Description
The Payout Annuity product should be used to model any single premium immediate annuity. This annuity provides a guaranteed income benefit on a monthly, quarterly, semi-annual, or annual mode during your lifetime or for a guaranteed period.
Cash Flows & Timing
The following table describes when during the month each type of cash flow occurs in the product.
| Beginning of Month | End of Month |
| Premiums (Deposits) | Benefit Payments |
| Expenses | |
| Commissions | |
| Premium Taxes |
Model Point File
Gender – The gender of the primary insured. Values should be entered as ‘Male’, ‘Female’, ‘M’, or ‘F’.
Guarantee Period – The period in years where benefit payments are guaranteed to be made regardless of policyholder survival.
Initial Premium – The amount of gross premium paid into the policy on the issue date of the policy only. This field only affect premiums on new business model points. For in-force policies, the issue date would be in the past and this field will be ignored.
Issue Age – The attained age at issue of the primary insured expressed as an integer value.
Issue Date – The original issue date of the policy. For new business model points, any date can be entered in this field. It will be overwritten during the new business processing.
Payment Amount - Periodic annuity benefit payment amounts paid to the policyholder.
Payments Per Year - The number of annuity benefit payments paid each year to the policyholder. This field should equal an integer value of 1, 2, 4, 6, or 12.
Plan Code - A string value used to identify the plan corresponding to this model point. The plan code serves as the lookup key for multiple tables on this product, including benefit patterns, premiums, lapses, commissions, expenses, and valuation assumptions.
Policy Count - The number of policies included in this model point. If multiple policies have been aggregated together, this value should be the total count of all policies.
Policy ID - The Policy ID is a string value that is used as an identifier for the model point. This could be policy number or some other unique ID from your administration system. The policy ID is used for informational purposes. It does not affect any of the calculations on this product. It can be removed from the model point file definition if not needed.
Purchase Price - The amount of gross premium paid into the policy on the issue date of the policy for in-force model points with issue dates before or equal to the valuation date. This field is ignored for new business model points.
Product Inputs
The following list of variables are defined on the library that provide input points for various items that are described. In addition, many of the product inputs are defined in the Plan Code Table - Annuity.
Credited Rate – Guaranteed – The current guaranteed annual interest rate.
Commission Rate – The commission rate specifies the commissions paid as a percentage of gross premiums received in any given time period. The commission rates are looked up from the Commission Rate table based on the Plan Code from the model point file and duration since issue. Logic assumes commissions are paid at policy issue only.
Expenses – Acquisition – The acquisition expenses paid on the issue date of the policy. The expenses are the sum of a flat dollar expense per policy These expense amounts are read from the Policy Expenses tables based on the Plan Code from the model point file.
Expenses – Maintenance – The recurring maintenance expenses paid per policy each month. The expenses are the sum of a flat dollar expense and a percent of premium expense. The first expense is calculated as an annual expense and is paid 1/12 per month throughout the policy year. The percent of premium expense is paid based on the policy mode. These expense amounts are read from the Policy Expenses tables based on the Plan Code from the model point file.
Experienced Mortality PAD – Factor for adjusting experienced mortality rates. Should be specified as a decimal value representing the amount of extra or reduced mortality to apply. A value of 0 will use the experienced mortality factors as-is. A value of 0.1 will use 10% higher mortality. And a value of -0.2 will use 80% of the experience mortality table rates.
Experienced Mortality Table – The mortality table name to be used for Experienced Mortality. This is used as the lookup into the Mortality Tables Input Table to get the experienced rates.
Maximum Age – The maximum age, or maturity age of the policy. This age is used to calculate the time period at which the policy will cease to provide any benefits or receive any further premiums.
Guaranteed Rate
The guaranteed rate on the payout annuity is calculated at the time of issue and remains constant during the life of the payout annuity.
Statutory Valuation
The statutory valuation of the payout annuity product is based upon US Statutory CARVM principles and prescribed valuation interest rates from the Valuation Manual - 22 Interest Rate for Payout Annuities.
US GAAP Valuation
The US GAAP reserve assumes benefits that would require a separate reserve calculation under FAS97.