Product Specification#
Status: Draft, 2026-08-03 (all cited sources accessed 2026-08-03; see sources.md).
Scope note. This is a standardized composite specification assembled for reference
liability cash-flow modeling. It does not describe any single insurer’s product. Facts
carrying a source tag — [S#] (primary product documents) and [R#] (regulatory/actuarial
references), both numbered per _research/unit-linked-bond.md — resolve against
sources.md in this directory; [REG-R#] resolves against the cross-product reference
library references/regulatory-and-actuarial-references.md (its own R-numbering;
research provenance in _research/regulatory-actuarial.md). Values marked std
are standardizations introduced for the reference implementation; each std table row
carries a footnote giving the rationale and the observed range across insurers.
Facts the research file could not verify are flagged unverified. The implementation
anchor for mechanics is a single carrier’s document pair — Key Features
Document [S1] plus Policy Provisions [S2] — the most completely specified public source.
Product overview and market role#
The onshore unit-linked investment bond is a single-premium (“lump sum”) unit-linked whole-of-life assurance: it has no fixed term or maturity date and is designed to be held for five to ten years or more [S1] [S4] [S5]. It is a “contract of long-term insurance” within the meaning of the FSMA 2000 (Regulated Activities) Order 2001 [S2 §18.5], and its linked benefit design places it in RAO Class III “Linked long-term” R4. Units are purely notional records of benefit entitlement — the policyholder does not own the units or any interest in the underlying assets [S2 §3.1.5] [S3 Part D] [S5 Q1] — and the insurer’s liability is capped at the value derived from the assets underpinning each fund, with no make-whole if an external fund manager defaults [S2 §3.1.9] [S4] [S1].
The product is sold as a tax wrapper: no personal capital gains tax applies, and policyholder taxation runs through the chargeable-event regime with its cumulative 5% per-annum tax-deferred withdrawal allowance R1 R2 [S1] [S4] [S5]. Because the insurer pays corporation tax on the fund under the I-E/BLAGAB regime, gains carry a basic-rate tax credit in the policyholder’s hands R6 [S4] [S5]. The life cover element is nominal — a death uplift of 0.1%–1% over unit value [S1] [S2] [S3] [S4] [S5] — so the contract is economically a taxed investment account with a thin insurance wrapper.
The market has consolidated around adviser-platform providers: one carrier closed its onshore bond to new business on 23 January 2024 (retaining all features for existing customers) to concentrate on offshore bonds, and the closed products were under 1% of its customer base [S7]. Current open books are platform or platform-style “clean-charge” designs (three of the carriers surveyed [S1] [S2] [S4] [S5]); legacy back-books carry bid-offer, establishment and early cash-in charge layers [S3] (see Variations).
Representative specification#
The composite is a modern clean-charge onshore single-premium bond on the anchor carrier’s chassis [S1] [S2], with the explicit life-fund tax pass-through documented on the platform products [S4] [S5].
Product identity and issue rules#
Parameter |
Representative value |
Basis |
|---|---|---|
Design type |
Single-premium unit-linked whole-of-life assurance bond (onshore); no maturity date |
[S1] [S2] [S4] [S5] |
Legal class |
RAO Class III linked long-term; contract of long-term insurance |
R4 [S2 §18.5] |
Governing law |
England (and Wales) |
[S1] [S2 §18.4] [S3] [S4] [S5] |
Lives assured |
Single or joint lives, benefits on last death; composite models single life |
design [S1] [S2 §9.2] [S3] [S4] [S5]; single-life choice std (1) |
Plan owner |
Individual 18+, UK resident (trustee/corporate ownership out of scope) |
[S1] [S5]; scope std (1) |
Issue ages (life assured) |
3 months to 85 next birthday |
[S1]; band choice std (2) |
Policy segmentation |
100 identical mini-policies (“segments”), premium and units divided equally |
count std (3); mechanics [S1] [S2 §2.4] |
Minimum single premium |
£10,000 (after any set-up adviser charge) |
[S1] [S4] [S5] |
Top-ups |
Permitted any time, minimum £10,000; blocked if no longer UK resident; excluded from base projection |
[S1]; exclusion std (4) |
Maximum investment |
£5,000,000 (general limit; more by referral) |
[S1] |
Anchor model cell |
Male 65, single life, £100,000 premium, no adviser charges, 5% p.a. regular withdrawals |
std (5) |
Footnotes to std rows:
All five product sets write single or joint lives on a last-death basis; one platform bond allows up to 10 lives assured [S4] and another accepts companies and trusts [S5]. The composite restricts to a single life assured who is also the sole owner — joint-life last-death mortality is a second-order refinement for a product whose death strain is 0.1% of unit value (see Contractual mechanics).
