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Study

Study on Canadian Group Long Term Disability

Termination Experience (1988-1997)

Group Life and Health Subcommittee – Research Committee

January 2010 Revised July 2010

Document 210002

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© 2010 Canadian Institute of Actuaries

Group LTD Termination Study January 2010, Revised July 2010

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Table of Contents

EXECUTIVE SUMMARY 3

ACKNOWLEDGEMENTS 4

INTRODUCTION 6

GROUP DISABILITY CHARACTERISTICS AND PLAN DESIGN 7

CONFIDENTIALITY 8

DATA SUMMARY 10

GRADUATION OF DATA 16

APPENDIX A – DATA SUMMARIES 18

APPENDIX B – COMPARISON TO PUBLISHED TABLES 27

APPENDIX C – ILLUSTRATION OF THE GRADUATED RESULTS 37

APPENDIX D – GRADUATED TABLES 44

APPENDIX E – GRADUATION FORMULAS 52

RECOVERY 54

MORTALITY 57


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EXECUTIVE SUMMARY This is an update of the earlier termination study done by the Research Committee - Group Life & Health Subcommittee (the Committee). This study includes data from some additional insurers as well as data for the 1996 and 1997 years.

Also included in this report are a number of graduated tables. The various tables are:

• Disabled recovery (Québec/Non-Québec, unisex)

• Disabled mortality (Québec/Non-Québec, gender specific) The graduated tables that have been produced reflect the average experience for the 1988-1997 period and do not include any margins.

While the information coming out of this study gives an indication of recent aggregate Canadian experience, the Committee did not analyze the data by other factors such as industry, occupation, benefit level, plan design or tax status. We do understand that these factors may contribute to the experience we believe this detail is best left for private studies.

The Committee did attempt to separate the data based on whether or not the individual had a CPP/QPP award or not. However, this field was only populated in less than 40% of the records.

Data were collected from virtually all insurers in Canada, covering the period 1988 to 1997. The data collected represent over 300,000 records and approximately 95% of the LTD premium in Canada.

The data were provided by the 25 companies listed below, which together receive an estimated 95% of the LTD premiums in Canada. Many of these companies have subsequently merged. Aeterna Vie Aetna Canada Allstate Life AVD Blue Cross Life Canada Life Co-operators Life Confederation Life Equitable Life Great West Life La Capitale Assurances La Survivance L’Industrielle-Alliance London Life Manulife Financial Maritime Life Metropolitan Life Mutual Life National Life North American Life Prudential of America SSQ Standard Life Sun Life Zurich Life

The study compares the experience to the 1987 Basic Group LTD (87GLTD) table, the Life Waiver Study based on the CIA 1988-1994 LTD study and a recent SOA table “2005 Group Term Life Waiver Reserve Table.”

The key findings from this study are:

• experience in Québec is significantly different than in the rest on Canada;

• male mortality rates are consistently higher than the female mortality rates;

• there is no significant difference between male and female recovery rates;

• there is an identifiable spike in recoveries at the time the definition of disability changes from “own occupation” to “any occupation”;

• type of insurance arrangement did not have a significant impact on the termination rates;


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• there is a lower recovery rate immediately after the claim is admitted;

• there has been a slight upward trend in recovery rates over the 10-year study period (1988-1997); and

• the Life waiver experience in the US is significantly different than the LTD experience in Canada.

ACKNOWLEDGEMENTS Current subcommittee members involved in finalizing the study for publication:

Peter Douglas (Chairperson) Nathalie Laporte Donald Blue Cindy Lau Isabelle Bouchard Stéphane Levert Joel Cornberg Stella-Ann Ménard Réjean Dion Wayne Morris Ronald Hoskins Michel Simard Micheline Lafond

Former subcommittee members, not currently on the subcommittee that were involved in the development of this study:

Peter Muirhead (previous Chairperson) John Have (former Chairperson) Walton Achoy Tony Iglesias Karen Davies Rudra Maharajh Jack Earl Marlene Van den Hoogen Denis Garand Pascal Verrette Firozali Hirji Whitman Wu

We also acknowledge those members, not already listed above, who assisted in the previous 1988-1994 study on which the current study expands:

Wendy Achoy Kelly Rendek Kim Anderson Pierre Saddik Daniel Couture Cathy Shum-Adams Richard Hampton Luc St-Amour Jon Falkenberg Bernard Tanguay R. Allan Ireland Stephen Tedesco Caterina Lindman George Turpie David Martin Gary Weigel George Melnik Michael Wise Jacques Parent

Others:

Munich Re


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Outside providers:

Statlab—University of Western Ontario Marc Vincelli and Bruce Jones

Peer reviewers, previous 1988-1994 study:

Robert L. Brown and Peter DaSilva


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INTRODUCTION There is considerable interest in industry-wide studies for assumptions used in actuarial work. The Research Committee – Group Life & Health Subcommittee (the Committee) understands the desire for these studies and also understands the desire of insurers to retain the information in their databases for their use. The Committee has limited the scope of this study to broad-based characteristics and intentionally leaves the more detailed studies to private studies and commercial database providers. The characteristics that are included in this study are; year, gender, region, age, duration of disability, reason for termination, cause of disability and type of insurance arrangement (Insured vs. Administrative Service Only {ASO} plans). While the information coming out of this study gives an indication of recent aggregate Canadian experience, the Committee did not analyze the data by other factors that may contribute to termination experience. These other factors could include; industry, individual’s occupation, plan design, benefit level, etc. Data were collected from virtually all insurers in Canada, covering the period 1988 to 1997. The data collected represent over 300,000 records, covering over four million months of exposure and including over 140,000 terminations. This represents approximately 95% of the LTD premium in Canada. Terminations were separated between death, recovery and expiry (maximum benefit period reached). The Committee chose to compare the results of this study to three existing published tables. The first of these tables is the 1987 Basic Group LTD (87GLTD) table which is a Society of Actuaries (SOA) study developed from US data for 1975 to 1980. The 87GLTD table does not separate LTD recoveries and deaths. The second table is the Life Waiver Study based on the CIA 1988-1994 LTD study, which does separate recoveries and deaths. The third table is the Group Term Life Waiver Table, another SOA table which does differentiate between deaths and recoveries. The graduated tables that have been produced reflect the average experience for the period 1988-1997 and do not include any margins. Although there are several large contributors of data to the study, there is no single contributor that predominates. The largest three contributors provided 27%, 22% and 9% of the exposures. The Committee hired Statistical Laboratory (STATLAB) at the University of Western Ontario to collect and screen the data. The Committee members did not have access to the individual data records or any detailed summaries that would allow them to match experience to a particular insurance provider. The report covers;

• some basic characteristics of disability plans in Canada; • summaries of the data; • comparisons to published tables; • comparisons by region, insurer, year and cause of disability; • the graduation methodology; and • final graduated results.


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GROUP DISABILITY CHARACTERISTICS AND PLAN DESIGN Group long-term disability benefits are an important part of an employee’s benefit package. The common benefits that are provided to disabled employees include;

• Income replacement benefits (LTD);

• Continuation of Life Insurance coverage (Life Waiver); and

• Continuation of Medical and Dental benefits.

In Canada, it is typical that a common definition of disability is applied for these benefits. In the US, a different definition is often applied for the different disability benefits. When the definition of disability differs, the continuation of Life Insurance coverage often requires a much more stringent definition of disability that the LTD benefit requires.

While the valuation of the obligation to provide future LTD and Life Waiver benefits to disabled employees has been a common focus, the valuation of the continuation of Medical and Dental benefits is becoming of increasing interest. Due to the uncertain future benefit level of Medical and Dental benefits these are not insurable benefits but the employer’s obligation does exist.

Income Replacement Benefits/Long-Term Disability (LTD) Benefits The data for this study were collected from income replacement or LTD policies.

LTD has been an important group benefit in Canada for many years, and has grown significantly since 1970. Disability income periods range from two years to age 65, with the latter being most common. Total annual premium revenues in Canada were about $2.166 billion in 1997.

The typical product provides benefits for two years, from either date of disability or end of the elimination period, if an insured person is unable to perform the duties of his/her own occupation, (“own occupation”) and thereafter for any occupation for which the person is reasonably trained or educated (“any occupation”). A typical LTD plan provides a disabled person with 50% to 75% of pre-disability income. The coverage is coordinated with other overlapping disability coverages (such as those provided by statutory plans) so that the total benefits are not a disincentive for the disabled worker to return to work when able.

The major overlapping benefits are provided either by the Canada Pension Plan (CPP) or by the Québec Pension Plan (QPP). Usually LTD contracts offset the CPP/QPP benefits entirely or partially so that claimants are limited to, at most, 85% of pre-disability earnings.

Rehabilitation benefits are usually a major component of most plans.

LTD plans are affected by many forces in the workplace. Over the last few decades, the Canadian workplace has experienced many changes that would impact the LTD experience, increased international competition, technology, advances in medical treatment and the aging workforce, to mention just a few. Legislative and legal changes have also impacted on the disability programs offered. On top of these uncontrollable factors, the claims adjudicators have altered their processes for rehabilitation and other return to work initiatives. These, either individually or collectively, can often explain the trends that are observed in the emerging experience.


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With a few differences, the product is similar to that sold in the United States, both with reference to policy provisions and the underwriting and claims practices needed to control the results. Integration with US Social Security disability benefits parallels the integration of CPP/QPP benefits in Canada. Notwithstanding these similarities, the experience may be significantly different due to differences in the workforce demographics and other workplace factors.

One significant difference between US and Canadian plans is Canadian disability plans cannot use the cause of disability to differentiate between plan provisions. In particular, “mental and nervous” claims cannot be treated differently than any other disability (i.e., if the disability plan provides benefits to age 65, “mental and nervous” claims cannot be limited to 24 months).

CONFIDENTIALITY In the initial stages of the study, the Committee decided that confidentiality would be a very sensitive issue. The Committee wanted to ensure that no company would be reluctant to participate in the study for reasons having to do with confidentiality, and severely restricted access to the data submitted.

1. Only the STATLAB knew which data belong to a particular company. None of the STATLAB personnel had any links to any of the contributing companies or any of the direct insurers. The initial data gathering was delayed due to one of the senior STATLAB personnel being removed from the project so she could pursue a contract with one of the contributing companies. All other references to a particular company’s data were handled by using code numbers.

2. The tables were reviewed carefully in order to ensure that no company could be identified from a particular table. For example, if only one company had been able to submit data by cause, the Committee would have excluded cause from the analysis in order to protect the identity of that company.

3. The list of participating companies deliberately excludes any reference to numbers of claims, proportion of the market held, and similar items, in order to ensure claims could not be attached to the companies.

DATA COLLECTING AND REFINEMENT METHODOLOGY Period Covered: 1988-1997 In general terms, the study covers claims active at some time during the period from the start of 1988 through the end of 1997. However, not all companies were able to provide data for this entire period.

From an economic perspective, the 1988-1997 period includes some highs and some lows - but probably does not cover a complete business cycle. From a benefit design perspective, the two-year maximum benefit period limitation for mental and nervous conditions was removed just prior to the study period, to comply with employment equity regulations.

Companies were requested to provide all the data that they had available. One company provided data back through 1979 and another back through 1983. While the Committee wanted to include as much data as possible, it was not appropriate to include data from periods that were


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represented by only a few companies. After a review of the pattern of companies by year, the January 1, 1988 start date was chosen. Initial Processing of Contributions

For each insurer, a “profile” of the data set was produced and examined. For most fields this profile consisted simply of a listing of the values that occurred in that field. These were checked against the expected values for that field, and any unexpected values were flagged for further review. For example, the gender field was expected to contain either “M” or “F” and other values were flagged.

The disablement date and termination date were summarized by year and also checked against other dates submitted. The date of birth was summarized by year, and also used in conjunction with the disablement date to calculate an age at disablement.

Comparisons of the report date relative to the disablement date and the date benefits commenced were done. Comparisons of the termination date relative to the disablement date, the report date and the date benefits commenced were also done.

Copies of these profiles, with any concerns noted, were sent to contributing companies. Follow-up discussions were held as necessary to resolve any concerns.

