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2023 Prescribed U.S. statutory and tax interest rates for the valuation of life insurance and annuity products

December 20, 2023

Annually, WTW publishes a summary of prescribed U.S. valuation interest rates for life insurance and annuity products. These interest rates are used in determining minimum U.S. statutory reserves, minimum life policy nonforfeiture values and tax reserves.
Insurance Consulting and Technology
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This report updates the maximum statutory valuation rate and nonforfeiture interest rate for calendar year 2024 issues of life insurance products and the maximum statutory valuation interest rates for calendar year 2023 issues of annuity products.

VM-22 was adopted with an effective date of January 1, 2018, and prescribes the interest rates to be used when valuing single premium immediate annuities and other similar contracts or supplementary contracts.

Section 2: Key results

Bond yields rose in the second half of 2022 and then remained between 5% and 5.5% in the first half of 2023.

Average of Moody's Seasonal Corporate Bond yields

Average of Moody's Seasonal Corporate Bond yields rose in the second half of 2022 and then remained between 5% and 5.5% in the first half of 2023.
Average of Moody's Seasonal Corporate Bond yields

Highlights include:

  • Under VM-20, statutory valuation interest rates for life insurance products that are categorized as term or universal life still in the secondary guarantee period are different from interest rates for other life insurance products.
  • The maximum statutory valuation interest rate for calendar year 2024 issues of whole life insurance products (i.e., life insurance products with guarantee duration of more than 20 years) remained level at 3.00%
  • The nonforfeiture interest rate for calendar year 2024 issues of life insurance is 4.00% for products with guarantee duration of 20 years or less and 3.75% for products with guarantee duration of more than 20 years.
  • The maximum statutory valuation interest rates for calendar year 2023 issues of annuities and guaranteed interest contracts (not subject to VM-22) increased 25 to 175 basis points, to 3.25% to 5.25%, depending on type and guarantee duration.

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