Observed maxima for a life assured at outset: 85 next birthday [S1]; top-ups while the younger life is not over 84 (legacy) [S3]; 89 [S4]; owner aged 18–90 attained [S5]. The anchor carrier’s band [S1] is adopted, since the composite is built on that carrier’s document pair.
Observed segment counts: 20 default, up to 999 on request, minimum £1,000 per segment when more than 20 [S1] [S2 §2.4]; 100 [S3]; 1,000 [S4]; 1,000 [S5]. Standardized to 100 so each segment is exactly 1% of the bond (£1,000 per segment at the anchor model cell premium, which meets that £1,000 per-segment floor [S2 §2.4]), matching the legacy structure [S3] and keeping segment-level arithmetic transparent. Purpose in every source is tax flexibility: full surrender of individual segments and part surrender across all segments produce different chargeable-event outcomes [S1] [S4] [S5 Q12] R1 s484/s498 R2.
Top-up minima observed: £10,000 [S1]; £1,000 [S4]; permitted, minimum not stated [S5]. The base projection excludes top-ups; a top-up is modeled as a new model point (its own premium, allowance clock and segment set) — consistent with the statutory per-premium allowance arithmetic R2.
Pure modeling choice: £100,000 sits inside all observed premium bands; age 65 reflects the retirement-lump-sum use case implied by the 5–10-year holding design [S1] [S4] [S5] [unverified as a market-demographics fact]. Withdrawals at exactly the 5% allowance exercise the tax-deferral machinery without triggering excess events R2.
Death benefit (sum assured)#
Parameter |
Representative value |
Basis |
|---|---|---|
Sum assured |
100.1% of the bid value of units (0.1% death uplift) |
[S1] [S2 “Sum Assured”] [S5]; choice std (6) |
Unit valuation on death |
Units valued on the working day notice of death is received (12:00 cut-off); number of units = units in credit at the date of death, adjusted for post-death transactions |
[S1] [S2 §4.2.7, §9] |
Adviser charges after death |
Ongoing/ad hoc adviser charges paid between death and processing are reclaimed and included in the claim |
[S2 §9] |
Deferral powers |
Do not apply to death benefit payment |
[S1] [S2 §8] |
On payment |
Plan cancelled; no further benefits |
[S2 §9.5, §10.5] |
Return-of-premium GMDB rider |
Optional at outset only; described under Riders; excluded from the base model |
[S1] [S2 §5.2, §10] [S5]; exclusion std (7) |
Observed death uplifts: 100.1% of bid value of units [S1] [S2]; 100.1% of plan value, 101% for pre-3-August-2006 plans (legacy) [S3]; 101% [S4]; 100.1% of surrender value, 101% prior to 25 November 2024 [S5]. 100.1% is chosen — it is the anchor-document value [S1] [S2], shared by another currently open product [S5]; only one platform writes 101% [S4]. The 101% variant is a one-line parameter change (uplift 1.0% instead of 0.1%).
Both optional guarantees observed (a return-of-premium death benefit [S1] [S2 §5.2, §10]; a capital-protected death benefit [S5]) are elected at outset only, cancellable but not restartable, and charged monthly. Excluded from the base model to keep the death strain at 0.1% of unit value; the rider module is specified under Riders so it can be enabled without changing the core recursion.