After the initial profiles were produced, additional summaries were made with appropriate follow-up as necessary. Particular note was made of net amounts that were zero and negative. A comparison was made between the date benefits commenced and the end of the elimination period. “Other” and “no claim” termination reasons were reviewed to ensure appropriate processing. In conjunction with the termination reason, a comparison between the benefit duration information and the termination date was made.

Some insurers submitted revised contributions. Other insurers submitted changes on the hardcopy error list.

For each contribution, an exposure period was established with the contributor by determining a contribution start date and contribution end date. Any records with termination dates prior to the contribution start date or with disablement dates after the contribution end date were deleted. Also, on any records with a termination date after the contribution end date, the termination data were deleted (i.e., the record was counted as an active claim through the contribution end date). Note that the contribution start date was never earlier than January 1, 1988 and the end date was never later than December 31, 1997, even though companies may have submitted valid records outside this range.

An exposure start date was established for each record as the earlier of the date benefits commenced and the end of the elimination period. These fields essentially agreed on most records, but differed widely in both directions on some records. Records were deleted if the termination date was before or the same as this exposure start date. Records were also deleted if the exposure start date was after or the same as the contribution end date.

Deletions were also made for certain field values being other than acceptable values or outside what came to be considered an acceptable range. A significant number of deletions were made for termination reasons of “no claim”, elimination periods of greater than 25 months and unknown gender. A more moderate number of records were deleted for ages at disablement being greater than 69 and geographic regions being “out of Canada”. A few records were also


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deleted for ages at disablement being less than 15, disablement date missing and identified company specific situations.

Categorizing the Data Exposures were developed by calculating fractional durations, from date of disability- in months to exposure start dates, expiry dates and termination (decrement) dates. These were adjusted as follows:

1. Exposures were counted to end of month (or year) for decrements due to death, recovery and benefit ceasing due to change in definition;

2. Terminations due “To Settlements” were counted as expiries without decrements;

3. Termination reason “Other” was counted as a 0.75 decrement. This was coded when reason was unknown and the 0.25 reduction represents the average ratio of terminations which were due to expiries based on the whole data set; and

4. Age was calculated in quinennial age group at date of disability.

DATA SUMMARY After the processing of the various data checks and corrections, there were over 300,000 records. These records provided 4,027,405 units of exposure and 140,959 terminations. Records that ceased due to the expiry of the benefit period (often age 65) were not included in the terminated record count. The 140,959 terminated records included 20,210 records that terminated due to death. The remaining 120,749 were classified as recoveries. With this classification, disabilities that terminated due to a change in definition of disability (often occurring after 24 months) were classified as recoveries.

The table below provides a summary of the data and a more detailed summary is included in Appendix A. Further details are available from the CIA. Exposures Recoveries Deaths Male Female Total Male Female Total Male Female Total 1988 110,157 65,293 175,450 2,347 1,776 4,123 638 257 895 1989 168,501 105,969 274,470 4,153 3,183 7,336 929 344 1,273 1990 239,939 157,879 397,818 6,386 4,993 11,379 1,382 516 1,898 1991 261,124 179,419 440,543 7,166 5,700 12,866 1,587 627 2,214 1992 309,294 217,438 526,732 8,324 7,234 15,558 1,951 811 2,762 1993 310,678 231,935 542,613 8,588 7,751 16,339 1,925 827 2,752 1994 246,536 188,467 435,003 7,317 6,307 13,624 1,586 713 2,299 1995 187,439 167,836 355,275 5,239 5,498 10,737 1,118 622 1,740 1996 210,447 202,883 413,330 6,224 6,694 12,918 1,374 729 2,103 1997 229,982 236,189 466,171 7,453 8,416 15,869 1,424 850 2,274

Total 2,274,097 1,753,308 4,027,405 63,197 57,552 120,749 13,914 6,296 20,210


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Exposures Recoveries Deaths Male Female Total Male Female Total Male Female Total BC 193,313 184,461 377,774 4,989 5,422 10,411 1,112 528 1,640 Alberta 95,393 74,463 169,856 2,777 2,277 5,054 545 286 831 Saskatchewan 92,477 95,836 188,313 2,567 3,131 5,698 552 300 852 Manitoba 49,367 52,294 101,661 1,411 1,547 2,958 260 187 447 Ontario 834,252 716,627 1,550,879 18,234 18,691 36,925 5,167 2,907 8,074 Québec 477,914 258,813 736,727 18,285 13,713 31,998 3,274 974 4,248 New Brunswick 59,236 32,114 91,350 1,365 905 2,270 271 74 345 Nova Scotia 89,530 61,968 151,498 1,767 1,305 3,072 411 165 576 PEI 6,881 7,095 13,976 109 189 298 20 6 26 Newfoundland 38,897 18,514 57,411 860 624 1,484 144 52 196 NWT 3,202 3,087 6,289 87 111 198 4 3 7 Yukon 2,438 2,338 4,776 60 87 147 4 2 6 Unknown 331,195 245,700 576,895 10,683 9,553 20,236 2,150 812 2,962

Total 2,274,095 1,753,310 4,027,405 63,194 57,555 120,749 13,914 6,296 20,210

Comparison to Other Tables 1987 Basic GLTD Table Most companies have used the 1987 Basic GLTD table while substituting their own experience for a specified period. In the US, the maximum period of such substitutions is two years, unless a company’s experience is highly credible. In Canada, companies have often modified the 1987 Basic GLTD table or substituted their own experience for periods longer than two years.

The 1987 Basic GLTD table is based on data from the period 1975 to 1980 for the first two years of termination rates, and back to 1962 for longer durations. The data are mainly US based, and do not allow for changes in demographics that underlie current claims either in the US or in Canada, or for differences in demographics and socioeconomic conditions between the two countries now or in the recent past. Nevertheless, the 1987 Basic GLTD table is the most recent and most used standard in Canada.

Life Waiver Study Based on Canadian LTD Experience 1988-1994 In November 2001, the Committee published a research paper that used the 1988-1994 Canadian LTD experience (the predecessor of this study) to produce a disability mortality and recovery table. A LTD termination table would be the sum of these two decrements.

This table was presented as an alternative to the 1970 Intercompany Group Life Waiver of Premium Table (Krieger Table). The Committee thought that creating a Group Life Waiver Study from LTD data was logical since most Group Life Waiver policies use the same definition of disability as is used in the LTD policies.

Society of Actuaries 2005 Group Term Life Waiver Table In March 2006, the Society of Actuaries (SOA) published a report from their Group Life Insurance Experience Committee. They studied group life waiver claims between 1993 and 2002 inclusive. The study included 750,000 life years of experience.


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The study included a basic table (without margins) as well as a valuation table (with margins). The valuation table has been accepted as the valuation standard by the NAIC.

Summary of Comparisons The Canadian LTD termination experience is significantly different than what would have been expected by either the 1987 Group Long-Term Disability Table (1987GLTD) or the 2005 Society of Actuaries Group Life Waiver Table (2005 SOA Life Waiver).

The Canadian LTD experience for 1988-1997, with some additional insurers contributing to the study is in aggregate close to the table derived from the earlier 1988-1994 study. However, a distinct regional difference is apparent.

The tables below provide a summary of the comparisons with a more detailed summary included in Appendix B. Further details are available from the CIA.

1987 GLTD

1st

year 2nd year

3rd year

years 4 & 5

years 6 to 10

over 10 years Total

Actual 64,425 35,258 23,342 9,814 6,108 2,012 140,959 Expected 60,630 25,157 8,044 6,395 5,519 1,961 107,706 Actual / Expected 106% 140% 290% 153% 111% 103% 131%

Comments The 1987 GLTD Table does not differentiate between deaths and recoveries.

The 1987 GLTD Table ignores terminations attributed to the change of definition of disability.

LTD Termination Rates(death and recovery)

0.00

0.01

0.02

0.03

0.04

0.05

0.06

0.07

0.08

0.09

0.10

0 12 24 36 48 60 72 84 96 108 120

Duration Since Disability (months)

Ter

min

atio

n R

ate

(mon

thly

)

Actual(male)

Actual(female)

Expected (male)(87GLTD)

Expected (female)(87GLTD)


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2005 SOA Life Waiver

1st

year 2nd year

3rd year

years 4 & 5

years 6 to 10

over 10 years Total

Actual Recoveries 59,174 29,763 20,621 7,242 3,357 592 120,749 Deaths 5,251 5,495 2,721 2,572 2,751 1,420 20,210 Terminations 64,425 35,258 23,342 9,814 6,108 2,012 140,959

Expected Recoveries 12,089 10,152 5,206 4,700 3,236 669 36,052 Deaths 10,618 10,991 4,780 4,977 4,373 1,721 37,460 Terminations 22,707 21,143 9,986 9,677 7,609 2,390 73,512

Actual / Expected Recoveries 489% 293% 396% 154% 104% 89% 335% Deaths 49% 50% 57% 52% 63% 83% 54% Terminations 284% 167% 234% 101% 80% 84% 192%

Comments The 2005 SOA Life Waiver Table does differentiate between deaths and recoveries.

The low expected terminations and high expected deaths are consistent with a definition of disability being more stringent in the SOA study than in the Canadian LTD experience study.

LTD Recovery Rates

0.00

0.01

0.02

0.03

0.04

0.05

0.06

0.07

0.08

0 12 24 36 48 60 72 84 96 108 120


Rec

over

y R

ate

(mon

thly

)

LTD Mortality Rates

0.000

0.001

0.002

0.003

0.004

0.005

0.006

0.007

0.008

0.009

0.010

0 12 24 36 48 60 72 84 96 108 120


Mor

talit

y R

ate

(mon

thly

)

Actual(male)

Actual(female)

Expected (male) (2005 SOA)

Expected (female)(2005 SOA)


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CIA 1988-1994 Table (by duration since disability)

1st

year 2nd year

3rd year

years 4 & 5

years 6 to 10

over 10 years Total

Actual Recoveries 59,174 29,763 20,621 7,242 3,357 592 120,749 Deaths 5,251 5,495 2,721 2,572 2,751 1,420 20,210 Terminations 64,425 35,258 23,342 9,814 6,108 2,012 140,959

Expected Recoveries 65,746 31,222 20,390 8,461 3,835 242 129,896 Deaths 5,510 5,433 2,626 2,772 3,282 1,449 21,072 Terminations 71,256 36,655 23,016 11,233 7,117 1,691 150,968


CIA 1988-1994 Table (by region)

BC Prairies Ontario Québec Maritimes Other and unknown Total

Actual Recoveries 10,411 13,710 36,925 31,997 7,123 20,583 120,749 Deaths 1,640 2,130 8,074 4,248 1,143 2,975 20,210 Terminations 12,051 15,840 44,999 36,245 8,266 23,558 140,959

Expected Recoveries 12,217 15,465 48,284 24,719 9,777 19,434 129,896 Deaths 1,892 2,297 8,257 3,980 1,749 2,897 21,072 Terminations 14,109 17,762 56,541 28,699 11,526 22,331 150,968


Comments

The updated experience would support separating the Québec experience.

LTD Recovery Rates

0.00

0.01

0.02

0.03

0.04

0.05

0.06

0.07

0.08

0.09

0 12 24 36 48 60 72 84 96 108 120


Rec

over

y R

ate

(mon

thly

)

LTD Mortality Rates

0.000

0.001

0.002

0.003

0.004

0.005

0.006

0.007

0 12 24 36 48 60 72 84 96 108 120


Mor

talit

y R

ate

(mon

thly

)

Actual(male)

Actual(female)

Expected (male)(CIA 88-94)

Expected (female)(CIA 88-94)


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CIA 1988-1994 Table (by year)

1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 Total Actual

Recoveries 4,123 7,336 11,379 12,866 15,558 16,339 13,624 10,737 12,918 15,869 120,749 Deaths 895 1,273 1,898 2,214 2,762 2,752 2,299 1,740 2,103 2,274 20,210 Terminations 5,018 8,609 13,277 15,080 18,320 19,091 15,923 12,477 15,021 18,143 140,959

Expected

Recoveries 5,286 8,481 12,639 14,255 16,777 17,426 14,098 11,835 13,709 15,390 129,896 Deaths 952 1,441 2,063 2,266 2,693 2,784 2,320 1,869 2,189 2,495 21,072 Terminations 6,238 9,922 14,702 16,521 19,470 20,210 16,418 13,704 15,898 17,885 150,968

Actual / Expected

Recoveries 78% 86% 90% 90% 93% 94% 97% 91% 94% 103% 93% Deaths 94% 88% 92% 98% 103% 99% 99% 93% 96% 91% 96% Terminations 80% 87% 90% 91% 94% 94% 97% 91% 94% 101% 93%

Comments

There is a distinctive upward trend in recovery rates. The trend in mortality rates is not as apparent.

