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We believe that the affordable cancer and medical insurance products Aflac Japan provides will continue to be an
important part of our product portfolio. Nevertheless, as we continue our long history of product innovation, Aflac Japan's
product portfolio has expanded beyond traditional health-related products.
In July 2016, we launched a new third sector product called Income Support Insurance. This product provides fixed-
benefit amounts in the event that a policyholder is unable to work due to significant illness or injury and was developed to
supplement the disability coverage within Japan’s social security system. This product targets young to middle-aged
consumers, and by focusing our efforts on this demographic, we believe we are building relationships that lay the
groundwork for the sale of our cancer and medical insurance later in life to the Income Support policyholders.
While Aflac Japan continues to offer life insurance and other first sector products, we have decreased sales of first
sector savings products, such as WAYS, child endowment and annuities, in 2016 in light of the negative interest-rate
environment in Japan. We continue to monitor interest rates and their effects on our first sector business. We believe that
the measures taken to date, including lowering assumed interest rates or increasing premiums, are appropriate in
response to interest rates and that life insurance continues to provide cross-selling opportunities for our third sector
products such as cancer and medical insurance. Some of the life insurance products that we offer in Japan provide death
benefits and cash surrender values. These products are available as stand-alone policies and riders, providing a mix of
term and whole life coverage. Our WAYS insurance product has features that allow policyholders to convert a portion of
their life insurance to medical, nursing care, or fixed annuity benefits at a predetermined age. In November 2016, we
lowered the assumed interest rate for WAYS reflecting the continued low interest rate environment, consistent with our
desire to de-emphasize first-sector sales and bolster profitability. Also in November 2016, Aflac Japan halted the offering
of traditional fixed-income annuities. Aflac Japan's child endowment insurance product offers a death benefit until a child
reaches age 18. It also pays a lump-sum benefit at the time of the child's entry into high school, as well as an educational
annuity for each of the four years during his or her college education. In January 2017, we increased the premium level of
this product reflecting the continued low interest rate environment.
For additional information on Aflac Japan's products and composition of sales, see the Aflac Japan Segment subsection
of MD&A in this report.
U.S.
We design our U.S. insurance products to provide supplemental coverage for people who already have major medical
or primary insurance coverage. Most of our U.S. policies are individually underwritten and marketed through independent
agents. Additionally, we started to market and administer group insurance products in 2009.
Our individually issued policies are portable and pay benefits regardless of other insurance. Most products' benefits
are paid in cash directly to policyholders; therefore, our customers have the opportunity to use this cash to help with
expenses of their choosing. Our individually issued health insurance plans are typically guaranteed-renewable for the
lifetime of the policyholder (to age 75 for short-term disability policies).
Aflac U.S. offers short-term disability benefits on both an individual and group basis. In 2013 and 2014, we introduced
a completely redesigned group short-term disability product with enhanced benefit options and higher income
replacement amounts.
Aflac U.S. offers accident coverage on both an individual and group basis. These policies are designed to protect
against losses resulting from accidents. The accident portion of the policy includes lump-sum benefits for accidental
death, dismemberment and specific injuries as well as fixed benefits for hospital confinement. In 2015
,
we introduced a
new individual accident plan with new benefits for home modifications, improved wellness benefits and a new benefit that
provides an additional payout for injuries related to participations in an organized sporting activity.
Aflac U.S. offers coverage for critical care on both an individual and group basis. These policies are designed to
protect against losses resulting from critical illnesses such as heart attack, stroke, or cancer. On an individually
underwritten basis we offer cancer plans, critical illness plans, and critical care and recovery plans (formerly called
specified health event). On a group basis we offer critical illness plans. In 2015, an updated group critical illness plan was
introduced that provides benefits for 30 additional conditions in addition to more consumer options.
Aflac U.S. offers hospital indemnity coverage on both an individual and group basis. Our hospital indemnity products
provide policyholders fixed dollar benefits triggered by hospitalization due to accident or sickness, or just sickness alone.
Indemnity benefits for inpatient and outpatient surgeries, as well as various other diagnostic events, are also available.
We also offer a lump sum rider than can be added to our individual accident, short-term disability and hospital indemnity
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