Charges (clean structure; snapshot where insurer-discretionary)#
Parameter |
Representative value |
Basis |
|---|---|---|
Annual management charge (AMC) |
1.00% p.a. of unit value, accrued daily through the unit price (modeled as 1/12 monthly) |
mechanism [S2 §5.1.1]; level std (8) |
Fund-level further costs |
0.10% p.a., borne within the fund (not insurer income) |
existence [S1] [S2 §3.1.7]; level std (9) |
AMC fund-size discount |
Not modeled; documented option — one carrier’s tiers 0.30% (<£25k) to 0.575% (£3m+), applied monthly on AUM per premium |
[S1] [S2 §5.1.4]; scope std (10) |
Life-fund tax pass-through |
20% of the gross fund investment return, deducted within the unit price (neutral pass-through to the insurer) |
mechanism [S2 §3.2.1] [S3 Part E] [S4] [S5 Q15]; rate proxy std (11) |
Bid-offer spread / allocation rate |
None — single-priced units, 100% allocation |
[S3 Part D single-priced default] [S4] [S5]; clean scope std (12) |
Establishment / early cash-in charges |
None in the clean design |
[S4] [S5]; scope std (12) |
Switching |
Free, unlimited (right to introduce charges reserved); anti-market-timing powers reserved |
[S1] [S2 §6.3.1.2] [S3] [S5 Q10, Q11] |
Dilution levy |
Reserved power, collected through unit pricing; not modeled |
[S2 §3.2.6]; scope std |
Actual AMC percentages are per-fund and live in fund guides that were not fetched (research gap 5 in
_research/unit-linked-bond.md); only one carrier’s fund-size discount tier table is public [S1]. 1.00% p.a. is a round representative level for a managed fund net of any discount. The AMC is insurer-reviewable — increase provisions tied to cost/tax/regulatory changes are documented on the legacy booklet [S3 Part D] — so the model treats it as a discretionary current element (class (b) in the technical notes).Fund-level “further costs” (transaction/underlying costs) are confirmed to exist and be borne within funds [S1] [S2 §3.1.7] but no values are published in the fetched documents; 0.10% p.a. is a placeholder. They reduce the unit fund but are not insurer margin.
The tier table [S1]: <£24,999: 0.30%; £25,000–£49,999: 0.35%; £50,000–£99,999: 0.40%; £100,000–£249,999: 0.45%; £250,000–£499,999: 0.475%; £500,000–£999,999: 0.50%; £1,000,000–£1,749,999: 0.525%; £1,750,000–£2,999,999: 0.55%; £3,000,000+: 0.575%, computed at each Monthly Transaction Date on assets under management per premium [S2 §5.1.4]. Omitted from the base model (a level net AMC is assumed); enabling it makes the AMC margin band-dependent on fund size.
Onshore life funds bear corporation tax on income and gains under I-E/BLAGAB, at the policyholder rate (basic rate, 20% in the HMRC example) on the policyholder slice R6. The two insurer-managed fund ranges allow for tax inside the daily unit price [S2 §3.2.1] [S3 Part E]; the platform products levy explicit periodic tax charges to the policy (on income as received, on realised gains at the next bond charge date, an annual deemed-disposal charge, and on full surrender from proceeds) [S4] [S5 Q15]. The composite standardizes to a flat 20% of the gross fund return deducted within the unit price — a deliberate simplification of the I-E timing detail (see technical notes for what the proxy ignores).
The clean design has no initial charge, no allocation-rate machinery and no exit penalties: one platform’s withdrawals are “at any time without penalty” [S4] and the other discloses charges via personalised illustration documents with no early-exit layer recorded [S5 Q7]. Legacy layers (bid-offer One-Off Charge, Early Cash-in Charges, Establishment Charge [S3]) are back-book variations only — see Variations across insurers.
