Product Specification#
Status: Draft, 2026-08-03. This is a standardized composite specification for reference
modeling — it does not reproduce any single insurer’s product. Facts tagged [S#] and [R#] are
sourced from the product research notes (_research/term-life.md); facts tagged [REG-R#]
are sourced from the cross-product reference library
(references/regulatory-and-actuarial-references.md; research provenance in
_research/regulatory-actuarial.md for R1–R34 and in _research/appp-a820-a821-a822.md and
_research/appp-a830.md for the AP&P Manual appendix items cited here, same R-numbering). Values marked std are standardizations
introduced for the reference implementation; each std entry carries a footnote with the
rationale and the observed range across insurers. Facts the research notes flag as
unverified remain flagged here.
Product overview and market role#
Level premium term life insurance provides a guaranteed level death benefit for a fixed initial “level term period” (commonly 10 to 40 years), during which gross premiums are guaranteed not to change. After the level period the policy is renewable annually, without evidence of insurability, at annually increasing premiums until expiry at attained age 95 S2 S3 S5 S6. The policy accumulates no cash value, pays no dividends (non-participating), and grants no policy loans S3 S6. Most carriers also make the policy convertible: the owner may exchange it for a permanent policy without new underwriting during a contractually bounded conversion window S2 S3 S6.
Term is the commodity protection product of the U.S. individual life market. Pricing at the competitive cell examined in the research (Female 40, $1,000,000, best non-tobacco class, 20-year term) is tightly clustered — the top seven carriers were within $4 per year of each other (≈$477–$480 annually) S4. The 20-year level term plan carries the highest in-force exposure among level term types in the SOA/LIMRA 2015–2022 lapse study R6. For liability modeling, the economically dominant feature is the post-level-term (PLT) transition: the premium jump at the end of the level period triggers a shock lapse of 27%–96% and first-year PLT mortality deterioration of 154%–1,066% of level-period mortality for Jump-to-ART designs R4, so the small surviving PLT block is heavily anti-selected.
Representative specification#
Plan structure#
Parameter |
Representative value |
Basis |
|---|---|---|
Product type |
Individual level premium term; renewable and convertible; level death benefit |
|
Level term periods modeled |
10 / 20 / 30 years; base cell = 20-year |
std (fn 1) |
Coverage expiry |
Attained age 95 (renewal ceases; policy expires without value) |
|
Age basis |
Age nearest birthday (ANB); attained age = issue age + completed policy years |
|
Issue ages (non-tobacco) |
10-yr: 18–75; 20-yr: 18–70; 30-yr: 18–55 |
std (fn 2) |
Issue ages (tobacco) |
Cap 5 years lower than non-tobacco cap per plan; floor 18 |
std (fn 2) |
Minimum face amount |
$100,000 |
|
Maximum face amount |
None modeled (band 4 is open-ended) |
std (fn 3) |
Participation / values |
Non-participating; no cash value; no policy loans |
|
Free look |
30 days |
Footnotes
std Level period menu. Observed menus: 10/15/20/25/30/35/40 (Protective S1; Banner S2); 10/15/20/30 (Lincoln S3); 10/15/20/25/30 (Pacific Life S4); 18 periods including every year 15–30 (Corebridge S5). The 10/15/20/30 menu is the classic core (it is Lincoln’s entire menu S3); the reference library models 10/20/30 and takes 20-year as the base cell because 20-year term has the highest in-force exposure industry-wide R6.
std Issue ages. Observed: Protective 20-yr NT 18–70 (tobacco 18–62), 10-yr 18–80, 30-yr 18–58 S1; Banner 10-yr 20–75, 20-yr NT 20–70 (tobacco 20–65), 30-yr 20–55 S2; Lincoln 10/15/20-yr 18–60, 30-yr NT 18–55 S3; Corebridge 10-yr 20–80, 20-yr 20–70, 30-yr 20–55 S5. The representative grid uses minimum age 18 (Protective/Lincoln) and NT caps 75/70/55 — modal for the 20- and 30-year plans; the 10-year cap adopts Banner’s 75 S2, between Lincoln’s 60 S3 and the Protective/Corebridge 80 S1 S5; the tobacco cap reduction of 5 years approximates the observed pattern (Protective 20-yr −8 yrs, Banner 20-yr −5 yrs) without a per-plan table.
std Maximum face. Protective states no set maximum S1; Lincoln caps at $1,000,000 reflecting its accelerated/online underwriting program S3; Banner bands run to $10,000,001+ S2. The reference model imposes no maximum; underwriting-program caps are a distribution feature, not a liability mechanic.