CIA 1988-1994 Table (by gender) Actual Expected Actual / Expected

Male Female Total Male Female Total Male Female Total Recoveries 63,196 57,553 120,749 66,477 63,419 129,896 95% 91% 93% Deaths 13,914 6,296 20,210 14,461 6,611 21,072 96% 95% 96% Terminations 77,110 63,849 140,959 80,938 70,030 150,968 95% 91% 93%

Comments

The updated experience would support the continued use of unisex recoveries with sex distinct mortality rates.

Recovery Rates

0%

20%

40%

60%

80%

100%

120%

1988 1989 1990 1991 1992 1993 1994 1995 1996 1997

Year

Rat

io o

f Act

ual N

umbe

r of

Rec

over

ies

to E

xpec

ted

from

CIA

198

8-19

94 T

able

Mortality Rates

0%

20%

40%

60%

80%

100%

120%

1988 1989 1990 1991 1992 1993 1994 1995 1996 1997

Year

Rat

io o

f Act

ual N

umbe

r of

Dea

ths

to E

xpec

ted

from

CIA

198

8-19

94 T

able


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GRADUATION OF DATA General Rates were graduated from the base data with the following criteria:

1. Recovery rates were separately graduated for Québec and the Rest of Canada, and done on a unisex basis,

• Québec rates graduated into “Rest of Canada” after 36 months. 2. Mortality rates were separately graduated for Québec and the Rest of Canada, and done on a

sex distinct basis,

• Québec rates graduated into “Rest of Canada” after 36 months. 3. The “spike” in terminations that was attributed to the change in definition of disability was

removed from the base recovery rates,

• “spikes” appeared in the data at 24 months since disability, as well as after 24 months of payment;

• the terminations due to change in definition appeared to linger into 25 and 26 months of payment;

• the total impact (24 months since disability, plus 24 to 26 months of payment) was identified as the termination rate at the time the definition of disability changed.

4. A reduction in the termination rates was recognized in the first month of benefit eligibility. For instance, terminations during the sixth month of disability were much lower on plans with a sixth month elimination period compared to plans with three or four month elimination period.

5. Ultimate mortality rates were graduated into the Canadian Life Table-1990-1992 (Canadian population table) between ages 76 and 85.

The details of the graduation are included in Appendices C to E,

• Appendix C – Illustrations of the results of the graduation

• Appendix D – The graduated tables

• Appendix E – Graduation formulas

Caveats The actuary intending to use the study results will need to make allowance for several characteristics of the data:

1. The processing of the claim records initially submitted by individual companies resulted in the deletion of some claims and adjustments to others, as noted above. The Committee believes that the results have not been materially affected by such deletions and adjustments.

2. The separation of data into elimination periods was done with ranges of days rather than exact months.


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3. The termination experience is actually a blend of many different and evolving claims management practices. A company with an active and successful claims management program will expect higher termination rates than indicated by the study at early durations of disability. However, they may find it necessary to use lower termination rates than those produced by the study beyond certain durations of disability, on the grounds that those claimants who are not managed back to work are seriously disabled and likely to remain so.

4. Participation in the study was such that each year of experience results from a different combination of participating companies.

5. The study period itself was one in which the economy experienced extreme peaks and troughs. Recognizing the strong connection between economic activity and morbidity, it may be necessary to make carefully considered adjustments to the results to reflect the expected future economic environment.

6. The typical LTD product provides for two years under an “own occupation” definition of disability, with an “any occupation” definition of disability required after two years. The graduation methodology attributed all extra terminations at the typical time the definition of disability changed from “own occupation” to “any occupation” to be caused by the change in definition. Not all plans in the study would have a two-year “own occupation” provision.

7. Not all companies were able to distinguish between insured and Administrative Services Only (ASO) claims. Thus, the observed raw termination rates are a blend of insured and ASO experience. On those claims where the type of administration was shown (74% of the total), termination rates on insured business were noticeably higher than on ASO business. Claims on this type of business were identified by just five companies. Therefore, caution needs to be used when interpreting the results.

8. The Committee found that the use of “Other” as a cause of termination was not consistent from one company to another. Counting each such termination as a 0.75 decrement (see prior section), assumes 0.25 of terminations are expiries; however, there is no reliable way to test this average assumption.

9. Since data were collected for a LTD study, the process of identifying death claims may have lacked the rigor that would have been applied if the contributors knew at the onset that the data would be used for a Group Life waiver study as well.


18

APPENDIX A – DATA SUMMARIES Data Summary by Primary Cause of Disability and Reported Year Exposures

Circulatory system

diseases

Mental and nervous

disorders

Accidents (including poisoning)

Musculoskeletal system and

connective tissue disorders Neoplasms Other

Not- provided Total

1988 30,030 31,973 14,536 37,679 10,252 18,535 32,445 175,450 1989 44,185 53,578 32,430 60,228 15,728 30,249 38,072 274,470 1990 60,763 81,019 50,464 93,513 22,643 44,591 44,825 397,818 1991 61,527 92,795 56,342 105,401 25,608 50,134 48,736 440,543 1992 71,615 111,305 66,634 116,311 32,191 78,706 49,970 526,732 1993 69,983 130,093 62,662 129,319 34,837 65,273 50,446 542,613 1994 56,165 108,172 42,603 100,167 28,577 51,184 48,135 435,003 1995 44,480 105,957 31,322 85,598 25,919 41,752 20,247 355,275 1996 46,653 129,792 31,813 95,756 30,958 49,383 28,975 413,330 1997 50,331 150,905 33,654 108,866 37,700 58,139 26,576 466,171

Total 535,732 995,589 422,460 932,838 264,413 487,946 388,427 4,027,405

Terminations (Deaths and Recoveries)

Circulatory system

diseases

Mental and nervous

disorders

Accidents (including poisoning)

Musculoskeletal system and

connective tissue disorders Neoplasms Other

Not- provided Total

1988 639 748 632 909 538 665 887 5,018 1989 1,023 1,440 1,412 1,591 941 1,109 1,093 8,609 1990 1,478 2,306 2,452 2,608 1,379 1,774 1,280 13,277 1991 1,592 2,879 2,645 2,842 1,596 1,940 1,586 15,080 1992 1,930 3,529 3,216 3,365 1,953 2,797 1,530 18,320 1993 1,867 4,218 3,113 3,894 2,097 2,461 1,441 19,091 1994 1,451 3,798 2,315 3,144 1,764 1,981 1,470 15,923 1995 1,247 3,574 1,602 2,493 1,507 1,492 562 12,477 1996 1,170 4,151 1,566 2,785 1,707 1,568 2,074 15,021 1997 1,524 5,764 1,935 3,644 2,206 2,058 1,012 18,143 Total 13,921 32,407 20,888 27,275 15,688 17,845 12,935 140,959


19

Data Summary by Province and Reported Year Exposures 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 Total BC 14,253 17,777 29,181 32,188 39,322 40,012 37,173 35,368 55,724 76,776 377,774 Alberta 6,248 7,159 12,845 14,243 19,676 20,762 19,008 14,875 23,379 31,662 169,856 Saskatchewan 9,755 10,719 17,686 19,220 22,170 22,638 22,063 20,137 21,507 22,421 188,313 Manitoba 4,127 5,151 9,322 11,489 14,629 14,701 8,349 6,347 9,471 18,076 101,661 Ontario 74,464 89,173 147,007 160,873 195,076 198,993 187,638 152,132 167,521 177,999 1,550,879 Québec 42,228 49,912 63,476 70,016 80,110 83,328 84,454 79,843 88,589 94,771 736,727 New Brunswick 4,329 4,479 7,215 7,599 11,204 11,429 10,402 10,574 12,323 11,795 91,350 Nova Scotia 7,103 8,153 12,534 14,460 19,646 20,999 20,060 15,377 16,428 16,738 151,498 PEI 833 751 914 974 1,179 1,202 1,098 2,080 2,437 2,508 13,976 Newfoundland 3,032 3,380 3,788 4,194 5,840 6,761 6,400 7,320 8,036 8,661 57,411 Yukon 39 193 351 460 683 860 729 842 1,031 1,102 6,289 NWT 695 579 451 326 343 430 456 463 471 563 4,776 Unknown 8,344 77,044 93,048 104,501 116,854 120,498 37,173 9,917 6,413 3,099 576,895

Total 175,450 274,470 397,818 440,543 526,732 542,613 435,003 355,275 413,330 466,171 4,027,405

Exposure by Primary Cause of Disability

Circulatory system diseases13.3%

Mental and nervous disorders24.7%

Accidents (including external causes of injury and poisoning)

10.5%

Musculoskeletal system and connective tissue disorders

23.2%

Neoplasms6.6%

Other12.1%

Not provided

9.6%

Terminations by Primary Cause of Disability

Circulatory system diseases9.9%

Mental and nervous disorders23.0%

Accidents (including external causes of injury and poisoning)

14.8%Musculoskeletal system and connective

tissue disorders19.3%

Neoplasms11.1%

Other12.7%

Not provided

9.2%


20

Terminations (Deaths and Recoveries) 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 Total BC 413 477 806 1,013 1,354 1,319 1,332 1,081 1,711 2,546 12,051 Alberta 198 203 422 451 646 673 623 490 850 1,331 5,885 Saskatchewan 268 317 580 618 695 739 708 694 817 1,115 6,550 Manitoba 118 123 281 334 450 492 330 207 328 744 3,405 Ontario 1,802 2,300 4,161 4,546 5,958 5,499 5,673 4,351 5,206 5,504 44,999 Québec 1,664 1,938 2,686 3,226 3,877 4,157 4,492 4,160 4,663 5,384 36,246 New Brunswick 107 109 197 219 267 307 288 297 374 452 2,615 Nova Scotia 138 167 234 312 423 475 491 353 400 655 3,648 PEI 27 19 21 15 29 32 32 46 61 42 324 Newfoundland 61 88 120 105 172 170 188 236 234 305 1,680 Yukon 1 8 19 18 17 30 29 25 43 16 205 NWT 24 18 13 13 11 17 15 14 19 11 153 Unknown 197 2,842 3,737 4,210 4,421 5,181 1,722 523 315 38 23,198 Total 5,018 8,609 13,277 15,080 18,320 19,091 15,923 12,477 15,021 18,143 140,959

Exposure by Year

19884.4% 1989

6.8%

19909.9%

199110.9%

199213.1%

199313.5%

199410.8%

19958.8%

199610.3%

199711.6%

Terminations by Year

19883.6% 1989

6.1%

19909.4%

199110.7%

199213.0%

199313.5%

199411.3%

19958.9%

199610.7%

199712.9%


21

Data Summary by Type of Insurance Arrangement and Reported Year Exposures ASO

Insured With Refund Accounting

Insured Without Refund Accounting Unknown Total

1988 17,685 70,783 63,916 23,066 175,450 1989 39,092 74,299 132,570 28,509 274,470 1990 69,079 75,813 212,335 40,591 397,818 1991 76,140 79,167 236,385 48,851 440,543 1992 82,951 92,634 257,206 93,941 526,732 1993 84,823 97,390 261,122 99,278 542,613 1994 52,930 99,388 181,415 101,270 435,003 1995 36,522 142,108 162,177 14,468 355,275 1996 59,303 158,899 180,009 15,119 413,330 1997 78,137 171,975 204,825 11,234 466,171 Total 596,662 1,062,456 1,891,960 476,327 4,027,405