Withdrawals, adviser charges and surrender#
Parameter |
Representative value |
Basis |
|---|---|---|
Regular withdrawals |
Monthly (available frequencies monthly/3-/4-/6-/12-monthly); amount as fixed £, % of premium, or % of unit value; minimum £50 per payment; ≥ £500 must remain per fund |
[S1] [S2 §7.1] |
Product cap on regular withdrawals |
In any 12 months, greater of 7.5% of plan value and 7.5% of total paid in, with ongoing adviser charges aggregated inside the cap |
[S1] [S2 §7.1] |
One-off partial withdrawal |
Any time, part surrender spread across all segments; irrevocable once received |
[S2 §7] |
Segment surrender |
Full surrender of one or more individual segments |
[S1] [S2 §2.4.5] [S4] [S5 Q12] |
Full surrender value |
Bid value of units — no surrender penalty in the clean design |
[S4]; composite scope std (13) |
Composite withdrawal behavior (anchor cell) |
Regular withdrawals of 5% of the single premium p.a., paid monthly (£416.67/month on £100,000) |
std (14) |
Tax-deferred allowance (policyholder side) |
Cumulative 5% of each premium per insurance year — statutorily, allowable element = premium × y/20, y capped at 20; unused allowance carries forward; excess over the cumulative allowance is an “excess event” gain at insurance-year end |
R2 R1 s498/s507 [S1] [S4] [S5 Q15] |
Adviser charges |
Set-up (deducted before investment; remainder is the Premium), ongoing (periodic, by unit cancellation spread across segments), ad hoc (one-off); ongoing/ad hoc treated as withdrawals for tax and counted inside the 7.5% cap; base model carries them at zero |
[S1] [S2 §12.1–12.4] [S4] [S5 Q15]; zero std (15) |
Maximum Limit Test |
Caps total ongoing + ad hoc adviser charges per policy year; re-tested on partial withdrawals and instruction changes |
[S2 §12.3.2, §12.7] |
Cooling-off |
30 days from plan documents; refund reduced by any fall in value; adviser fees not refunded |
[S1] [S4] [S5 Q19] |
Settlement frictions |
Same-working-day unit cancellation before 12:00 cut-off; up to 2 working days for large deals; deferral up to 6 months (property funds) / 1 month (others); not modeled |
[S2 §4.1.1, §4.4, §8] [S1] [S3]; scope std |
The anchor provisions confirm partial/full withdrawals at any time with no penalty layer in the current product [S1] [S2 §7.2–7.3]; one platform states “without penalty” [S4]. The other caps a one-off part surrender at 95% of value with £1,000 minimum remaining [S5 Q12] — remaining-balance minima are administrative and not modeled. Early cash-in charges exist only in the legacy layer [S3].
5% of premium p.a. equals the statutory tax-deferred allowance exactly R2, sits inside the 7.5% product cap [S2 §7.1], and is the pattern every fetched KFD uses to explain the wrapper [S1] [S4] [S5]. Behavioral rationale and the dynamic variant are in the technical notes.
A representative ongoing adviser charge, when the module is enabled, is 0.5% p.a. of unit value — the illustrative rate in the anchor cap example (“0.5% OAC ⇒ maximum 7% withdrawals”) [S1] [S2 §7.1]. The anchor cell carries all three adviser charges at zero so the worked example stays within the 5% allowance without consuming it on charges (ongoing/ad hoc adviser charges consume the allowance [S2 §12.1.1] [S4] [S5 Q15]).
Contractual mechanics#
Premium and segmentation. A single premium P (the payment minus any set-up adviser charge [S1] [S2 §1, §12.2]) buys units at the bid price across the chosen funds; premium and units are divided equally between the 100 segments (std count; mechanics [S1] [S2 §2.4]). Each segment is an identical mini-policy that can be assigned or fully surrendered separately [S1] [S2 §2.4].