Rate classes and banding#
Parameter |
Representative value |
Basis |
|---|---|---|
Rate classes |
4: Preferred Plus NT / Preferred NT / Standard NT / Standard Tobacco |
std (fn 4) |
Substandard ratings |
Not modeled |
std (fn 5) |
Premium rate bands (by face) |
4: $100,000–249,999 / $250,000–499,999 / $500,000–999,999 / $1,000,000+ |
|
Per-$1,000 rate behavior |
Rate per $1,000 decreases by band, constant within band |
std Rate classes. Observed counts: 4 (Protective: Select Preferred, Preferred, Non-Tobacco, Tobacco S1), 5 (Lincoln S3), 6 (Banner S2), 8 (Corebridge S5). The common skeleton is preferred-plus/preferred/standard × tobacco with table ratings layered on a standard-type class S2 S3 S5. Four classes (three NT tiers + one tobacco) keep the model-point dimensionality small while preserving the preferred-structure mortality split that the 2015 VBT relative-risk tables support REG-R18.
std Substandard. Observed: table ratings to Table D (Lincoln; flat extras to $5/1,000) S3, Table H/D by issue age (Corebridge, on Special rates) S5, ratings applied to Standard Plus rates (Banner) S2. Excluded from the reference model as a volume-minor complication; a flat mortality multiple can emulate it.
std Bands. Observed band counts: 3 (Lincoln S3), 4 (Corebridge S5), 7 (William Penn S2), 10 (Banner S2). Four bands with the Corebridge boundaries S5 are chosen as the median-complexity structure that still exhibits the band-reversal lapse dynamics noted in the experience studies R6.
Post-level term (PLT)#
Parameter |
Representative value |
Basis |
|---|---|---|
PLT design |
Jump-to-ART: face amount unchanged; premium jumps at end of level period, then increases annually to expiry at 95 |
|
Guaranteed ART tail anchor (M35/$100k/10-yr, fee included) |
Yr 11: $764; yr 12: $830; yr 15: $992; yr 20: $1,526; yr 30: $4,250; yr 40: $10,946; yr 50: $30,965; yr 60 (age 95): $74,780 |
|
Initial premium jump at anchor |
$764 / $140 ≈ 5.46× (increase ≈ 446%, fee included) |
S6-derived |
Implied per-$1,000 ART rates (fee $65 removed) |
Yr 11: $6.99; yr 12: $7.65; yr 15: $9.27; yr 20: $14.61; yr 30: $41.85; yr 40: $108.81; yr 50: $309.00; yr 60: $747.15 |
S6-derived |
Current PLT scale |
Equal to guaranteed scale (no separate current scale modeled) |
std (fn 10) |
std Current PLT scale. Graded PLT structures (smaller initial jump, premiums grading up annually) have become popular, in some cases implemented by re-rating in-force blocks R4; Lincoln instead decreases face and holds premium level for three years S3, and Corebridge decreases face with premium initially near level S5. The reference product charges the guaranteed Jump-to-ART scale because it is the SOA-documented most common structure R4 and because the specimen contract provides a complete verified guaranteed schedule for it S6.
