Gen Re is pleased to present results from our U.S. Group Term Life Rate & Risk Management Survey. First conducted in 1999, the comprehensive survey focuses on rates for Employer-Paid and Employee-Paid Group Term Life, as well as AD&D. The 17 carriers that participated had an opportunity to benchmark their underwriting, pricing, and claims management practices with those of their industry peers. They each received a customized report detailing the aggregate responses to each question, as well as their own company’s responses.

Following are some highlights that we can share with everyone.

Standard Guarantee Issue Limits and Plan Maximum Limits

For employer-paid coverage, standard guarantee issue (GI) limits averaged $113,500 for a case with 10 lives and nearly $1.1 million for a case with 10,000 lives. Standard plan maximum limits averaged $265,000 for the smallest case size and just over $1.1 million for the largest case size.

Average GI and Plan Maximum Limits for Employer-Paid Coverage

Percentage of Sold Cases Outside Standard Limit Tables

The highest GI limit sold on an employer-paid case averaged $1.0 million in 2022, while the highest maximum limit sold on a case averaged $1.8 million. The number of lives associated with those cases averaged 3,900 and 17,000, respectively.

Highest Limits Sold on a Case in 2022

Standard GI Limits and Plan Maximum Limits

For a case with 10 lives, standard GI limits averaged $66,000 for employee coverage and about $23,000 for spouse/domestic partner coverage. For a case with 5,000 lives, GI limits averaged $297,000 for employees compared to $38,300 for spouses/domestic partners.

Average Standard GI Limits by Case Size

For the smallest case size, standard plan maximums averaged $350,000 for employees and about $122,000 for spouses/domestic partners. For a case with 5,000 lives, plan maximums averaged $1.0 million for employees compared to $230,000 for spouses/domestic partners.

Average Standard Plan Maximum Limits by Case Size

In 2022, 17% of sold cases were outside standard GI limits and 11% were outside standard maximum limits for employee-paid coverage, compared to 15% and 12%, respectively, in 2021.

% of Sold Cases Outside Standard Limit Tables

Group Term Life (GTL) Manual Rates

For the manual rating section, Gen Re provided a data file with 15 employer-paid censuses and one employee-paid census; a summary of the plan designs is shown in the table below. Using the core plan design, participating companies reported their claim rate per $1,000 of coverage, final manual rate per $1,000 of coverage, initial quote rate and lowest quote rate.

Census Characteristics

For 25‑year-old males and females, final manual rates averaged $0.07 and $0.03, respectively. Rates gradually increased and averaged $2.29 and $1.42, respectively, for 75‑year-old males and females.

Final manual rates averaged $3.36 for retired males and were 47% higher than those aged 75 and not retired. For retired females, rates averaged $2.20 and were 55% higher than those 75 and not retired.

Average GTL Employer-Paid Final Manual Rates

Overall, the commission percentage assumed for the 15 cases averaged 10.2%. Commissions were lowest for 75‑year-old males and females at 7.8% and 8.0%, respectively, and highest for 25‑year-old males and females at 11.6% and 11.8%, respectively.

When using the core plan design and replacing the waiver provision to either “eligible at age 60, coverage to age 70 or eligible at age 60, coverage to Social Security Normal Retirement Age (SSNRA),” the final manual rates didn’t change. Both rates averaged $0.11 and ranged from $0.04 to $0.16. For lifetime coverage, the average rate saw a slight increase to $0.12. When removing the waiver provision altogether, the final manual rate averaged $0.10 and ranged from $0.04 to $0.15.

Final Manual Rate of Core Plan With Waiver Provisions Replaced

Employee-Paid Final Manual Rates

Employee-paid final manual rates ranged from a low of $0.07 for individuals 29 and younger to $3.40 for those 70 years and older. The final manual rate for individuals aged 70+ is nearly 150% higher than the rate ($1.37) for individuals aged 65‑69.

Average GTL Employee-Paid Final Manual Rates

Employer-Paid Pricing

When underwriting a customer for GTL, 88% of the companies will accept a lower margin on one line if the deficiency is expected to be made up on another line. However, for those cross-line subsidies most companies do not adjust their management reporting and/or financial analysis.

Percentage That Accept Lower Margin and Adjust Reporting

Percentage That Price for Mortality Improvement and Aging

On average 7,000 life years are assigned to a GTL case and almost 40,000 are assigned to an AD&D case that is 50% credible. Additionally, more than half (59%) of the companies base the credibility of a group life case on life years exposure and 41% base it on the number of claims; few base credibility on actual vs expected experience, age distribution, or male/female content.

Average Life Years Assigned by Credibility

Companies begin experience rating GTL cases at about 1,000 lives for new business and 900 lives for renewals. For AD&D, companies begin experience rating cases at about 3,000 lives for both new business and renewals.

Average Lives for Experience Rating Cases

Nearly 90% of the companies manage their sold block of business to a target percentage of the final manual rate. The target averaged 85% and ranged from 60% to 100%.

Percentage That Manage Their Sold Block to a Target Percentage of the Final Manual Rate

For a new employer-paid group life case sold in 2023 and assuming $150 annual premium per insured, the target loss ratio averaged 59% for $5,000 in annual premium and 83% for $5 million in annual premium. Standard commissions and home office expenses averaged 12% and 22%, respectively, for $5,000 in annual premium, but were considerably lower at 3% and 8%, respectively, for $5 million in annual premium.

Average Expenses and Claim Costs

Claims Metrics

Of the total number of claims received by participating companies in 2022, Group Term Life claims accounted for 69%, Waiver of Premium claims accounted for 28% and AD&D accounted for the remainder.

Percentage of Claims Received by Product, 2022

For companies providing both the number and associated dollar amount for claims received, paid and denied, average face values were calculated. Across the three products, average face amounts were highest for Waiver of Premium claims.

Average Face Amounts by Product

Seventy-three percent of the companies revisit Waiver of Premium claims annually.

All companies re‑examine Attending Physician Statements and more than half revisit the functional ability to perform any occupation and updated medical records.

Often Revisited on Waiver of Premium Claims

Claims Risk Management

Seventy-three percent of the companies utilize their own Special Investigations Unit and while most expect staffing levels to stay the same, 27% expect an increase within the next year.

Although all participating companies utilize their in-house claims staff to facilitate suspicious claim investigations, more than 70% consult with an in-house or outside legal counsel, and nearly 60% utilize an outsourced vendor.

To identify suspicious claim indicators, 64% of the companies rely on tips, while 50% rely on automatic rules-based triggers or flags. Others may rely on the expertise of claims specialists, referrals from claims examiners, or use medical and/or court records to identify suspicious claims.

Resources Used in Claim Investigations

Identifying Suspicious Claims

Overall, the percentage of Waiver of Premium claims and death claims that involve risk intervention averaged 23% and 20%, respectively. Most companies rely upon nurses (86%) and/or managers (79%) to assess risks associated with waiver claims, compared to 50% and 64%, respectively, for death claims.

Additionally, companies reported that on average, less than 2% of claims are litigated. The most frequently mentioned themes of claims litigation include policy terms and conditions not being met (80%), and beneficiary disputes (70%). Forty percent of the participants said claims litigation was due to policy administration or eligibility, while none of the claims were litigated because of non-disclosure / pre‑ex or fraud.

Claims Involving Risk Intervention

If you have any questions about our summary report, please reach out to me.

Download the PDF version for a list of participating companies.