Terminations (Deaths and Recoveries) ASO



1988 344 2,057 1,972 645 5,018 1989 971 2,361 4,290 987 8,609 1990 1,920 2,466 7,309 1,582 13,277 1991 2,147 2,570 8,402 1,961 15,080 1992 2,423 3,122 9,439 3,336 18,320 1993 2,683 3,248 9,677 3,483 19,091 1994 1,510 3,337 7,051 4,025 15,923 1995 1,021 4,735 6,058 663 12,477 1996 1,982 5,109 7,097 833 15,021 1997 2,500 6,048 8,628 967 18,143 Total 17,501 35,053 69,923 18,482 140,959

Exposure by Type of Insurance Arrangement

ASO14.8%

Insured With

Refund26.4%

Insured Without Refund47.0%

Unknown11.8%

Terminations by Type of Insurance Arrangement

ASO12.4%

Insured With

Refund24.9%

Insured Without Refund49.6%

Unknown13.1%


22

Data Summary by Type of Insurance Arrangement and Province Exposures

ASO Insured With

Refund Accounting Insured Without

Refund Accounting Unknown Total BC 77,067 118,541 151,032 31,134 377,774 Alberta 5,414 39,148 96,422 28,872 169,856 Saskatchewan 38,762 71,938 56,312 21,301 188,313 Manitoba 7,763 33,657 52,234 8,007 101,661 Ontario 232,747 424,132 706,492 187,508 1,550,879 Québec 80,719 229,901 388,332 37,775 736,727 New Brunswick 5,018 31,229 43,993 11,110 91,350 Nova Scotia 15,707 64,597 60,159 11,035 151,498 PEI 476 8,948 3,475 1,077 13,976 Newfoundland 785 24,182 25,746 6,698 57,411 Yukon 3 4,499 959 828 6,289 NWT 75 4,107 515 79 4,776 Unknown 132,126 7,577 306,289 130,903 576,895 Total 596,662 1,062,456 1,891,960 476,326 4,027,405

Terminations (Deaths and Recoveries) ASO



BC 2,460 3,497 4,850 1,244 12,051 Alberta 211 1,372 3,102 1,200 5,885 Saskatchewan 1,078 2,048 2,008 1,416 6,550 Manitoba 241 1,028 1,616 520 3,405 Ontario 5,194 12,160 20,922 6,723 44,999 Québec 2,956 11,123 20,447 1,720 36,246 New Brunswick 183 827 1,143 462 2,615 Nova Scotia 276 1,529 1,317 526 3,648 PEI 7 204 111 2 324 Newfoundland 25 644 731 280 1,680 Yukon 2 156 40 7 205 NWT 3 128 22 0 153 Unknown 4,865 337 13,614 4,382 23,198 Total 17,501 35,053 69,923 12,802 140,959


23

Data Summary by Elimination Period and Province Exposures

3-month

elimination 4-month

elimination 6-month

elimination 12-month

elimination Other and Unknown Total

BC 88,410 59,882 105,377 40,797 83,308 377,774 Alberta 32,969 34,475 32,904 6,858 62,650 169,856 Saskatchewan 75,892 59,850 26,918 6,978 18,675 188,313 Manitoba 24,524 19,488 14,221 4,305 39,123 101,661 Ontario 318,212 281,190 361,441 66,578 523,458 1,550,879 Québec 191,908 165,751 152,429 120,251 106,388 736,727 New Brunswick 23,689 22,528 16,707 9,218 19,208 91,350 Nova Scotia 51,412 37,294 19,020 8,363 35,409 151,498 PEI 4,839 4,752 1,349 624 2,412 13,976 Newfoundland 19,338 16,697 6,915 4,527 9,934 57,411 Yukon 3,886 995 338 26 1,044 6,289 NWT 4,011 186 99 87 393 4,776 Unknown 9,988 12,389 7,689 3,228 543,601 576,895 Total 849,078 715,477 745,407 271,840 1,445,603 4,027,405

Terminations by Province

BC 8.5%

Alberta 4.2%

Saskatchewan 4.6% Manitoba

2.4%

Ontario 31.9% Québec

25.7%

New Brunswick 1.9%

Nova Scotia 2.6%

PEI 0.2%

Newfoundland 1.2%

NWT 0.1%

Yukon 0.1%

Unknown 16.5%

Exposure by Province

BC 9.4%

Alberta 4.2%

Saskatchewan 4.7%

Manitoba 2.5%

Ontario 38.5%

Québec 18.3%

New Brunswick 2.3%

Nova Scotia 3.8%

PEI 0.3%

Newfoundland 1.4%

NWT 0.2%

Yukon 0.1%

Unknown 14.3%


24


3-month elimination

4-month elimination

6-month elimination

12-month elimination

Other and Unknown Total

BC 2,934 2,541 2,997 831 2,748 12,051 Alberta 1,190 1,382 1,050 141 2,122 5,885 Saskatchewan 2,511 2,002 1,040 202 795 6,550 Manitoba 884 696 448 115 1,262 3,405 Ontario 9,660 8,952 9,389 1,783 15,215 44,999 Québec 9,310 10,872 7,674 3,455 4,935 36,246 New Brunswick 755 668 399 192 601 2,615 Nova Scotia 1,173 932 432 201 910 3,648 PEI 114 139 29 2 40 324 Newfoundland 549 497 165 74 395 1,680 Yukon 115 29 4 0 57 205 NWT 135 2 1 0 15 153 Unknown 1,218 1,000 468 279 20,233 23,198 Total 30,548 29,712 24,096 7,275 49,328 140,959

Terminations by Elimination Period

3-month elimination

21.7%

4-month elimination

21.1%

6-month elimination

17.1%


5.2%

Other and Unknown

35.0%

Exposure by Elimination Period

3-month elimination

21.1%

4-month elimination

17.8%

6-month elimination

18.5%


6.7%

Other and Unknown

35.9%


25

Data Summary by Elimination Period and Reporting Year Exposures

3-month

elimination 4-month

elimination 6-month

elimination 12-month

elimination Other and Unknown Total

1988 65,715 11,824 20,869 11,020 66,022 175,450 1989 67,248 16,012 26,816 14,272 150,122 274,470 1990 74,410 37,423 48,451 21,524 216,010 397,818 1991 77,949 47,544 53,924 22,952 238,174 440,543 1992 82,130 62,454 63,263 25,022 293,863 526,732 1993 86,889 70,977 65,640 26,701 292,406 542,613 1994 89,438 75,540 64,823 25,815 179,387 435,003 1995 99,965 107,839 104,672 39,771 3,028 355,275 1996 103,895 130,578 133,803 41,842 3,212 413,330 1997 101,439 155,286 163,146 42,921 3,379 466,171 Total 849,078 715,477 745,407 271,840 1,445,603 4,027,405


3-month elimination

4-month elimination

6-month elimination



1988 1,908 445 616 381 1,668 5,018 1989 2,145 652 863 317 4,632 8,609 1990 2,620 1,360 1,455 636 7,206 13,277 1991 2,785 1,820 1,628 675 8,172 15,080 1992 2,961 2,416 2,008 646 10,289 18,320 1993 3,191 2,716 2,148 714 10,322 19,091 1994 3,202 3,127 2,173 675 6,746 15,923 1995 3,758 4,249 3,377 1,000 93 12,477 1996 3,934 5,676 4,228 1,093 90 15,021 1997 4,044 7,251 5,600 1,138 110 18,143 Total 30,548 29,712 24,096 7,275 49,328 140,959


26

Terminations Split Between Deaths and Recoveries Terminations (Deaths and Recoveries)

Recoveries Deaths Total

1988 4,123 895 5,018 1989 7,336 1,273 8,609 1990 11,379 1,898 13,277 1991 12,866 2,214 15,080 1992 15,558 2,762 18,320 1993 16,339 2,752 19,091 1994 13,624 2,299 15,923 1995 10,737 1,740 12,477 1996 12,918 2,103 15,021 1997 15,869 2,274 18,143 Total 120,749 20,210 140,959

Recoveries Deaths Total BC 10,411 1,640 12,051 Alberta 5,054 831 5,885 Saskatchewan 5,698 852 6,550 Manitoba 2,958 447 3,405 Ontario 36,925 8,074 44,999 Québec 31,998 4,248 36,246 New Brunswick 2,270 345 2,615 Nova Scotia 3,072 576 3,648 PEI 298 26 324 Newfoundland 1,484 196 1,680 Yukon 198 7 205 NWT 147 6 153 Unknown 20,236 2,962 23,198 Total 120,749 20,210 140,959

Deaths14.3%

Recoveries85.7%


27

APPENDIX B – COMPARISON TO PUBLISHED TABLES Summary of Exposures Exposures (Months of exposure for first 36 months, Annual exposures after) – by gender

Duration since disability Male Female Total 1st year 631,116 568,531 1,199,647 2nd year 834,692 621,326 1,456,018 3rd year 610,535 430,599 1,041,134 years 4 & 5 72,950 48,463 121,413 years 6 to 10 90,145 59,803 149,948 over 10 years 34,658 24,587 59,245

Total 2,274,096 1,753,309 4,027,405 Exposures (Months of exposure for first 36 months, Annual exposures after) – by elimination period

Duration since disability

3-month elimination

4-month elimination

6-month elimination



1st year 302,966 274,802 196,776 0 425,103 1,199,647 2nd year 273,363 244,113 280,403 125,604 532,535 1,456,018 3rd year 196,674 156,557 200,343 112,870 374,690 1,041,134 years 4 & 5 24,643 17,045 24,293 13,365 42,067 121,413 years 6 to 10 34,732 17,978 31,186 15,043 51,009 149,948 over 10 years 16,700 4,982 12,406 4,958 20,199 59,245 Total 849,078 715,477 745,407 271,840 1,445,603 4,027,405

Exposures (Months of exposure for first 36 months, Annual exposures after) -- by region

Duration since disability BC Prairies Ontario Québec Maritimes

Other/ Unknown Total

1st year 107,453 148,340 428,496 240,567 85,383 189,408 1,199,647 2nd year 140,294 163,681 563,915 255,137 113,457 219,534 1,456,018 3rd year 99,450 113,074 417,269 182,774 85,887 142,680 1,041,134 years 4 & 5 11,735 12,937 50,667 21,081 10,544 14,449 121,413 years 6 to 10 13,840 16,249 64,302 25,778 13,437 16,342 149,948 over 10 years 5,002 5,549 26,230 11,390 5,527 5,547 59,245 Total 377,774 459,830 1,550,879 736,727 314,235 587,960 4,027,405

Exposures (Months of exposure for first 36 months, Annual exposures after) – by reporting year

Duration since disability 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 Total 1st year 52,686 85,280 124,003 137,699 155,659 157,729 124,887 106,199 121,183 134,322 1,199,647 2nd year 63,616 100,447 145,602 163,102 197,589 197,602 155,100 124,184 146,315 162,461 1,456,018 3rd year 45,825 69,634 99,978 108,526 135,463 145,421 116,324 92,478 106,062 121,423 1,041,134 years 4 & 5 5,386 7,604 11,069 12,070 14,483 15,861 14,289 11,787 13,451 15,413 121,413 years 6 to 10 5,996 8,805 12,987 14,317 17,301 18,548 16,793 14,547 18,357 22,297 149,948 over 10 years 1,941 2,700 4,179 4,829 6,237 7,452 7,610 6,080 7,962 10,255 59,245 Total 175,450 274,470 397,818 440,543 526,732 542,613 435,003 355,275 413,330 466,171 4,027,405


28

Exposures (Months of exposure for first 36 months, Annual exposures after) – by age at disability Duration since disability

under 25

25- 29

30- 34

35- 39

40- 44

45- 49

50- 54

55- 59

60 and over

all ages Total

1st year 18,789 62,905 115,592 149,564 166,680 179,903 183,575 186,775 135,864 1,199,647 2nd year 16,530 59,902 115,651 154,935 183,371 212,870 245,153 278,579 189,027 1,456,018 3rd year 9,479 34,694 69,201 96,933 120,866 148,840 188,716 233,376 139,029 1,041,134 years 4 & 5 972 3,532 7,049 10,646 13,546 17,640 24,399 31,918 11,710 121,412 years 6 to 10 1,394 4,832 8,955 13,972 18,808 25,923 39,046 35,183 1,834 149,947 over 10 years 59,247 59,247 Total 47,164 165,865 316,448 426,050 503,271 585,176 680,889 765,831 477,464 59,247 4,027,405