Conversion#
Parameter |
Representative value |
Basis |
|---|---|---|
Conversion right |
To a permanent plan the insurer makes available, without evidence of insurability, same or most-comparable rate class |
|
Conversion window |
Any time before min(end of level term period, policy anniversary at attained age 70) |
|
Conversion credit |
One annual term premium, applied to the new policy’s initial premium, if conversion occurs after policy year 1 |
|
Partial conversion |
Allowed once; converted portion ≥ $250,000; remainder ≥ minimum face |
|
New policy face |
Cannot exceed the term face |
|
Carry-overs |
Suicide/contestable periods measured from original issue date |
|
Restriction |
Not allowed while waiver-of-premium disability benefits apply (rider out of scope) |
Window per Banner (level period or attained age 70, whichever first; 5 years if issued at 66+ — the 66+ carve-out is not modeled) S2 and Lincoln (earlier of level period and attained age 70) S3. The Pacific Life specimen instead prints an explicit Conversion Period End Date (sample: 5 years on a 10-year plan) S6; Protective’s longer rider-extended windows (8/13/18 years, to age 70) are unverified. The min(level period, age 70) rule is the modal contractual pattern S2 S3.
Policy administration provisions#
Parameter |
Representative value |
Basis |
|---|---|---|
Grace period |
31 days; policy in force during grace; premium to end of policy month deducted from proceeds on death in grace |
|
Reinstatement |
Within 3 years of lapse; evidence of insurability; overdue premiums with 6.00% compound interest |
S6 (fn 12) |
Incontestability |
2 years from issue (separately from reinstatement) |
|
Suicide exclusion |
2 years; proceeds limited to premiums paid |
|
Misstatement of age/sex |
Benefits adjusted to what premiums would have purchased at correct age/sex |
|
Requested face decrease |
Once, after 5th policy year, up to 50% of face; new premium = ((a − b) × c) + b where b = policy fee (fee not scaled) |
|
Face increases |
Not allowed after issue |
|
Termination |
Earliest of death, expiry (age 95), conversion, lapse, successful contest, owner request; pro-rata premium refund beyond month of termination |
Lincoln allows 5 years (and 15 days after the 46-day post-due-date window without evidence) S3; the specimen’s 3-year/6% rule S6 is adopted as it is complete contract language. Reinstatement is administratively real but not modeled as a decrement reversal in the base reference model (see technical notes).
1-year suicide period in CO, MO, ND for Banner S2; state variations are out of scope for the composite.
Death benefit#
Parameter |
Representative value |
Basis |
|---|---|---|
Death benefit |
Level face amount, guaranteed, all years (level period and ART tail) |
|
Proceeds formula |
Face + rider benefits + pro-rata refund of premium paid beyond the month of death − premiums due and unpaid |
|
Delayed-claim interest |
Interest payable on delayed claims (10% after 31 days in specimen) |
|
Settlement options |
Lump sum default; guaranteed income options (≥2% interest; specimen uses Annuity 2000 female −5 yrs for life incomes) — not modeled |
Contractual mechanics#
Death benefit provisions#
The death benefit is the level face amount in all years, including the ART tail S1 S2 S6 (the Corebridge and Lincoln face-decrease PLT variants are documented under “Variations” and not modeled S3 S5). Proceeds on death equal face plus any rider benefits, plus a pro-rata refund of premium paid beyond the policy month of death, minus due and unpaid premium S6. If death occurs in the grace period, the premium to the end of the policy month is deducted from proceeds S3 S6.
Account / cash value mechanics#
None. The policy accumulates no account value or cash surrender value, is non-participating, and terminates without value on lapse or expiry S3 S6. There are consequently no charges, credits, loans, or withdrawals: Lincoln explicitly lists “Loans: N/A” S3. Long-duration guaranteed-premium term can in principle generate nonforfeiture values under the Standard Nonforfeiture Law REG-R2; the representative product is assumed to develop none std (consistent with all retrieved product documents, none of which shows a cash value schedule S1 S2 S3 S5 S6).
Grace, lapse, reinstatement#
If a premium is unpaid at its due date, a 31-day grace period begins during which the policy remains in force S3 S6 S7. If the premium remains unpaid at the end of grace, the policy lapses without value S6. Reinstatement is available within 3 years of lapse upon evidence of insurability and payment of overdue premiums accumulated at 6.00% compound interest S6.
Renewal, conversion, maturity#
Renewal. At the end of the level term period, coverage continues automatically (no evidence of insurability) on the guaranteed ART scale, renewing annually to attained age 95, at which point the policy expires without value S2 S3 S5 S6.
