POLICY LIABILITIES

Policy liabilities consist of future policy benefits, unpaid policy claims, unearned premiums, and other policyholders' funds, which accounted for 78%, 4%, 11% and 7% of total policy liabilities at December 31, 2014, 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	2014		2013		Year of Issue		In 20 Years
Health insurance:
Japan:	2002 - 2014	$	3,900	$	3,370	1.25 - 2.5	%	1.25 - 2.5	%
	1974 - 2013	3,449		3,889		2.7 - 2.75		2.25 - 2.75
	1998 - 2014	10,641		11,763		3.0		3.0
	1997 - 1999	2,461		2,842		3.5		3.5
	1994 - 1996	3,023		3,483		4.0 - 4.5		4.0 - 4.5
	1987 - 1994	14,394		16,727		5.5		5.5
	1985 - 1991	1,923		2,262		5.25 - 6.75		5.25 - 5.5
	1978 - 1984	2,260		2,699		6.5		5.5

U.S.:	2012 - 2014	588		345		3.0 - 3.75		3.0 - 3.75
	2011	276		243		4.75		4.75
	2005 - 2010	2,951		2,897		5.5		5.5
	1988 - 2004	706		725		8.0		6.0
	1986 - 2004	1,293		1,301		6.0		6.0
	1981 - 1986	183		190		6.5 - 7.0		5.5 - 6.5
	1998 - 2004	1,260		1,237		7.0		7.0
	Other	21		22

Life insurance:
Japan:	2013 - 2014	312		59		1.5 - 1.75		1.5 - 1.75
	2001 - 2013	3,674		3,009		1.65 - 1.85		1.65 - 1.85
	2011 - 2014	2,298		1,584		2.0		2.0
	2009 - 2011	1,890		1,648		2.25		2.25
	2005 - 2011	1,214		1,211		2.5		2.5
	1985 - 2006	2,006		2,303		2.7		2.25
	2007 - 2011	1,010		1,025		2.75		2.75
	1999 - 2011	1,944		2,164		3.0		3.0
	1996 - 2009	633		721		3.5		3.5
	1994 - 1996	884		1,021		4.0 - 4.5		4.0 - 4.5

U.S.:	1956 - 2014	452		396		3.5 - 6.0		3.5 - 6.0
Total		$	65,646	$	69,136

The weighted-average interest rates reflected in the consolidated statements of earnings for future policy benefits for Japanese policies were 3.8% in 2014, compared with 3.9% in 2013 and 4.0% in 2012; and for U.S. policies, 5.7% in 2014, compared with 5.8% in 2013 and 6.0% in 2012.

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



(In millions)	2014				2013				2012
Unpaid supplemental health claims, beginning of year		$	3,537			$	3,781			$	3,749
Less reinsurance recoverables		9				10				0
Net balance, beginning of year		3,528				3,771				3,749
Add claims incurred during the year related to:
Current year		6,866				7,215				8,013
Prior years		(301		)		(236		)		(173		)
Total incurred		6,565				6,979				7,840
Less claims paid during the year on claims incurred during:
Current year		4,532				4,834				5,453
Prior years		1,873				1,931				2,082
Total paid		6,405				6,765				7,535
Effect of foreign exchange rate changes on unpaid claims		(283		)		(457		)		(283		)
Net balance, end of year		3,405				3,528				3,771
Add reinsurance recoverables		7				9				10
Unpaid supplemental health claims, end of year		3,412				3,537				3,781
Unpaid life claims, end of year		218				226				253
Total liability for unpaid policy claims		$	3,630			$	3,763			$	4,034

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.

As of December 31, 2014 and 2013, unearned premiums consisted primarily of discounted advance premiums on deposit. 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. These advanced premiums represented 80% of the December 31, 2014 and 82% of the December 31, 2013 unearned premiums balances.

As of December 31, 2014 and 2013, the largest component of the other policyholders' funds liability is our annuity line of business in Aflac Japan. Our annuities have fixed benefits and premiums. These annuities represented 98% of the December 31, 2014 and 93% of the December 31, 2013 other policyholders' funds liability.