Summary of Recoveries Recoveries – by gender

Duration since disability Male Female Total 1st year 30,311 28,863 59,174 2nd year 15,777 13,986 29,763 3rd year 10,421 10,200 20,621 years 4 & 5 4,202 3,040 7,242 years 6 to 10 2,123 1,234 3,357 over 10 years 362 230 592 Total 63,196 57,553 120,749

Recoveries – by elimination period


3-month elimination

4-month elimination

6-month elimination



1st year 15,121 15,712 8,409 0 19,932 59,174 2nd year 4,673 5,662 5,927 2,631 10,870 29,763 3rd year 4,473 3,435 3,821 1,416 7,476 20,621 years 4 & 5 1,280 963 1,305 1,121 2,573 7,242 years 6 to 10 543 422 748 423 1,221 3,357 over 10 years 84 41 170 75 223 592 Total 26,174 26,235 20,380 5,666 42,295 120,749

Recoveries – by region



1st year 4,556 6,364 15,430 19,108 2,880 10,836 59,174 2nd year 2,573 3,178 9,967 7,524 1,763 4,758 29,763 3rd year 2,144 2,873 7,110 3,247 1,464 3,783 20,621 years 4 & 5 729 797 2,756 1,497 584 879 7,242 years 6 to 10 349 458 1,362 554 389 245 3,357 over 10 years 60 40 300 68 43 82 592 Total 10,411 13,710 36,925 31,998 7,123 20,583 120,749


29

Recoveries – by reporting year

Duration since disability 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 Total 1st year 2,041 3,834 5,940 6,560 7,625 7,986 6,539 5,199 6,118 7,332 59,174 2nd year 1,040 1,752 2,662 3,142 3,942 3,899 3,449 2,567 3,270 4,040 29,763 3rd year 694 1,238 1,826 2,091 2,671 3,025 2,269 1,828 2,141 2,838 20,621 years 4 & 5 233 354 596 730 885 970 943 696 857 978 7,242 years 6 to 10 104 136 294 294 379 402 374 366 443 565 3,357 over 10 years 11 22 61 49 56 57 50 81 89 116 592 Total 4,123 7,336 11,379 12,866 15,558 16,339 13,624 10,737 12,918 15,869 120,749

Recoveries – by age at disability


under 25

25- 29

30- 34

35- 39

40- 44

45- 49

50- 54

55- 59

60 and over

all ages Total

1st year 1,900 5,316 8,462 9,598 9,546 8,879 7,303 5,424 2,747 59,175 2nd year 745 2,310 4,056 4,856 4,893 4,740 4,036 2,957 1,170 29,763 3rd year 454 1,448 2,670 2,984 3,261 3,195 3,139 2,623 849 20,623 years 4 & 5 137 504 788 1,004 1,082 1,089 1,213 1,055 370 7,242 years 6 to 10 68 192 327 411 427 487 730 673 43 3,358 over 10 years 588 588 Total 3,304 9,770 16,303 18,853 19,209 18,390 16,421 12,732 5,179 588 120,749

Summary of Deaths Deaths – by gender

Duration since disability Male Female Total 1st year 3,425 1,826 5,251 2nd year 3,722 1,773 5,495 3rd year 1,889 832 2,721 years 4 & 5 1,818 754 2,572 years 6 to 10 1,990 761 2,751 over 10 years 1,070 350 1,420 Total 13,914 6,296 20,210

Deaths – by elimination period


3-month elimination

4-month elimination

6-month elimination



1st year 1,220 1,218 877 0 1,936 5,251 2nd year 944 977 1,043 564 1,967 5,495 3rd year 558 447 499 334 883 2,721 years 4 & 5 558 396 501 288 829 2,572 years 6 to 10 671 308 547 298 927 2,751 over 10 years 423 131 249 125 492 1,420 Total 4,374 3,477 3,716 1,609 7,034 20,210


30

Deaths – by region



1st year 412 599 2,050 1,076 265 849 5,251 2nd year 395 571 2,226 1,180 281 842 5,495 3rd year 233 250 1,154 566 149 369 2,721 years 4 & 5 223 264 992 593 161 339 2,572 years 6 to 10 246 324 1,070 502 177 432 2,751 over 10 years 131 122 582 331 110 144 1,420 Total 1,640 2,130 8,074 4,248 1,143 2,975 20,210

Deaths – by reporting year

Duration since disability 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 Total 1st year 247 354 556 647 718 711 587 400 487 544 5,251 2nd year 218 354 524 612 786 770 647 457 552 575 5,495 3rd year 116 172 260 267 374 363 320 264 283 302 2,721 years 4 & 5 123 151 209 279 359 319 302 244 304 282 2,572 years 6 to 10 135 177 239 276 354 394 267 237 314 358 2,751 over 10 years 56 65 110 133 171 195 176 138 163 213 1,420 Total 895 1,273 1,898 2,214 2,762 2,752 2,299 1,740 2,103 2,274 20,210

Deaths – by age at disability


under 25

25- 29

30- 34

35- 39

40- 44

45- 49

50- 54

55- 59

60 and over

all ages Total

1st year 22 109 220 405 598 842 1,040 1,125 890 5,251 2nd year 18 118 285 458 630 872 1,005 1,207 902 5,495 3rd year 10 62 147 194 270 400 504 742 392 2,721 years 4 & 5 12 59 103 188 213 360 508 781 348 2,572 years 6 to 10 6 39 92 152 227 435 848 914 38 2,751 over 10 years 1,420 1,420 Total 68 387 847 1,397 1,938 2,909 3,905 4,769 2,570 1,420 20,210

Ratio of Actual to Expected Termination Rates (recoveries plus deaths) Compared to 1987 GLTD – basic table (3 month elimination period) – by gender

Duration since disability Male Female Total 1st year 119% 95% 106% 2nd year 148% 132% 140% 3rd year 259% 336% 290% years 4 & 5 144% 171% 153% years 6 to 10 107% 118% 111% over 10 years 106% 95% 103% Total 139% 123% 131%


31

Compared to 1987 GLTD – basic table (3 month elimination period) – by elimination period


3-month elimination

4-month elimination

6-month elimination



1st year 97% 114% 114% 106% 106% 2nd year 118% 153% 141% 158% 141% 140% 3rd year 334% 318% 277% 204% 288% 290% years 4 & 5 145% 151% 144% 195% 151% 153% years 6 to 10 98% 111% 118% 122% 111% 111% over 10 years 94% 110% 113% 122% 98% 103% Total 117% 134% 139% 167% 131% 131%

Compared to 1987 GLTD – basic table (3 month elimination period) – by region



1st year 91% 91% 84% 157% 75% 122% 106% 2nd year 120% 131% 126% 199% 106% 146% 140% 3rd year 307% 355% 256% 275% 241% 375% 290% years 4 & 5 155% 155% 141% 188% 133% 159% 153% years 6 to 10 119% 132% 104% 108% 111% 111% 111% over 10 years 123% 95% 102% 98% 85% 123% 103% Total 121% 123% 114% 172% 103% 147% 131%

Compared to 1987 GLTD – basic table (3 month elimination period) – by reporting year

Duration since disability 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 Total 1st year 92% 102% 105% 104% 108% 109% 111% 101% 105% 114% 106% 2nd year 124% 129% 131% 133% 139% 137% 151% 137% 146% 159% 140% 3rd year 243% 273% 279% 285% 289% 298% 285% 288% 291% 328% 290% years 4 & 5 126% 127% 138% 159% 163% 152% 163% 151% 165% 157% 153% years 6 to 10 103% 93% 109% 106% 114% 117% 104% 114% 114% 116% 111% over 10 years 97% 91% 119% 110% 107% 99% 86% 115% 102% 104% 103% Total 113% 121% 126% 127% 132% 133% 136% 127% 132% 143% 131%

Compared to 1987 GLTD – basic table (3 month elimination period) – by age at disability


under 25

25- 29

30- 34

35- 39

40- 44

45- 49

50- 54

55- 59

60 and over

all ages Total

1st year 104% 99% 96% 97% 102% 108% 113% 122% 157% 106% 2nd year 129% 127% 132% 135% 139% 146% 137% 145% 195% 140% 3rd year 322% 313% 326% 301% 313% 304% 288% 257% 203% 290% years 4 & 5 142% 172% 164% 176% 180% 173% 152% 122% 132% 153% years 6 to 10 119% 119% 124% 113% 99% 104% 114% 113% 99% 111% over 10 years 102% 102% Total 122% 121% 122% 123% 129% 135% 137% 140% 168% 102% 131%


32

Ratio of Actual to Expected Recovery Rates Compared to Life Waiver Study (1988-1994) – by gender


Compared to Life Waiver Study (1988-1994) – by elimination period


3-month elimination

4-month elimination

6-month elimination




Compared to Life Waiver Study (1988-1994) -- by region




Compared to Life Waiver Study (1988-1994) – by reporting year



33

Compared to Life Waiver Study (1988-1994) – by age at disability


under 25

25- 29

30- 34

35- 39

40- 44

45- 49

50- 54

55- 59

60 and over

all ages Total


Ratio of Actual to Expected Mortality Rates Compared to Life Waiver Study (1988-1994) – by gender


Compared to Life Waiver Study (1988-1994) – by elimination period


3-month elimination

4-month elimination

6-month elimination




Compared to Life Waiver Study (1988-1994) -- by region





34

Compared to Life Waiver Study (1988-1994) – by reporting year


Compared to Life Waiver Study (1988-1994) – by age at disability


under 25

25- 29

30- 34

35- 39

40- 44

45- 49

50- 54

55- 59

60 and over

all ages Total


Ratio of Actual to Expected Recovery Rates Compared to 2005 SOA Life Waiver Table (basic) – by gender


Compared to 2005 SOA Life Waiver Table (basic) – by elimination period


3-month elimination

4-month elimination

6-month elimination





35

Compared to 2005 SOA Life Waiver Table (basic) -- by region




Compared to 2005 SOA Life Waiver Table (basic) – by reporting year


Compared to 2005 SOA Life Waiver Table (basic) – by age at disability


under 25

25- 29

30- 34

35- 39

40- 44

45- 49

50- 54

55- 59

60 and over

all ages Total


Ratio of Actual to Expected Mortality Rates Compared to 2005 SOA Life Waiver Table (basic) – by gender



36

Compared to 2005 SOA Life Waiver Table (basic) – by elimination period


3-month elimination

4-month elimination

6-month elimination




Compared to 2005 SOA Life Waiver Table (basic) -- by region




Compared to 2005 SOA Life Waiver Table (basic) – by reporting year


Compared to 2005 SOA Life Waiver Table (basic) – by age at disability


under 25

25- 29

30- 34

35- 39

40- 44

45- 49

50- 54

55- 59

60 and over

all ages Total



37

APPENDIX C – ILLUSTRATION OF THE GRADUATED RESULTS Base Recovery Rates

mth 4 mth 7 mth 10 mth

13 mth 16 mth

19 mth 22 mth

25 mth 28 mth

31 mth 34

under 25 25-29

30-34 35-39

40-44 45-49

50-54 55-59

60-64

0.00 0.02 0.04 0.06 0.08 0.10 0.12 0.14 0.16 0.18 0.20

Rate of Recovery (monthly)

Months since Disability

Age at Disability

Recovery Rates - Québec


13 mth 16 mth

19 mth 22 mth

25 mth 28 mth

31 mth 34

under 25 25-29

30-34 35-39

40-44 45-49

50-54 55-59

60-64

0.00 0.02 0.04 0.06 0.08 0.10 0.12 0.14 0.16

Rate of Recovery (monthly)


Age at Disability

Recovery Rates - Non-Québec


38

Comparison of Graduated Recovery Rates to Actual (all ages)

Recovery Rates Québec

0.00

0.02

0.04

0.06

0.08

0.10

0.12

0.14

0 12 24 36 48 60 72 84 96 108 120 Months since Disability

Monthly Recovery Rate

Graduated (unisex)

Actual (male)

Actual (female)

Recovery Rates Non-Québec

0.00

0.02

0.04

0.06

0.08

0.10

0.12

0.14


Monthly Recovery Rate

Graduated (unisex)

Actual (male)

Actual (female)


39

Comparison of Graduated Recovery Rates to Actual by Region (all ages)

Note: The value axis for the Québec termination has a maximum of 0.14, compared to the maximum of 0.08 for the other regions.