Conversion. At any time before min(end of level period, attained age 70) the owner may convert all or part (once, ≥$250,000 converted, remainder ≥ minimum face) of the face to a permanent policy without evidence of insurability, at attained-age premium rates for the same or most-comparable class; a conversion credit of one annual term premium is applied to the new policy’s initial premium when conversion occurs after policy year 1 S2 S3 S6. Conversion terminates the term policy (or reduces it, on partial conversion) S6.
Maturity. There is no maturity value; expiry at attained age 95 ends coverage S6.
Riders#
In scope#
Accelerated Death Benefit (terminal illness) — included at no premium. Included automatically on all policies at Banner (ICC10-ADB) S2 and on Corebridge plans (accelerate up to the lesser of 50% of the specified amount and a scheduled maximum; eligibility on a 24-month prognosis (12 in NY); one-time administrative fee up to $500; payment reduces the death benefit) S5. Lincoln’s version (R879) accelerates up to 50% of death benefit, max $250,000, discounted with interest under a lien approach S3; Pacific Life’s forms are R16LYTIR / specimen R12TTI S4 S6. Modeling treatment std: the rider is carried in the specification for completeness but modeled as cash-flow-neutral — an acceleration is approximately an actuarially discounted prepayment of an imminent death claim, and the rider carries no premium.
Out of scope#
Listed for completeness; none is modeled in the reference implementation:
Additional-insured / layered term riders (e.g. Banner AIR 10/15/20-year) S2
Accidental death benefit S5
Conversion-extension riders with chronic-illness benefits (Protective Conversion Choice(SM) / ExtendCare(SM)) S1 S7
Income/settlement endorsements (Protective Income Provider Option S7; guaranteed income benefit plans S6)
Return-of-premium (ROP) term variants — no fetched insurer source documents one; the only verified ROP-related fact is VM-20’s special NPR lapse treatment for policies with an endowment benefit R2; ROP products’ existence is otherwise unverified
Risk class improvement / re-qualification feature (Pacific Life: after 2nd anniversary to age 70, fee up to $100) S6
Variations across insurers#
Term period menus. 10–40 years including 35/40-year plans (Protective S1, Banner S2); 10/15/20/30 only (Lincoln S3); every year 15–30 plus 10 and 35 (Corebridge S5); 10–30 in 5-year steps (Pacific Life S4). Representative choice 10/20/30 with a 20-year base cell: a subset of the classic 10/15/20/30 core menu (Lincoln’s exact lineup S3) weighted by in-force exposure R6.
PLT design — the largest structural variation. (a) Jump-to-ART with face unchanged (Banner S2, Pacific Life S6); (b) automatic face decrease with premium held level 3 years then ART (Lincoln — explicitly a design to avoid premium sticker-shock and antiselective termination S3); (c) immediate face decrease with premium initially near-level then increasing (Corebridge S5); (d) graded PLT premium scales, sometimes applied retroactively to in-force blocks R4. Jump-to-ART is chosen because the SOA found it the most common U.S. structure R4 and the full guaranteed schedule is verified S6; it also produces the strongest anti-selection dynamics, which the model must be able to represent.
Rate classes. 4 (Protective S1) to 8 (Corebridge S5); representative 4 std (fn 4).
Policy fees and bands. Fees $64–$90, commissionable or not S2 S3 S5 S6; bands 3 to 10 S2 S3 S5. Representative $65 fee / 4 bands (fns 6–7).
Issue ages. Minimum 18 (Protective, Lincoln S1 S3) or 20 (Banner, Corebridge S2 S5); maximum 80 on 10-year plans (Protective, Corebridge S1 S5) but 60 at Lincoln’s digital program S3. Representative grid per fn 2.
Conversion. All carriers convert without evidence, typically bounded by the level period and attained age 70, but: Banner grants 5 years at issue ages 66+ S2; Lincoln guarantees full-portfolio access for the first 7 years of the conversion period via amendment S3; Pacific Life prints an explicit Conversion Period End Date and pays a conversion credit of about one annual premium S6; Protective sells an optional rider lengthening the window with a chronic-illness benefit S1 S7, with numeric windows (8/13/18 years) unverified; Corebridge’s month-based limits (96th/120th month) are unverified. Representative: min(level period, age 70) window + one-premium credit (fn 11).
