UL Tax Reserves

[Holy Grail]

Let's say a UL product with a secondary guarantee uses XXX (or AXXX) for stat reserves, using 20-year select factors for the basic reserves. Would you also use select factors for the XXX tax reserve?

[Take 2]

Yes, as it can be presumed they're accepted in 26 states; and the method is NAIC model.

[G. Ringo]

Are you sure? I thought that when there are several prevailing tables tax reserves must use the table that generally produces the lowest reserves, which is the table without select factors.

[Double High C]

Are you sure? I thought that when there are several prevailing tables tax reserves must use the table that generally produces the lowest reserves, which is the table without select factors.

I agree with this; it is generally accepted that the table w/o select factors generally produces lower reserves, so this table is used for tax reserves, even for products on which it would result in higher tax reserves.

[Take 2]

You could be right; it seems odd to me.
Does this imply that unismoke is required if it produces lower reserves? How about unisex?

For 2001 CSO, must tax reserves be tested to see which table yields the lowest reserve? Will the ultimate aggregate always produce the lowest reserve?

[Numbers Nerd]

This subject was covered in an article in the March 2003 edition of the Financial Reporter (link not available yet). The article mentioned that testing was done on the 2001 CSO tables with and without select factors (the "aggregate" qx's produced lower reserves), and with S/NS versus unismoke tables (about the same). No guidance is available as to which direction the IRS will go on this one yet.