Klein
Milliman, Inc.
(312) 499-5731
al.klein@milliman.com
Scott Sheefel
Wilton Re
(203)762-4448
ssheefel@wiltonre.com

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