Pricing dispersion. At the F40/$1M/best-NT/20-year cell the top 7 carriers sit within $4/yr (≈$477–$480) and the widest outlier is 54% higher S4 — supporting a single representative rate scale calibrated to the cluster.
Regulatory context#
Standard Valuation Law (NAIC Model #820) REG-R1, as codified in the AP&P Manual at Appendix A-820 REG-R153. The legal root of statutory reserving: minimum standards by calendar year of issue, CRVM (¶11), the deficiency-reserve rule (¶¶19–20), and the principle-based-valuation provisions delegating to the Valuation Manual (¶¶23–28) REG-R1 REG-R153. The appendix print has now been read in full and it settles two things this entry previously left open. (i) The VM operative date is no longer unverified: ¶3 applies the PBR paragraphs to all policies and contracts “issued on or after the January 1, 2017, operative date of the Valuation Manual”, and ¶4 provides that they “shall not apply” to earlier issues REG-R153 ¶¶3–4. (ii) The deficiency-reserve rule is not an additive quantity but a floor: where the gross premium charged in any contract year is less than the valuation net premium computed by the method actually used but on the minimum standards of mortality and interest, the minimum reserve is the greater of the reserve on the basis actually used and the reserve on the minimum standards with the actual gross premium substituted for the valuation net premium in the deficient contract years only REG-R153 ¶19. A-830 defines a separate deficiency quantity for the policies it reaches — see the next entry. One verified negative worth carrying: the 2017 CSO is nowhere in A-820’s printed text, which names the 2001 CSO for issues from 1 January 2004 and the 1980 CSO before that; the 2017 CSO reaches post-2017 issues through the Valuation Manual under ¶23 REG-R153 ¶¶5, 23.
Valuation of Life Insurance Policies — AP&P Appendix A-830 REG-R154, the manual’s print of the regulation known outside it as Model #830, “Regulation XXX” R1 REG-R6. The pre-PBR reserve regime for level premium term, still operative for in-force blocks issued before PBR REG-R6 REG-R154. Cite it by paragraph: the appendix is a flat sequence ¶¶1–32 plus an unnumbered Attachment, has no Sections at all, and the strings “Model #830” and “Regulation XXX” appear nowhere in it REG-R154. By its own ¶2 the method it defines constitutes CRVM for the policies it reaches, so it replaces rather than supplements the A-820 ¶11 construction REG-R154 ¶2 REG-R153 ¶11. Basic reserves for policies with guaranteed nonlevel gross premiums are the greater of segmented and unitary reserves under the contract segmentation method (¶21), which segments on the ratio of guaranteed gross premiums per thousand of face amount, “ignoring policy fees only if level for the premium paying period”, against the ratio of valuation mortality rates, with a company-elective ±1% tolerance on the mortality ratio, floored at 1 and elected per policy year (¶5) — the library’s earlier second-hand statement of this construction is confirmed and the “per thousand of face amount” wording is exact REG-R154 ¶¶5, 21. Deficiency reserves are quantity A less the basic reserve, A being a full recalculation of the basic reserve with the guaranteed gross premium substituted for the net premium duration by duration wherever the gross is the smaller — a one-sided substitution, keyed to the guaranteed premium “determined at issue” and not to premium collected — mitigated by X-factor select mortality subject to a two-limb test (an aggregate present-value limb and a year-by-year floor over the first five years after the valuation date) and, whenever X falls below 100% at any duration for any policy, an annual actuarial opinion and memorandum under the A-822 asset adequacy requirements REG-R154 ¶¶7, 17, 22. The valuation basis is date-split, not 1980 CSO flat: 1980 CSO with elective select factors applies before 1 January 2004, and from 1 January 2004 the 2001 CSO Mortality Table is the minimum standard for basic reserves, deficiency reserves and the tabular cost of insurance; the complete pre-2004 branch is retained in the print for valuing older issues REG-R154 ¶¶16, 17, 23. A level dollar policy fee after year 1 may be excluded from the guaranteed gross premium wherever a calculation uses it — confirmed — with the asymmetry that for deficiency reserves the fee may be put back in even where it was excluded from the basic reserve REG-R154 ¶19. A-830 prints no calendar effective date for itself: “the effective date of this appendix” is an unresolved placeholder used eleven times, so no date for when XXX first bit may be attributed to REG-R154 — the only calendar dates it prints are the 1 January 2004 cutover above. The XXX conservatism drove captive reserve financing, hence AG 48 REG-R11 and Model #787 REG-R12.
