Managing Whole Life Insurance Nonforfeiture Options
April 16, 2025 by John Blocher
Insurers selling whole life insurance frequently offer nonforfeiture options down to the first dollar of Cash Surrender Value (CSV) for Reduced Paid Up (RPU) or Extended Term Insurance (ETI). Each of these options is actuarially equivalent from a policyholder perspective when premium cessation occurs. However, over the remaining life of the policy, ETI and RPU are not actuarially equivalent from the insurer perspective when expenses are considered. ETI is significantly more advantageous than RPU, especially when the CSV is small at the time of premium cessation.
Originally Posted at SOA on April 2025 by John Blocher.
Categories: Industry Articles