Units and unit pricing. Units are notional [S2 §3.1.5]. The anchor carrier’s internally-managed funds are valued at least monthly between a maximum value (lowest buying price of assets) and minimum value (highest selling price), net of taxes, duties, reserves and the AMC, with the basis swinging between purchase and sale valuation according to whether the fund is expanding or contracting; bid price ≥ minimum value / units in issue, rounded to the nearest 0.1p [S2 §3.2.1–3.2.4]. Externally-linked funds follow the external manager’s prices with the same expansion/contraction logic [S2 §3.2.3, §3.2.5]; the legacy book values funds every business day on the same swinging-basis design [S3 Part E]; platform deals receive forward pricing at the next dealing point [S5 Q9]. The reference model abstracts all of this to a single daily-priced, single-priced unit fund per policy (std; see technical notes).
Charges. For unit-linked funds, 1/365 of the fund’s AMC is deducted daily from
fund value and reflected in the bid price [S2 §5.1.1]. Fund-level further costs are
borne within the fund [S1] [S2 §3.1.7]. Tax on the life fund’s income and gains is
allowed for inside the unit price (insured funds) [S2 §3.2.1] [S3 Part E] or charged
explicitly to the policy (platform products) [S4] [S5 Q15]. With AMC rate c, further
costs f, gross fund return g and tax proxy rate t_pf (composite values 1.00%,
0.10%, scenario input, 20% — all std as tabulated above), the annual unit-fund
growth relation the composite standardizes is:
UF_after = UF_before × (1 + g × (1 − t_pf)) × (1 − c − f) − withdrawals − adviser charges
(the exact monthly discretization, processing order and dimension checks are in the technical notes; the same parameter values are used there).
Death benefit. On death of the (last) life assured the plan pays the sum assured:
DB = 100.1% × bid value of units [S1] [S2]; uplift choice **[std]** (6)
with units counted at the date of death and valued on the working day notice is received [S2 §4.2.7, §9]. The insurer’s death strain per claim is DB − unit fund = 0.1% of unit value (plus any GMDB in-the-money amount if the rider is attached [S1] [S2 §5.2, §10]). The plan then terminates [S2 §9.5].
Withdrawals. Regular withdrawals run monthly to annually, subject to the £50 per-payment and £500 residual minima and the 12-month cap = max(7.5% of plan value, 7.5% of total paid in), with ongoing adviser charges counted inside the cap [S1] [S2 §7.1]. One-off partial withdrawals are part surrenders spread across all segments; alternatively whole segments are surrendered [S2 §2.4.5, §7] [S4] [S5 Q12]. All withdrawals and adviser charges are effected by unit cancellation.
Policyholder tax machinery (contract-external, behavior-relevant). At each insurance-year end a periodic calculation compares cumulative withdrawals (including ongoing/ad hoc adviser charges [S2 §12.1.1] [S4] [S5 Q15]) with the cumulative allowable element = Σ premiums × y/20 (y = insurance years since payment, capped at 20) — i.e. 5% of each premium per year, unused amounts carried forward, full premium allowable after 20 years R2 R1 s498/s507. Withdrawals above the cumulative allowance create an “excess event” gain; full surrender (of the bond or a segment), death giving rise to benefits, and assignment for consideration are chargeable events R1 s484, with gain = total benefit value − (allowable deductions + previous gains) R1 s491–s494. On death the bond is treated as fully cashed in immediately before death [S5 Q15] R1 s484. Gains are taxed as income of the policyholder with a basic-rate credit (onshore) [S4] [S5 Q15] R6; top-slicing relief (s535–s537) and deficiency relief (s539) exist in the statute R1 [unverified beyond section references]. The insurer issues Chargeable Event Certificates [S5 Q15]. None of this is an insurer cash flow — it is modeled only through policyholder behavior (see technical notes).
Switching and fund powers. Switching between funds is free (charge rights reserved) [S1] [S2 §6.3.1.2] [S3] [S5 Q11]; the insurer may refuse, limit or charge switches on suspicion of market timing [S3] [S5 Q10], and may close, merge or rename funds with notice [S2 §3.1.3] [S3]. Fund-count limits vary (10 [S1] [S2 §3.1.4] to open architecture [S4] [S5]); the reference model collapses the fund menu to a single composite fund (std).