Valuation Manual / VM-20 R2 REG-R3. For new issues, the minimum reserve is the seriatim net premium reserve (NPR) plus any excess of the modeled deterministic (DR) and stochastic (SR) reserves; the deterministic exclusion test no longer applies to term R2. Term NPR uses the 2017 CSO per VM-M, prescribed NPR interest, and prescribed lapses: 6%/yr during level periods of 5+ years (10% if <5 years), a prescribed shock lapse of 25%–80% at the end of the level period depending on segment lengths and the premium increase per $1,000 including the policy fee (70% jumping to ART with <400% increase; 80% with ≥400%), and 0% after the final premium R2. For the representative product the anchor jump is ≈446% including fee S6-derived, so the prescribed NPR shock is 80% R2. PLT profits may not be capitalized: for post-2017 issues the DR must assume 100% lapse at the end of the level term when PV(PLT inflows) > PV(PLT outflows); PLT losses must be reflected; SR and pre-2017 blocks grade PLT profits toward zero where experience lacks credibility R2.
2017 CSO tables R3 REG-R17. The statutory valuation and nonforfeiture mortality family for new issues: composite, smoker-distinct, and preferred-structure versions, loaded/unloaded, ANB/ALB R3 REG-R17. The reference model uses the ANB smoker-distinct loaded tables for guaranteed-basis calculations std (choice among R3 variants). That std is not upgraded by the appendix prints now read: neither A-820 nor A-830 names the 2017 CSO anywhere, and neither prints any mortality table it does name — A-820 reaches the 2017 CSO only through its ¶5.a forward reference to tables “adopted subsequently by the NAIC” and, in practice, through the Valuation Manual under ¶23 REG-R153 ¶¶5, 23 REG-R154.
Standard Nonforfeiture Law (Model #808) REG-R2. Sets minimum cash surrender values via the adjusted-premium method; relevant to term chiefly as the reason long-duration guaranteed-premium term may generate nonforfeiture values REG-R2. The representative product assumes none arise (see Account/cash value mechanics).
Reserve financing: AG 48 REG-R11 and Model #787 REG-R12. XXX term reserve financing through captives requires prescribed Primary Security levels computed by the Actuarial Method, on pain of a qualified actuarial opinion REG-R11, codified as a regulation in Model #787 REG-R12. Relevant to a reinsurance/collateral module, not to base liability cash flows REG-R11.
IRC §7702 R5 REG-R13. Federal definition of life insurance (CVAT, or guideline premium test plus cash value corridor with applicable percentages 250% at ages 0–40 grading to 100% at 90–95) R5. Level premium term with no cash value satisfies these tests trivially, and §7702A MEC status is not normally implicated [R5 — analytical note flagged unverified in the research](#uslib-term_life-r5). No §7702 testing machinery is needed in the term reference model.
IRC §807 tax reserves REG-R16. Post-TCJA, the tax reserve is the greater of net surrender value and 92.81% of the NAIC-method reserve, capped at the statutory reserve REG-R16. For term (no surrender value) this is 92.81% of the CRVM/VM-20 quantity capped at statutory — a scalar wrapper on the statutory engine REG-R16.
Interstate compact. The specimen contract is issued under IIPRC (Interstate Insurance Product Regulation Commission) standards S6; state variations (policy forms, suicide periods, NY entities such as William Penn and US Life) apply to essentially all parameters S2 S5 and are out of scope for the composite.
Companion documents: technical-notes.md (model mechanics), sources.md (citations).