POLICY LIABILITIES

Policy liabilities consist of future policy benefits, unpaid policy claims, unearned premiums, and other policyholders' funds, which accounted for 81%, 4%, 8% and 7% of total policy liabilities at December 31, 2016, 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	2016				2015				Year of Issue		In 20 Years
Health insurance:
Japan:	1992 - 2016	$	8,912			$	7,633			1.0 - 2.5	%	1.0 - 2.5	%
	1974 - 2013	1,118				1,078				2.7 - 2.75		2.25 - 2.75
	1998 - 2016	11,687				11,008				3.0		3.0
	1997 - 1999	2,485				2,435				3.5		3.5
	1994 - 1996	3,069				2,998				4.0 - 4.5		4.0 - 4.5
	1987 - 1994	14,372				14,161				5.5		5.5
	1985 - 1991	1,871				1,868				5.25 - 6.75		5.25 - 5.5
	1978 - 1984	2,134				2,163				6.5		5.5

U.S.:	2013 - 2016	75				57				3.0 - 3.5		3.0 - 3.5
	2012 - 2016	1,062				794				3.75		3.75
	2011	319				300				4.75		4.75
	2005 - 2010	3,004				2,986				5.5		5.5
	1988 - 2004	669				687				8.0		6.0
	1986 - 2004	1,265				1,276				6.0		6.0
	1981 - 1986	166				174				6.5 - 7.0		5.5 - 6.5
	1998 - 2004	1,295				1,279				7.0		7.0
	Other	19				21

Intercompany eliminations:	2015	(630		)	⁽¹⁾	(646		)	⁽¹⁾	2.0		2.0


Life insurance:
Japan:	2001 - 2016	7,255				5,441				1.0 - 1.85		1.0 - 1.85
	2011 - 2016	4,151				3,226				2.0		2.0
	2009 - 2011	2,861				2,332				2.25		2.25
	1992 - 2006	5				5				2.19		1.55
	2005 - 2011	1,488				1,330				2.5		2.5
	1985 - 2006	2,007				1,962				2.7		2.25
	2007 - 2011	1,220				1,105				2.75		2.75
	1999 - 2011	2,102				1,988				3.0		3.0
	1996 - 2009	657				635				3.5		3.5
	1994 - 1996	897				877				4.0 - 4.5		4.0 - 4.5

U.S.:	1956 - 2016	571				514				3.5 - 6.0		3.5 - 6.0
Total		$	76,106			$	69,687

⁽¹⁾ Elimination entry necessary due to recapture of a portion of policy liabilities ceded externally, as a result of the reinsurance retrocession transaction as described in Note 8 of the Notes to the Consolidated Financial Statements

The weighted-average interest rates reflected in the consolidated statements of earnings for future policy benefits for Japanese policies were 3.5% in 2016, compared with 3.6% in 2015 and 3.8% in 2014; and for U.S. policies, 5.5% in 2016, compared with 5.6% in 2015 and 5.7% in 2014.

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



(In millions)	2016				2015				2014
Unpaid supplemental health claims, beginning of year		$	3,548			$	3,412			$	3,537
Less reinsurance recoverables		26				7				9
Net balance, beginning of year		3,522				3,405				3,528
Add claims incurred during the year related to:
Current year		7,037				6,416				6,866
Prior years		(465		)		(353		)		(301		)
Total incurred		6,572				6,063				6,565
Less claims paid during the year on claims incurred during:
Current year		4,613				4,227				4,532
Prior years		1,865				1,718				1,873
Total paid		6,478				5,945				6,405
Effect of foreign exchange rate changes on unpaid claims		64				(1		)		(283		)
Net balance, end of year		3,680				3,522				3,405
Add reinsurance recoverables		27				26				7
Unpaid supplemental health claims, end of year		3,707				3,548				3,412
Unpaid life claims, end of year		338				254				218
Total liability for unpaid policy claims		$	4,045			$	3,802			$	3,630

Total incurred claims increased from 2015 to 2016 partially due to the impact of foreign exchange rates as well as normal increases in inforce and policyholder aging. The incurred claims development related to prior years reflects favorable claims experience compared to previous estimates, primarily in our lines of business in Japan.

As of December 31, 2016 and 2015, 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 76% of the December 31, 2016 and 77% of the December 31, 2015 unearned premiums balances.

As of December 31, 2016 and 2015, 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 both the December 31, 2016 and 2015 other policyholders' funds liability.