Comparison of Graduated Recovery RatesBritish Columbia

0.00

0.01

0.02

0.03

0.04

0.05

0.06

0.07

0.08

0 12 24 36 48 60 72 84 96 108 120


Mon

thly

Rec

over

y R

ate

Graduated(Non-Quebec)

Actual(male)

Actual(female)

Comparison of Graduated Recovery RatesPrairies

0.00

0.01

0.02

0.03

0.04

0.05

0.06

0.07

0.08

0 12 24 36 48 60 72 84 96 108 120


Mon

thly

Rec

over

y R

ate


Actual(male)

Actual(female)

Comparison of Graduated Recovery RatesOntario

0.00

0.01

0.02

0.03

0.04

0.05

0.06

0.07

0.08

0 12 24 36 48 60 72 84 96 108 120


Mon

thly

Rec

over

y R

ate


Actual(male)

Actual(female)

Comparison of Graduated Recovery RatesMaritimes

0.00

0.01

0.02

0.03

0.04

0.05

0.06

0.07

0.08

0 12 24 36 48 60 72 84 96 108 120


Mon

thly

Rec

over

y R

ate


Actual(male)

Actual(female)

Recovery Rates

0.000

0.020

0.040

0.060

0.080

0.100

0.120

0.140

0 12 24 36 48 60 72 84 96 108 120


Mon

thly

Rec

over

y R

ate

Graduated(PQ)

Graduated(non-PQ)

Comparison of Graduated Recovery Rates Québec

0.00 0.02 0.04 0.06 0.08 0.10 0.12 0.14


Monthly Recovery Rate Graduated (Quebec) Actual (male) Actual

(female)


40

Mortality Rates

mth 4 mth 7 mth10

mth13

mth16

mth19

mth22

mth25

mth28

mth31

mth34

under 25

25-29

30-34

35-39

40-44

45-49

50-5455-59

60-64

0.000

0.001

0.002

0.003

0.004

0.005

0.006

0.007

0.008

0.009

Rat

e of

Mor

talit

y (m

onth

ly)


Age at Disability

Quebec Female Mortality Rates


13 mth 16 mth

19 mth 22 mth

25 mth 28 mth

31 mth 34

under 25 25-29

30-34 35-39

40-44 45-49

50-54 55-59

60-64

0.000 0.001 0.002 0.003 0.004 0.005 0.006 0.007 0.008 0.009

Rate of Mortality (monthly)


Age at Disability

Non-Québec Male Mortality Rates


41


13 mth 16 mth

19 mth 22 mth

25 mth 28 mth

31 mth 34

under 25 25-29

30-34 35-39

40-44 45-49

50-54 55-59

60-64

0.000 0.001 0.002 0.003 0.004 0.005 0.006 0.007 0.008 0.009



Age at Disability

Québec Female Mortality Rates


13 mth 16 mth

19 mth 22 mth

25 mth 28 mth

31 mth 34

under 25 25-29

30-34 35-39

40-44 45-49

50-54 55-59

60-64

0.000 0.001 0.002 0.003 0.004 0.005 0.006 0.007 0.008 0.009



Age at Disability

Non-Québec Female Mortality Rates


42

Comparison of Graduated Mortality Rates to Actual (all ages)

Québec Mortality Rates

0.000

0.001

0.002

0.003

0.004

0.005

0.006

0.007


Mon

thly

Mor

talit

y R

ate

Graduated (male)

Graduated (female)

Actual (male)

Actual (female)

Non-Québec Mortality Rates

0.000

0.001

0.002

0.003

0.004

0.005

0.006

0.007


Mon

thly

Mor

talit

y R

ate

Graduated (male)

Graduated (female)

Actual (male)

Actual (female)


43

Comparison of Graduated Mortality Rates to Actual by Region (all ages)

Comparison of Graduated Mortality RatesBritish Columbia

0.000

0.001

0.002

0.003

0.004

0.005

0.006

0.007

0 12 24 36 48 60 72 84 96 108 120


Mon

thly

Mor

talit

y R

ate

Graduated(male)

Graduated(female)

Actual(male)

Actual(female)

Comparison of Graduated Mortality RatesPrairies

0.000

0.001

0.002

0.003

0.004

0.005

0.006

0.007

0 12 24 36 48 60 72 84 96 108 120


Mon

thly

Mor

talit

y R

ate

Graduated(male)

Graduated(female)

Actual(male)

Actual(female)

Comparison of Graduated Mortality RatesOntario

0.000

0.001

0.002

0.003

0.004

0.005

0.006

0.007

0 12 24 36 48 60 72 84 96 108 120


Mon

thly

Mor

talit

y R

ate

Graduated(male)

Graduated(female)

Actual(male)

Actual(female)

Comparison of Graduated Mortality RatesMaritimes

0.000

0.001

0.002

0.003

0.004

0.005

0.006

0.007

0 12 24 36 48 60 72 84 96 108 120


Mon

thly

Mor

talit

y R

ate

Graduated(male)

Graduated(female)

Actual(male)

Actual(female)

Mortality Rates

0.000

0.001

0.002

0.003

0.004

0.005

0.006

0.007

0 12 24 36 48 60 72 84 96 108 120


Mon

thly

Mor

talit

y R

ate

graduated (non-PQ)(male)

Graduated (PQ)(male)

Graduated (non-PQ)(female)

Graduated (PQ)(female)

Comparison of Graduated Mortality Rates Québec

0.000 0.001 0.002 0.003 0.004 0.005 0.006 0.007


Monthly Mortality Rate Graduated (male) Graduated

(female) Actual (male) Actual

(female)


44

APPENDIX D – GRADUATED TABLES The following graduated tables are included in this study:

• Disabled recovery rates with a 10-year select period Unisex Non-Québec;

Unisex Québec;

Grouped into 5 year age bands based on age at disability;

Monthly rates for the first 36 months, annual rates thereafter.

• Disabled mortality rates with a 10-year select period Male Non-Québec;

Female Non-Québec;

Male Québec;

Female Québec;

Grouped into 5-year age bands based on age at disability;

Monthly rates for the first 36 months, annual rates thereafter.

• Ultimate mortality and recovery rates (after 10 years of disability) Male and female mortality rates;

Unisex recovery rates;

No distinction between Québec/Non-Québec;

By attained age.

The graduated tables that have been produced reflect the average experience for the 1988-1997 period and do not include any margins. These tables are also available separately as an excel workbook.


45

Recovery Rates –Non-Québec Duration Since

Disability Age at Disability

under 25 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64

month 4 0.14814 0.10985 0.08473 0.06822 0.05689 0.04822 0.04050 0.03268 0.02421 month 5 0.13172 0.09857 0.07813 0.06501 0.05559 0.04758 0.03973 0.03144 0.02258 month 6 0.11757 0.08888 0.07202 0.06116 0.05281 0.04513 0.03726 0.02898 0.02030 month 7 0.10534 0.08050 0.06640 0.05708 0.04943 0.04200 0.03431 0.02629 0.01803 month 8 0.09475 0.07322 0.06124 0.05303 0.04588 0.03874 0.03134 0.02371 0.01591 month 9 0.08557 0.06686 0.05655 0.04915 0.04240 0.03557 0.02852 0.02130 0.01396

month 10 0.07758 0.06127 0.05227 0.04550 0.03911 0.03260 0.02592 0.01910 0.01218 month 11 0.07061 0.05636 0.04839 0.04211 0.03605 0.02986 0.02353 0.01709 0.01055 month 12 0.06528 0.05250 0.04521 0.03929 0.03351 0.02761 0.02159 0.01548 0.00928 month 13 0.06069 0.04910 0.04237 0.03677 0.03126 0.02565 0.01993 0.01414 0.00827 month 14 0.05683 0.04617 0.03988 0.03456 0.02930 0.02397 0.01855 0.01307 0.00753 month 15 0.05371 0.04371 0.03774 0.03265 0.02764 0.02257 0.01745 0.01228 0.00705 month 16 0.05111 0.04160 0.03587 0.03099 0.02621 0.02139 0.01654 0.01165 0.00673 month 17 0.04861 0.03956 0.03407 0.02939 0.02483 0.02025 0.01566 0.01105 0.00643 month 18 0.04619 0.03761 0.03234 0.02785 0.02350 0.01916 0.01482 0.01048 0.00613 month 19 0.04388 0.03573 0.03067 0.02638 0.02222 0.01811 0.01401 0.00992 0.00585 month 20 0.04166 0.03393 0.02908 0.02496 0.02100 0.01710 0.01323 0.00939 0.00557 month 21 0.03954 0.03221 0.02756 0.02361 0.01983 0.01613 0.01249 0.00889 0.00531 month 22 0.03751 0.03057 0.02611 0.02231 0.01872 0.01521 0.01178 0.00840 0.00507 month 23 0.03558 0.02901 0.02472 0.02108 0.01765 0.01434 0.01110 0.00794 0.00483 month 24 0.03375 0.02752 0.02341 0.01992 0.01665 0.01350 0.01046 0.00750 0.00460 month 25 0.03201 0.02611 0.02216 0.01881 0.01569 0.01271 0.00985 0.00708 0.00439 month 26 0.03037 0.02479 0.02098 0.01776 0.01479 0.01197 0.00928 0.00669 0.00419 month 27 0.02883 0.02353 0.01987 0.01678 0.01394 0.01127 0.00874 0.00632 0.00400 month 28 0.02738 0.02236 0.01884 0.01585 0.01314 0.01061 0.00823 0.00598 0.00382 month 29 0.02603 0.02127 0.01787 0.01499 0.01240 0.01000 0.00776 0.00565 0.00366 month 30 0.02478 0.02025 0.01697 0.01419 0.01171 0.00943 0.00732 0.00535 0.00350 month 31 0.02362 0.01931 0.01614 0.01346 0.01107 0.00890 0.00691 0.00508 0.00336 month 32 0.02256 0.01845 0.01537 0.01278 0.01048 0.00842 0.00654 0.00482 0.00323 month 33 0.02159 0.01767 0.01468 0.01216 0.00995 0.00798 0.00620 0.00459 0.00311 month 34 0.02073 0.01697 0.01406 0.01161 0.00947 0.00759 0.00590 0.00438 0.00301 month 35 0.01995 0.01634 0.01350 0.01112 0.00905 0.00724 0.00563 0.00420 0.00291 month 36 0.01928 0.01579 0.01302 0.01069 0.00868 0.00693 0.00539 0.00404 0.00283

Year 4 0.18835 0.15712 0.13022 0.10700 0.08699 0.06970 0.05474 0.04178 0.03052 Year 5 0.10381 0.08646 0.07164 0.05891 0.04796 0.03847 0.03021 0.02297 0.01659 Year 6 0.06611 0.05575 0.04682 0.03905 0.03224 0.02621 0.02081 0.01595 0.01151 Year 7 0.04929 0.04240 0.03630 0.03085 0.02591 0.02139 0.01722 0.01332 0.00966 Year 8 0.04179 0.03659 0.03185 0.02746 0.02336 0.01950 0.01584 0.01234 0.00899 Year 9 0.02719 0.02092 0.01626 0.01272 0.00999 0.00782 0.00605 0.00457 0.00327

Year 10 0.02055 0.01380 0.00918 0.00603 0.00391 0.00250 0.00160 0.00103 0.00068

Multiplicative adjustment in 1st month after elimination period

0.70515 0.73103 0.75698 0.78298 0.80903 0.83511 0.86119 0.88726 0.91331 Additive adjustment for month of change in definition from “own occupation” to “any occupation”

0.21394 0.19228 0.17076 0.14939 0.12818 0.10717 0.08635 0.06575 0.04540


46

Recovery Rates - Québec Duration Since


under 25 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64




Year 10 0.02055 0.01380 0.00918 0.00603 0.00391 0.00250 0.00160 0.00103 0.00068

Multiplicative adjustment in 1st month after elimination period 0.65132 0.65211 0.65426 0.65937 0.66999 0.68971 0.72287 0.77400 0.84714

Additive adjustment for month of change in definition from “own occupation” to “any occupation”

