Risk of Long-Term Disability on Retirement Income
The historic shift from defined-benefit (DB) pension plans to defined-contribution (DC) plans has created a hidden threat to the retirement security of millions of American workers, in the form of long-term disability. Many workers and employers alike are unaware of the danger disability can pose to participants of DC plans such as 401(k)s; fortunately, regulatory changes have made it possible for long-term disability (LTD) insurance to cover retirement plan contributions. Further information can be found in the following articles.
Accounting Considerations of Stable Value Protection in BOLI
From the late 1990s until 2008, over $60 billion of notional SVP was underwritten within BOLI by about a half dozen leading providers. This all came to an abrupt end in 2008. During the financial crisis, these third-party SVP providers realized that their risk models were unsound and that loss exposures were significantly greater than previously understood. Consequently, all of the third-party SVP providers pulled back from the market and several have ultimately ceased writing additional business altogether. This displacement left a vacuum in the market and it took the industry several years to reinvent SVP solutions to begin filling the void. Presently, there are several companies looking to issue SVP features for separate account BOLI and these new SVP designs vary widely from one another. The following paper examines key provisions and accounting implications common to today’s SVP solutions.