Notes to the consolidated financial statements of Aegon N.V.  Note 3 158 Some insurance contracts without a guaranteed or fixed contract term contain guaranteed minimum benefits. Depending on the nature of  the guarantee, it may either be bifurcated and presented as a derivative or be reflected in the value of the insurance liability in accordance  with local accounting principles. Given the dynamic and complex nature of these guarantees, stochastic techniques under a variety of  market return scenarios are often used for measurement purposes. Such models require management to make numerous estimates based  on historical experience and market expectations. Changes in these estimates will immediately affect the income statement. In addition, certain acquisition costs related to the sale of new policies and the purchase of policies already in force are recorded as  DPAC and VOBA assets respectively and are amortized to the income statement over time. If the assumptions relating to the future  profitability of these policies are not realized, the amortization of these costs could be accelerated and may even require write offs due  to unrecoverability.  Mortality tables applied are generally developed based on a blend of company experience and industry wide studies, taking into  consideration product characteristics, own risk selection criteria, target market and past experience. Mortality experience is monitored  through regular studies, the results of which are fed into the pricing cycle for new products and reflected in the liability calculation  when appropriate. For contracts insuring survivorship, allowance may be made for further longevity improvements. Morbidity  assumptions are based on own claims severity and frequency experience, adjusted where appropriate for industry information.  Investment assumptions are prescribed by the local regulator, market observable or based on management’s future expectations. In  the latter case, the anticipated future investment returns are set by management on a countrywide basis, considering available market  information and economic indicators. A significant assumption related to estimated gross profits on variable annuities and variable life  insurance products in the United States and some of the smaller country units, is the annual long-term growth rate of the underlying  assets. The reconsideration of this assumption may affect the original DPAC or VOBA amortization schedule, referred to as DPAC or  VOBA unlocking. The difference between the original DPAC or VOBA amortization schedule and the revised schedule, which is based  on estimates of actual and future gross profits, is recognized in the income statement as an expense or a benefit in the period of  determination. In 2012, Aegon kept its long-term equity market return assumption for the estimated gross profits on variable life and variable annuity  products in the Americas at 9% (2011: 9%). The 90-day Treasury yield was 0.05% at December 31, 2012 and was assumed to remain  level for the next two years followed by a three year grade to 3%. Aegon’s assumptions on the long term credit spread or default  assumptions, remained unchanged in 2012. In the third quarter of 2013, to reflect the low interest rate environment, Aegon lowered its long-term assumption for 10-year  US Treasury yields by 50 basis points to 4.25% and extended the uniform grading period from 5 years to 10 years. Aegon also  changed its assumed returns for US separate account bond fund to 4% over the next 10 years and 6% thereafter from its previous  assumptions of 4% over the next 5 years and 6% thereafter. In addition, Aegon changed its long-term equity market return assumption  for the estimated gross profit in variable life and variable annuity products in the Americas from 9% to 8%. In total, these assumption  changes led to a negative impact on earnings of EUR 405 million in the third quarter of 2013. Both the assumptions for the bond  fund and that for the long-term equity market are gross assumptions from which asset management and policy fees are deducted  to determine the policyholder return. The 90-day Treasury yield is 0.07% at December 31, 2013 and is assumed to remain level  for the next two years followed by an eight year grade to 2.5%. On a quarterly basis, the estimated gross profits are updated for  the difference between the estimated equity market return and the actual return. Surrender rates depend on product features, policy duration and external circumstances such as the interest rate environment and  competitor and policyholder behavior. For policies with account value guarantees based on equity market movements, a dynamic lapse  assumption is utilized to reflect policyholder behavior based on whether the guarantee is in the money. Own experience, as well as  industry published data, are used in establishing assumptions. Lapse experience is correlated to mortality and morbidity levels, as  higher or lower levels of surrenders may indicate future claims will be higher or lower than anticipated. Such correlations are accounted  for in the mortality and morbidity assumptions based on the emerging analysis of experience.  Assumptions on future expenses are based on the current level of expenses, adjusted for expected expense inflation if appropriate.  Annual Report 2013 Actuarial assumptions The main assumptions used in measuring DPAC, VOBA and the liabilities for life insurance contracts with fixed or guaranteed terms  relate to mortality, morbidity, investment return and future expenses. Depending on local accounting principles, surrender rates may be  considered. 