0.47034 0.31951 0.22689 0.16735 0.12753 0.09996 0.08030 0.06591 0.05513


47

Disabled Mortality Rates - Male – Non-Québec Duration Since


under 25 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64




Year 10 0.02896 0.02166 0.01757 0.01685 0.01877 0.02234 0.02792 0.03581 0.05018


48

Disabled Mortality Rates - Female – Non-Québec Duration Since


under 25 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64




Year 10 0.01296 0.01097 0.01006 0.01064 0.01129 0.01275 0.01462 0.01755 0.02527


49

Disabled Mortality Rates - Male - Québec Duration Since


under 25 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64




Year 10 0.02896 0.02166 0.01757 0.01685 0.01877 0.02234 0.02792 0.03581 0.05018


50

Disabled Mortality Rates - Female - Québec Duration Since


under 25 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64




Year 10 0.01296 0.01097 0.01006 0.01064 0.01129 0.01275 0.01462 0.01755 0.02527


51

Ultimate Rates (over 10 years since disability) – annual rates Mortality Recovery Mortality Recovery

Age Male Female Unisex Age Male Female Unisex 66 0.03922 0.02044 0.00200 67 0.04133 0.02158 0.00186

28 0.03204 0.01188 0.03146 68 0.04363 0.02281 0.00173 29 0.03004 0.01136 0.02926 69 0.04605 0.02405 0.00161 30 0.02815 0.01085 0.02721 70 0.04869 0.02548 0.00149 31 0.02659 0.01034 0.02530 71 0.05166 0.02717 0.00139 32 0.02529 0.01023 0.02353 72 0.05508 0.02923 0.00129 33 0.02403 0.01007 0.02189 73 0.05880 0.03156 0.00120 34 0.02298 0.01003 0.02035 74 0.06278 0.03407 0.00112 35 0.02209 0.01008 0.01893 75 0.06711 0.03687 0.00104

36 0.02120 0.01006 0.01760 76 0.07191 0.04008 0.00097 37 0.02044 0.01010 0.01637 77 0.07728 0.04379 0.00090 38 0.01956 0.00995 0.01523 78 0.08316 0.04786 0.00075 39 0.01870 0.00977 0.01416 79 0.08947 0.05223 0.00062 40 0.01786 0.00956 0.01317 80 0.09626 0.05704 0.00051 41 0.01741 0.00959 0.01225 81 0.10359 0.06246 0.00040 42 0.01717 0.00973 0.01139 82 0.11152 0.06860 0.00031 43 0.01726 0.00995 0.01059 83 0.12000 0.07537 0.00023 44 0.01745 0.01029 0.00985 84 0.12899 0.08266 0.00016 45 0.01772 0.01066 0.00916 85 0.13856 0.09059 0.00010

46 0.01810 0.01098 0.00852 86 0.14874 0.09933 0.00005 47 0.01852 0.01132 0.00792 87 0.15961 0.10900 0.00000 48 0.01890 0.01156 0.00737 88 0.17112 0.11950 0.00000 49 0.01929 0.01177 0.00685 89 0.18324 0.13074 0.00000 50 0.01973 0.01195 0.00637 90 0.19601 0.14285 0.00000 51 0.02029 0.01219 0.00593 91 0.20951 0.15596 0.00000 52 0.02102 0.01251 0.00551 92 0.22378 0.17023 0.00000 53 0.02181 0.01283 0.00513 93 0.23879 0.18554 0.00000 54 0.02260 0.01317 0.00477 94 0.25451 0.20181 0.00000 55 0.02350 0.01350 0.00443 95 0.27099 0.21918 0.00000

56 0.02451 0.01391 0.00412 96 0.28828 0.23776 0.00000 57 0.02566 0.01437 0.00383 97 0.30645 0.25773 0.00000 58 0.02694 0.01482 0.00357 98 0.32545 0.27896 0.00000 59 0.02831 0.01531 0.00332 99 0.34525 0.30138 0.00000 60 0.02972 0.01583 0.00308 100 0.36591 0.32511 0.00000 61 0.03121 0.01641 0.00287 101 0.38748 0.35029 0.00000 62 0.03275 0.01712 0.00267 102 0.41002 0.37707 0.00000 63 0.03427 0.01787 0.00248 103 0.43349 0.40535 0.00000 64 0.03578 0.01862 0.00231 104 0.45786 0.43503 0.00000 65 0.03740 0.01945 0.00215 105 0.48318 0.46626 0.00000

106 1.00000 1.00000 0.00000


52

APPENDIX E – GRADUATION FORMULAS All rates are graduations with a 10-year select period.

Mortality is on a sex-distinct basis, Recovery is on a unisex basis.

During the first 36 months both the mortality and recovery rates are separated, Québec and non-Québec. After 36 months after the disability there is no distinction between Québec and non-Québec.

Graduation Methodology

The recovery and mortality rates were graduated using exponential curves with quadratic curves interpolating between the blocks.

Mid-points for the durations since disability were used in the formulas. For example, month 4 would have a mid-point of 3.5 months.

Recovery

Recovery rates at the change of definition from “own occupation” to “any occupation” were factored into the graduation methodology as additive rates to apply at the time the definition of disability changes.

A reduced rate of recovery for the month following the commencement of the LTD payments was also factored into the methodology as a multiplicative factor for the first month of disability following the commencement of the LTD benefits.

The base blocks used in the graduation were:

• First 36 months since disability

exponential curve for first 10 months since disability fit to the observed data;

quadratic curves used to blend recovery rates between 10 months and 36 months, in two sections, month 11 to 15 months and 16 to 36 months.

• 4 to 10 years since disability

exponential curve for durations 4 years to 8 years fit to the observed data;

quadratic curves used to blend recovery rates between 8 years since the disability and the ultimate rates (over 10 years).

• Over 10 years since disability

exponential curve fit to the observed data.

Mortality

Mortality rates were graduated separately Québec and non-Québec tables with the tables being blended together between 18 months since disability and 36 months since disability.

The base blocks used in the graduation were:

• First 36 months since disability (18 months for Québec)

for non-Québec rates; exponential curve for first 36 months since disability fit to the observed data;

for Québec rates; exponential curve for first 18 months since disability fit to the observed data, then blended to non-Québec rates at 36 months since disability.

• 4 to 10 years since disability

rates blended between 36 months and the ultimate mortality rates using quadratic curves.

• Over 10 years since disability

exponential curve fit to the observed data.


53

Approach

To develop rates that were smooth along both age and duration a parametric graduation approach was used.

We have used variable names a, b, and c when using exponential curves and names x, y, and z when using quadratic curves.

For the exponential curves used in the select period (in the first 10 years since disability) the variables (a, b, and c) were graduated between age bands.

The formulas and the factors are included in the following pages.


54

Recovery Select period (1st 10 years from date of disability) – monthly rates First 10 months of disability r[age]+dur/12 = a[age]+ 1b[age] ● 1cdur,[age] + 2b[age] ● 2cdur,[age]

variables a, 1b, 1c, 2b,and 2c

variable[age]

= base + d ●eage adjustment[age]

age adjustment[age] = base + g ● hage cell

age cell = 1 for under age 25 at disability 2 for between age 25 and 29 at disability 3 for between age 30 and 34 at disability … 9 for between age 60 and 64 at disability

(same age adjustment for all variables)

‘[age]’ is age as disability ‘dur’ is duration since disability in months (mid month 4 months uses ‘dur’ = 3.5)

Non-Québec age adjustment factors: base = -1.200829 g = 3.144069 h = 1.026315 a base = -0.080370 d = 0.213413 e = 0.683260 1b base = -0.285965 d = 10.793848 e = 0.188965 1c base = -9.304670 d = 11.804397 e = 0.926912 2b base = -0.330714 d = 0.797906 e = 0.761455 2c base = -0.427909 d = 1.296371 e = 1.011768 Leads to

Age at disability [age]

age adj[age] 2.025976 2.110890 2.198037 2.287479 2.379273 2.473484 2.570173 2.669407 2.771253

under 25 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64

a 1.8280E-02 1.5140E-02 1.2022E-02 8.9276E-03 5.8595E-03 2.8202E-03 -1.8775E-04 -3.1618E-03 -6.0994E-03 1b 8.3134E-02 3.4438E-02 -8.8655E-03 -4.7231E-02 -8.1089E-02 -1.1085E-01 -1.3691E-01 -1.5962E-01 -1.7934E-01 1c 8.1729E-01 7.5227E-01 6.8597E-01 6.1838E-01 5.4949E-01 4.7928E-01 4.0774E-01 3.3487E-01 2.6064E-01 2b 1.2866E-01 1.1815E-01 1.0762E-01 9.7061E-02 8.6493E-02 7.5917E-02 6.5342E-02 5.4775E-02 4.4223E-02 2c 8.9956E-01 9.0088E-01 9.0223E-01 9.0362E-01 9.0505E-01 9.0652E-01 9.0803E-01 9.0959E-01 9.1118E-01

Québec age adjustment factors: base = -0.096565 g = 2.561361 h = 0.868461 a base = -0.281162 d = -0.031552 e = 0.000004 1b base = -0.644312 d = 0.648398 e = 1.039072 1c base = 0.080052 d = 1.088732 e = 0.914498 2b base = 0.456029 d = -0.333045 e = 0.104476 2c base = 1.069080 d = -0.115584 e = 0.928770 Leads to


age adj[age] 2.127877 1.835276 1.581164 1.360477 1.168819 1.002372 0.857819 0.732280 0.623255

under 25 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64

a -2.8116E-01 -2.8116E-01 -2.8116E-01 -2.8116E-01 -2.8116E-01 -2.8116E-01 -2.8116E-01 -2.8117E-01 -2.8118E-01 1b 5.9184E-02 5.1338E-02 4.4596E-02 3.8793E-02 3.3794E-02 2.9481E-02 2.5759E-02 2.2542E-02 1.9761E-02 1c 9.8022E-01 1.0041E+00 1.0253E+00 1.0441E+00 1.0608E+00 1.0755E+00 1.0884E+00 1.0998E+00 1.1098E+00 2b 4.5331E-01 4.5076E-01 4.4667E-01 4.4062E-01 4.3227E-01 4.2142E-01 4.0806E-01 3.9233E-01 3.7454E-01 2c 9.7031E-01 9.6815E-01 9.6624E-01 9.6455E-01 9.6306E-01 9.6175E-01 9.6060E-01 9.5958E-01 9.5870E-01


55

Factors for durations 11 months to 15 months and 16 to 36 months

Non-Québec

r[age]+dur/12 = x[age] + y[age] ● dur + z[age] ● dur2


(11-15)x 1.7108E-01 1.2511E-01 1.0260E-01 9.0267E-02 8.0543E-02 7.0805E-02 6.0704E-02 5.0454E-02 4.0227E-02

under 25 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64

(11-15)y (1.3439E-02) (8.9988E-03) (6.9735E-03) (6.1937E-03) (5.7828E-03) (5.4035E-03) (5.0034E-03) (4.6079E-03) (4.2385E-03) (11-15)z 3.6860E-04 2.3346E-04 1.7242E-04 1.5311E-04 1.4720E-04 1.4326E-04 1.3934E-04 1.3621E-04 1.3453E-04 (16-36)x 1.0233E-01 8.3108E-02 7.2623E-02 6.3651E-02 5.4408E-02 4.4658E-02 3.4468E-02 2.3908E-02 1.3014E-02 (16-36)y (4.0519E-03) (3.2841E-03) (2.9079E-03) (2.5840E-03) (2.2311E-03) (1.8407E-03) (1.4185E-03) (9.6941E-04) (4.9689E-04) (16-36)z 4.8237E-05 3.9096E-05 3.4618E-05 3.0762E-05 2.6561E-05 2.1914E-05 1.6887E-05 1.1541E-05 5.9154E-06

Québec Age at disability [age]