Cancellation. 30-day cooling-off with refund reduced by any fall in value [S1] [S4] [S5 Q19]. There is no paid-up mechanism — a single-premium contract carries no premium obligation [unverified as an explicit statement; consistent with all of S1–S5].
Riders and options#
In scope (described; charged at 0 / disabled in the base model std):
Return-of-premium guaranteed minimum death benefit (GMDB). As written on the anchor documents, the option pays max(Sum Assured, GMDB) where GMDB = total premiums (net of set-up adviser charges) − partial/regular withdrawals − ongoing/ad hoc adviser charges. Monthly charge = (GMDB − Sum Assured, if positive) × a mortality factor depending on age at the last policy anniversary, levied by unit cancellation pro-rata across premiums and funds; the charge is zero while the option is out of the money; elected at outset only, cancellable but not restartable [S1] [S2 §5.2, §10]. A second currently open product carries the same design (greater of premiums-less-withdrawals and 100.1% of value; monthly charge that may exceed growth; unavailable if any life assured is over 90 at outset) [S5]. The mortality-factor scale is not published in the fetched documents — a std placeholder scale is given in the technical notes.
Out of scope (listed):
Accidental Death Benefit — 110% of bond value on accidental death within 90 days (legacy layer; war/self-inflicted/aviation exclusions) [S3].
PruFund smoothed funds inside the wrapper — Expected Growth Rate accrual, quarterly and daily smoothing limits, 28-day waits, quarter dates [S2 §3.3.7–3.3.10]; see the with-profits folder (
products/with_profits/) for smoothing mechanics; the smoothing parameters themselves are published separately and change over time [S2 §3.3.10].PruFund Protected Fund guarantee (Guaranteed Minimum Fund Value at a chosen Guarantee Date, fixed guarantee charge, proportional reduction for unit cancellations) [S2 §5.3, §11].
With-profits funds within the bond, including Market Value Reduction (MVR) on cash-in or switch-out — MVR never applied on death or on regular withdrawals up to 7.5% of plan value p.a. (legacy layer) [S3].
Capital guarantee on the trustee-owned variant (greater of net invested premiums less withdrawals and 101% of bond value) [S3].
Distribution funds / natural-income options [S1] [S3].
Discretionary investment manager (DIM) portfolios and model-portfolio rebalancing [S4] [S5].
Capital redemption variant [brief]: the same bond chassis written without lives assured as an RAO Class VI capital redemption contract, so no death-based chargeable event occurs; noted as a market variant only REG-R14 class list; product-level terms not in any fetched document unverified.
Variations across insurers#
Death uplift. 100.1% of unit value [S1] [S2] [S5] vs 101% [S4] [S3 pre-2006 plans; S5 pre-25/11/2024]. Chosen: 100.1% — anchor-document value, currently marketed norm; the difference is a factor of 10 in the (still tiny) death strain.
Segment count. 20 default / up to 999 [S1] [S2] vs 100 [S3] vs 1,000 [S4] [S5]. Chosen: 100 std (footnote 3) — mid-range, clean percentages.
Charge architecture. Clean fund-based AMC with tiered discount [S1] [S2] or platform charge plus fund charges plus explicit tax charge [S4] [S5], vs the legacy layer stack: bid-offer “One-Off Charge” implemented as offer price above bid on specified funds, Early Cash-in Charges (percentage of units cashed in before the end of a Schedule period, per payment, never on death, regular withdrawals within the “regular withdrawal percentage” exempt), Establishment Charge accruing daily in the early years collected monthly by unit cancellation, and a daily-accruing Yearly Management Charge [S3 Part C/D]. Chosen: clean structure; the legacy stack is documented here for back-book modeling. Allocation rates and initial/capital units were not present in any retrieved document and remain a unverified legacy variation.
Life-fund tax presentation. Implicit in daily unit pricing [S2 §3.2.1] [S3 Part E] vs explicit periodic “charge in respect of tax” to the policy, including an annual deemed-disposal charge [S4] [S5 Q15]. Chosen: implicit-in-price 20% proxy std (footnote 11); the explicit variant matters for platform-bond admin reconciliation but not for the net cash flow shape.
