New CSO Mortality Standard will Spur Increases in Life Insurance Premiums

New CSO Mortality Standard will Spur Increases in Life Insurance Premiums

Effective January 1, 2020, all life insurance products in the industry must shift to the 2017 Commissioners Standard Ordinary (CSO) mortality table— replacing the previously utilized 2001 standard. The CSO mortality tables are a standard for measuring average life expectancy across various demographics for the purpose of calculating life insurance reserves. Advancements in medicine, technology, lifestyle trends and more are continually impacting mortality rates, making periodic updates to the CSO table essential.

A recent article by InsuranceTechnologies highlights some of the key differences between the 2017 standard and the 2001 standard.

  • More than double the number of companies provided experience data for the 2017 CSO than for the 2001 CSO (51 to 21).
  • More data is available on smoker/non-smoker basis, as well as on business issued at older ages, substandard business, and business issued using a preferred underwriting basis.
  • The exposure by amount of insurance for the 2017 CSO was more than five times that of the 2001 CSO ($30.7 trillion to $5.7 trillion).

With an increased amount of available data and people generally living longer, life insurance pricing is undoubtedly going to be impacted by the new standard. Individuals can avoid the increases in life insurance premiums by purchasing a policy with an effective date starting in 2019 (and paying the initial premium). Talk to an RCM&D advisor to learn more about your life insurance and other insurance solutions.