(11-15)x 3.0157E-01 2.7848E-01 2.4993E-01 2.1857E-01 1.8669E-01 1.5597E-01 1.2755E-01 1.0204E-01 7.9648E-02

under 25 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64

(11-15)y (2.8332E-02) (2.5434E-02) (2.1943E-02) (1.8357E-02) (1.5074E-02) (1.2371E-02) (1.0401E-02) (9.2147E-03) (8.7805E-03) (11-15)z 8.4434E-04 7.4268E-04 6.2342E-04 5.0509E-04 4.0239E-04 3.2525E-04 2.7890E-04 2.6450E-04 2.8024E-04 (16-36)x 1.3627E-01 1.3472E-01 1.3114E-01 1.2417E-01 1.1291E-01 9.6931E-02 7.6271E-02 5.1337E-02 2.2805E-02 (16-36)y (5.6684E-03) (5.7420E-03) (5.6945E-03) (5.4660E-03) (5.0169E-03) (4.3300E-03) (3.4091E-03) (2.2756E-03) (9.6311E-04) (16-36)z 6.7481E-05 6.8357E-05 6.7791E-05 6.5071E-05 5.9725E-05 5.1547E-05 4.0584E-05 2.7090E-05 1.1466E-05 Factors for durations 4 years to 8 years All Canada (Québec and Non-Québec) r[age]+dur = a[age]+ 1b[age] ● 1cdur,[age] + 2b[age] ● 2cdur,[age]

variables a, b, and c

variable[age]





‘[age]’ is age as disability ‘dur’ is duration since disability in months (mid month 4 years uses ‘dur’ = 42) age adjustment factors: base = 4.092801 g = 3.789738 h = 0.963162 a base = 0.214901 d = -0.568130 e = 0.861517 b base = -20.561694 d = 11.814965 e = 1.090682 c base = 0.990276 d = -0.422491 e = 0.769145 Leads to


age adj[age] 7.742933 7.608469 7.478959 7.354220 7.234075 7.118357 7.006902 6.899552 6.796157

under 25 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64

a 33.5758E-02 3.2131E-02 2.8568E-02 2.5071E-02 2.1641E-02 1.8279E-02 1.4985E-02 1.1760E-02 8.6051E-03 b 2.5764E+00 2.3079E+00 2.0522E+00 1.8087E+00 1.5766E+00 1.3553E+00 1.1443E+00 9.4297E-01 7.5083E-01 c 9.3492E-01 9.3293E-01 9.3095E-01 9.2897E-01 9.2701E-01 9.2506E-01 9.2312E-01 9.2120E-01 9.1930E-01


56

Factors for durations 9 and 10 years All Canada (Québec and Non-Québec)

x 4.0507E-01 4.2655E-01 4.1970E-01 3.9405E-01 3.5611E-01 3.1030E-01 2.5962E-01 2.0612E-01 1.5116E-01

r[age]+dur/12 = x[age] + y[age] ● dur + z[age] ● dur2

y (6.5247E-03) (7.0038E-03) (6.9660E-03) (6.5842E-03) (5.9764E-03) (5.2229E-03) (4.3784E-03) (3.4802E-03) (2.5534E-03) z 2.7647E-05 2.9677E-05 2.9517E-05 2.7899E-05 2.5324E-05 2.2131E-05 1.8553E-05 1.4747E-05 1.0819E-05 Ultimate period (after 10 years from date of disability) – annual rates All Canada (Québec and Non-Québec) rage = ( )a + bcage age adjustment‘age’ is attained age

; q87+ = 0.0000

a 0.0000E+00 b 2.4000E-01 c 9.3000E-01 age adjustment = 1.0000 under age 78

0.9000 age 78 0.8000 age 79 0.7000 age 80 … 0.1000 age 86

Recovery at Change in Definition

same age adjustment as used for recovery rates less than 10 months since disability

variable[age]


‘[age]’ is age as disability Non-Québec base = -0.479290 d = 1.478231 e = 0.688138 Québec base = -0.017864 d = 0.033223 e = 3.535979

Leads to


Non-Québec 0.21394 0.19228 0.17076 0.14939 0.12818 0.10717 0.08635 0.06575 0.04540

under 25 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64

Québec 0.47034 0.31951 0.22689 0.16735 0.12753 0.09996 0.08030 0.06591 0.05513

1st Month Adjustment

same age adjustment as used for recovery rates less than 10 months since disability

variable[age]


‘[age]’ is age as disability non-Québec base = 1.851382 d = -1.976358 e = 0.764224 Québec base = 0.651012 d = 2.826744 e = 0.013830 Leads to


Non-Québec 0.70515 0.73103 0.75698 0.78298 0.80903 0.83511 0.86119 0.88726 0.91331

under 25 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64

Québec 0.65132 0.65211 0.65426 0.65937 0.66999 0.68971 0.72287 0.77400 0.84714


57

Mortality Select period (1st 10 years from date of disability) – monthly rates

Duration since disability less than 36 months

subject to a minimum value equal to the Canada Life table rates for ‘under age 25’ are a geometric extrapolation from ’25-29’ and ’30-34’ age factors

qage+10 is the ultimate mortality rate

variables malea, femalea, 1b, 1c, 2b, 2c and ‘female adj’

variable[age]





‘[age]’ is age as disability ‘dur’ is duration since disability in months (mid month 4 months uses ‘dur’ = 3.5)

Non-Québec age adjustment factors: base = 12.908175 g = -0.163425 h = 1.434101 malea base = -0.463156 d = 0.455613 e = 1.001313 femalea base = 0.005509 d = -0.012493 e = 0.926314 1b base = 0.005248 d = -2.290572 e = 0.672664 1c base = 0.386709 d = 0.002172 e = 1.547183 2b base = 0.009826 d = -0.132343 e = 0.000002 2c base = 0.116338 d = 0.759858 e = 1.005586 female adj base = 0.898457 d = -0.000026 e = 2.232739 Leads to


age adj[age] 12.673807 12.572068 12.426163 12.216921 11.916847 11.486511 10.869365 9.984316 8.715066

under 25 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64

malea 9.7101E-05 3.5263E-05 -5.3406E-05 -1.8054E-04 -3.6279E-04 -6.2404E-04 -9.9844E-04 -1.5348E-03 -2.3030E-03 femalea 7.7349E-04 7.3647E-04 6.8287E-04 6.0495E-04 4.9101E-04 3.2297E-04 7.2120E-05 -3.0896E-04 -9.0254E-04 1b -9.8004E-03 -1.0420E-02 -1.1353E-02 -1.2789E-02 -1.5068E-02 -1.8848E-02 -2.5529E-02 -3.8467E-02 -6.7061E-02 1c 9.3508E-01 9.1126E-01 8.7890E-01 8.3595E-01 7.8080E-01 7.1332E-01 6.3620E-01 5.5626E-01 4.8415E-01 2b 9.8260E-03 9.8260E-03 9.8260E-03 9.8260E-03 9.8260E-03 9.8260E-03 9.8260E-03 9.8260E-03 9.8260E-03 2c 9.3178E-01 9.3132E-01 9.3066E-01 9.2971E-01 9.2835E-01 9.2640E-01 9.2362E-01 9.1965E-01 9.1399E-01

female adj 2.1285E-01 2.6664E-01 3.3652E-01 4.2345E-01 5.2519E-01 6.3427E-01 7.3753E-01 8.1941E-01 8.6994E-01


58

Duration since disability less than 18 months Québec rates for ‘over age 65’ are subject to a minimum of ½ the trend from ‘50-54’ to ‘55-59’ age factors

age adjustment factors: base = 12.960263 g = -0.074806 h = 1.508752 malea base = -0.456214 d = 0.446659 e = 1.001753 femalea base = 0.006486 d = -0.015340 e = 0.932567 1b base = -0.008770 d = -6.532919 e = 0.610756 1c base = 0.521006 d = 0.001894 e = 1.518186 2b base = 0.017181 d = -0.132343 e = 0.000002 2c base = -0.040402 d = 0.757665 e = 1.020078 female adj base = -1.328984 d = 5.426322 e = 0.922435 Leads to


age adj[age] 12.847399 12.789980 12.703348 12.572641 12.375438 12.077908 11.629007 10.951728 9.929883

under 25 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64

malea 6.0955E-04 5.6361E-04 4.9431E-04 3.8977E-04 2.3209E-04 -5.7123E-06 -3.6426E-04 -9.0468E-04 -1.7188E-03 femalea 2.3006E-04 2.0493E-04 1.6682E-04 1.0890E-04 2.0493E-05 -1.1521E-04 -3.2537E-04 -6.5517E-04 -1.1832E-03 1b -2.0360E-02 -2.0692E-02 -2.1213E-02 -2.2041E-02 -2.3396E-02 -2.5707E-02 -2.9903E-02 -3.8281E-02 -5.7613E-02 1c 9.2552E-01 9.1594E-01 9.0191E-01 8.8168E-01 8.5317E-01 8.1437E-01 7.6423E-01 7.0432E-01 6.4066E-01 2b 1.7181E-02 1.7181E-02 1.7181E-02 1.7181E-02 1.7181E-02 1.7181E-02 1.7181E-02 1.7181E-02 1.7181E-02 2c 9.3772E-01 9.3661E-01 9.3492E-01 9.3239E-01 9.2859E-01 9.2287E-01 9.1432E-01 9.0155E-01 8.8261E-01 female adj 5.9420E-01 6.0314E-01 6.1670E-01 6.3734E-01 6.6890E-01 7.1748E-01 7.9301E-01 9.1227E-01 1.1050E+00

adjust female age 60-64, month 17 to be average month 16 and 18

Factors for durations 18 to 36 months Age at disability [age]

Male

under 25 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64

x 6.4904E-04 7.1820E-04 1.3082E-03 2.7678E-03 5.0352E-03 8.0412E-03 1.1041E-02 1.2902E-02 1.3203E-02 y 2.1271E-04 2.5082E-04 2.7490E-04 2.5446E-04 1.4805E-04 (6.7422E-05) (3.4951E-04) (5.9029E-04) (6.9731E-04) z (4.7111E-06) (6.2325E-06) (7.7767E-06) (8.6417E-06) (7.6249E-06) (3.6417E-06) 2.8595E-06 9.3897E-06 1.3345E-05 Female x (1.8901E-04) 6.4479E-05 5.4834E-04 1.5464E-03 3.0815E-03 5.3171E-03 8.0127E-03 1.0583E-02 1.2399E-02 y 1.2639E-04 1.5128E-04 1.6953E-04 1.6218E-04 9.9030E-05 (4.8373E-05) (2.7716E-04) (5.3851E-04) (7.7053E-04) z (2.7993E-06) (3.7591E-06) (4.7959E-06) (5.5077E-06) (5.1002E-06) (2.6128E-06) 2.2676E-06 8.5659E-06 1.4746E-05

adjust age 60-64 (both genders), month 25 to 35 to be linear interpolation between month 24 and 36

Factors for durations 4 years to 10 years (annual rates) All Canada (Québec and Non-Québec)

q[age]+dur/12 = x[age] + y[age] ● dur + z[age] ● dur2


Male

under 25 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64

x 3.3288E-05 1.9681E-02 2.9776E-02 4.1108E-02 4.3849E-02 4.8781E-02 5.3627E-02 5.4899E-02 5.2493E-02 y 8.5510E-04 1.9170E-04 (1.8045E-04) (5.5983E-04) (6.4829E-04) (7.8813E-04) (9.0774E-04) (9.0911E-04) (6.8841E-04) z (5.2749E-06) (1.5291E-06) 6.4363E-07 3.0439E-06 3.7567E-06 4.8790E-06 5.9847E-06 6.5055E-06 5.8610E-06 Female x (4.8280E-04) 1.2017E-02 1.9811E-02 2.8976E-02 3.4733E-02 3.9081E-02 4.4498E-02 5.1063E-02 5.0300E-02 y 4.4242E-04 5.9653E-05 (1.5471E-04) (3.7591E-04) (5.0733E-04) (5.9570E-04) (7.4402E-04) (9.5629E-04) (8.9292E-04) z (2.8465E-06) (6.0353E-07) 6.0659E-07 1.8865E-06 2.6466E-06 3.1997E-06 4.2273E-06 5.8101E-06 5.9064E-06


59

Ultimate period (after 10 years from date of disability) – annual rates A unisex adjustment is made to the sex distinct Canadian Life table.

qage = Canada Life Table 1990-1992qage ( )a + bcage

‘age’ is attained age

; q106 = 1.0000

a 1.0000E+00 b 3.6614E+02 c 9.1063E-01

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