POLICY LIABILITIES

Policy liabilities consist of future policy benefits, unpaid policy claims, unearned premiums, and other policyholders' funds, which accounted for 77%, 4%, 12% and 7% of total policy liabilities at December 31, 2013, respectively. We regularly review the adequacy of our policy liabilities in total and by component.

The liability for future policy benefits as of December 31 consisted of the following:



		Liability Amounts				Interest Rates
(In millions)	Policy Issue Year	2013		2012		Year of Issue		In 20 Years
Health insurance:
Japan:	2002 - 2013	$	3,370	$	2,518	1.25 - 2.5	%	1.25 - 2.5	%
	1974 - 2013	3,889		4,624		2.7 - 2.75		2.25 - 2.75
	1998 - 2013	11,763		13,685		3.0		3.0
	1997 - 1999	2,842		3,482		3.5		3.5
	1994 - 1996	3,483		4,261		4.0 - 4.5		4.0 - 4.5
	1987 - 1994	16,727		20,635		5.5		5.5
	1985 - 1991	2,262		2,824		5.25 - 6.75		5.25 - 5.5
	1978 - 1984	2,699		3,416		6.5		5.5

U.S.:	2013	124		0		3.0 - 3.5		3.0 - 3.5
	2012	221		127		3.75		3.75
	2011	243		202		4.75		4.75
	2005 - 2010	2,897		2,775		5.5		5.5
	1988 - 2004	725		748		8.0		6.0
	1986 - 2004	1,301		1,317		6.0		6.0
	1981 - 1986	190		198		6.5 - 7.0		5.5 - 6.5
	1998 - 2004	1,237		1,200		7.0		7.0
	Other	22		23

Life insurance:
Japan:	2013	59		0		1.5 - 1.75		1.5 - 1.75
	2001 - 2013	3,009		2,238		1.65 - 1.85		1.65 - 1.85
	2011 - 2013	1,584		733		2.0		2.0
	2009 - 2011	1,648		1,374		2.25		2.25
	2005 - 2011	1,211		1,231		2.5		2.5
	1985 - 2006	2,303		2,791		2.7		2.25
	2007 - 2011	1,025		1,049		2.75		2.75
	1999 - 2011	2,164		2,547		3.0		3.0
	1996 - 2009	721		872		3.5		3.5
	1994 - 1996	1,021		1,250		4.0 - 4.5		4.0 - 4.5

U.S.:	1956 - 2013	396		343		4.0 - 6.0		4.0 - 6.0
Total		$	69,136	$	76,463

The weighted-average interest rates reflected in the consolidated statements of earnings for future policy benefits for Japanese policies were 3.9% in 2013, compared with 4.0% in 2012 and 2011; and for U.S. policies, 5.8% in 2013, compared with 6.0% in 2012 and 2011.

Changes in the liability for unpaid policy claims were as follows for the years ended December 31:



(In millions)	2013				2012				2011
Unpaid supplemental health claims, beginning of year		$	3,781			$	3,749			$	3,524
Less reinsurance recoverables		10				0				0
Net balance, beginning of year		3,771				3,749				3,524
Add claims incurred during the year related to:
Current year		7,215				8,013				7,703
Prior years		(236		)		(173		)		(256		)
Total incurred		6,979				7,840				7,447
Less claims paid during the year on claims incurred during:
Current year		4,834				5,453				5,401
Prior years		1,931				2,082				1,944
Total paid		6,765				7,535				7,345
Effect of foreign exchange rate changes on unpaid claims		(457		)		(283		)		123
Net balance, end of year		3,528				3,771				3,749
Add reinsurance recoverables		9				10				0
Unpaid supplemental health claims, end of year		3,537				3,781				3,749
Unpaid life claims, end of year		226				253				232
Total liability for unpaid policy claims		$	3,763			$	4,034			$	3,981

The incurred claims development related to prior years reflects favorable development in the unpaid policy claims

liability. This favorable development is primarily in our lines of business in Japan.

On January 1, 2013, discounted advanced premiums were reclassified, retrospectively, from the other policyholders' funds line item to the unearned premiums line item in our balance sheet. Discounted advance premiums are premiums on deposit from policyholders in conjunction with their purchase of certain Aflac Japan limited-pay insurance products. These advanced premiums are deferred upon collection and recognized as premium revenue over the contractual premium payment period. As of December 31, 2013 and 2012, unearned premiums consisted primarily of discounted advance premiums on deposit. These advanced premiums represented 82% of the December 31, 2013 and 2012 unearned premiums balances, respectively.