Fund menu. ~10 concurrent internal/mirror funds [S1] [S2 §3.1.4]; 30 (legacy) [S3]; open architecture with ~3,000 collectives [S5] or unrestricted plus DIM [S4]. Chosen: single composite fund std — fund-menu breadth affects the return assumption, not the liability mechanics.
Withdrawal caps. 7.5%-of-value/paid-in product cap including ongoing adviser charges [S1] [S2 §7.1] vs minima-only (£25 minimum, £1,000 residual [S5]; residual minimum [S4]). Chosen: the 7.5% cap [S2 §7.1], because it is a real constraint that binds the withdrawal-plus-adviser-charge total.
Smoothed-fund option. PruFund range with published smoothing mechanics [S2 §3.3] vs a platform’s smoothed-managed fund range (quarterly switch limit) [S4] vs with-profits with MVR (legacy) [S3] vs none [S5]. Chosen: excluded — smoothing belongs to the with-profits reference product.
Guarantee riders. Return-of-premium GMDB [S1] [S2 §5.2, §10] [S5] vs none observed on one platform KFD [S4]. Chosen: specified as an optional module, disabled in the base cell.
Settlement frictions. 28-day PruFund waits, 2-working-day large-deal delay, 6-month property deferral [S1] [S2 §4.4, §8]; suspension/deferment powers [S3] [S4]; forward pricing and ~10-working-day payout [S5 Q9, Q16]. Chosen: ignored in the monthly-grid model std; they matter for liquidity risk, not expected cash flows.
Regulatory context#
PRA / Solvency UK. Technical provisions for the bond equal a best estimate plus a risk margin R5 TP 2.4; the best estimate is the probability-weighted average of future cash flows discounted at the relevant risk-free term structure, and the projection must take into account all cash in- and out-flows required to settle the obligations R5 TP 3.1, 3.2 — for unit-linked business this is the rule-level anchor for projecting fund-based charges, expenses and death strain alongside the unit fund. The reformed UK risk margin applies a 4% cost-of-capital rate with a 0.9 risk-tapering factor (floor 0.25) for long-term business R5 TP 1.2, 4A.1 REG-R4. This library projects the gross best-estimate cash flows only (see technical notes).
FCA conduct rules. COBS 21.3 restricts what benefits may be linked to for natural-person policyholders: only approved indices and the permitted-links asset list (approved/listed securities, permitted unlisted securities, permitted land and property, loans, deposits, scheme interests, money-market instruments, cash, permitted units, stock lending, derivatives, and conditional permitted links), classified by economic substance R3 REG-R10. This is why every fetched product reserves fund-deferral powers aligned to illiquid assets (6-month property deferral [S1] [S2 §8] [S3]). The Consumer Duty applies to this retail product; its price-and-value outcome bears on charge levels of the kind snapshotted here REG-R12; outcome-location detail unverified.
Policyholder tax (ITTOIA 2005 Part 4 Ch. 9). The chargeable-event regime taxes bond gains as income: events at s484 (death giving rise to benefits, full surrender, assignment for consideration, maturity, part-surrender excess events via s509/s514), gain computation at s491–s494, the 5%/20-year allowance machinery per s498/s507 as applied in IPTM3560, and top-slicing relief at s535–s537 and deficiency relief at s539 R1 R2. UK-resident individuals, personal representatives and trustees are the liable persons R1 s465–s467. Gains can affect personal allowances and means-tested benefits [S1] [S5 Q15]. All of it is policyholder-side: the model carries it as behavior, not cash flow.
Company tax (I-E / BLAGAB). Onshore bonds are BLAGAB: the insurer pays corporation tax on investment income and chargeable gains allocated to the business minus expenses, with the policyholder slice taxed at the basic rate and a minimum profits test protecting the shareholder slice R6 REG-R17. This is the source of the basic-rate credit on policyholder gains R6 [S4] [S5] and of the fund-level tax drag the composite standardizes at 20% of gross return std (footnote 11).