ASOP 2
(NONGUARANTEED ELEMENTS FOR LIFE INSURANCE AND ANNUITY PRODUCTS)
SECTION 1
(PURPOSE, SCOPE, CROSS REFERENCES, AND EFFECTIVE DATE)

Section 1
Purpose, Scope, Cross References, and Effective Date

ASOP 2 | §1.1 | PURPOSE

This actuarial standard of practice (ASOP or standard) provides guidance to actuaries when performing actuarial services with respect to the determination of nonguaranteed elements (NGEs) for life insurance and annuity products, including riders attached to such products.

ASOP 2 | §1.2 | SCOPE

This standard applies to actuaries when performing actuarial services with respect to the determination and, if applicable, illustration of NGEs for life insurance and annuity policies written on individual policy forms where NGEs may vary at the discretion of the insurer, except as provided below. Actuarial services performed on or after the effective date of this standard also include determinations and illustrations for policies in force on the effective date of this standard.

Throughout this standard, the term “determination” includes both the initial determination at policy issue and subsequent determinations for in-force policies.

The standard also applies to actuaries when performing similar actuarial services for group master contracts with individual certificates where NGEs are determined in a similar manner to products written on individual life and annuity policy forms. Examples of products within the scope of this standard include universal life, indeterminate premium life, and deferred annuity products. Such products may be fixed, variable, or indexed.

Actuarial services for group products with NGEs that are not determined in a similar manner to those written on individual life and annuity policy forms are not in scope. Two examples are traditional group term life insurance and certain retirement funding products (for example, synthetic guaranteed interest contracts). To the extent that actuarial services for a product do not clearly fall into the scope, the actuary should use professional judgment to determine whether the services are in scope.

This standard does not apply to actuaries when performing actuarial services with respect to policyholder dividends, which are covered by ASOP No. 15, Dividends for Individual Participating Life Insurance, Annuities, and Disability Insurance. To the extent that a product involves both NGEs and policyholder dividends, this standard applies to actuaries when performing actuarial services with respect to NGEs, and ASOP No. 15 applies to actuaries when performing actuarial services with respect to policyholder dividends.

This standard does not apply to actuaries when performing actuarial services with respect to the determination of any reinsurance contract elements that are not guaranteed in a reinsurance contract.

This standard does not apply to actuaries when performing actuarial services with respect to illustrations of NGEs subject to ASOP No. 24, Compliance with the NAIC Life Insurance Illustrations Model Regulation.

If the actuary departs from the guidance set forth in this standard in order to comply with law (statutes, regulations, and other legally binding authority), or for any other reason the actuary deems appropriate, the actuary should refer to section 4. If a conflict exists between this standard and applicable law, the actuary should comply with applicable law.

ASOP 2 | §1.3 | CROSS REFERENCES

When this standard refers to the provisions of other documents, the reference includes the referenced documents as they may be amended or restated in the future, and any successor to them, by whatever name called. If any amended or restated document differs materially from the originally referenced document, the actuary should consider the guidance in this standard to the extent it is applicable and appropriate.

ASOP 2 | §1.4 | EFFECTIVE DATE

This standard is effective for actuarial services performed on or after June 1, 2022.