Product Specification#
Status: Draft, 2026-08-03 (all cited sources accessed 2026-08-03).
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/universal-life.md, and [REG-R#] (the
cross-product reference library references/regulatory-and-actuarial-references.md,
whose own R-numbering is distinct; research provenance in
_research/regulatory-actuarial.md) — were extracted from the cited document. 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 the Pacific Life “Versa-Flex PRO” specimen
policy (form P08VP1, 8/08; specimen cell Male 35 Standard Nonsmoker, $100,000) S3.
Product overview and market role#
Universal life is defined by regulation as a life insurance policy “where separately
identified interest credits … and mortality and expense charges are made to the
policy”; flexible-premium UL additionally lets the owner vary the amount and timing of
premiums and the amount of insurance R1. Definitions to the same effect are printed
in the AP&P Manual’s own valuation item, Appendix A-585 ¶¶7 and 3, now read at
first hand — the two texts were not compared line by line REG-R155. The
flexible/fixed distinction is not cosmetic: it is what switches on the funding ratio
in the statutory reserve (see technical-notes.md, “Valuation and reserve pointers”).
The current assumption variant is the
interest-sensitive, cash-value-oriented chassis: the insurer declares a current
credited interest rate and current charge scales that may be more favorable than the
contractual guarantees (minimum interest, maximum charges), and revises them at its
discretion subject to actuarial standards on non-guaranteed elements R1 R8.
In the SOA/LIMRA 2015–2021 flexible-premium UL experience study, Current Assumption was one of three main product focuses, at 27% of known exposure (Cash Accumulation 33%, Lifetime Guarantee 27%); by policy count, fixed (non-indexed, non-variable) UL designs are the most common chassis across all product focuses R7. Current-assumption UL competes on credited rate and current charges rather than on secondary (no-lapse) guarantees; guaranteed-death-benefit needs are served by dedicated GUL products with lifetime no-lapse guarantees (e.g., Nationwide No-Lapse Guarantee UL II, guaranteeing to attained age 120) S4, which are out of scope here.
Current-assumption fixed UL is not an SEC-registered product; no statutory prospectus exists for it (prospectuses cover variable UL only) [unverified as a legal statement; consistent with EDGAR searches recorded in the research file].
Representative specification#
Product identity and issue rules#
Parameter |
Representative value |
Basis |
|---|---|---|
Design type |
Flexible-premium adjustable (universal) life, current assumption, fixed interest |
|
Policy form style |
Individual, non-participating |
|
Interest crediting style |
Portfolio: current rate declared periodically by insurer |
|
Death benefit qualification test |
Guideline Premium Test (GPT), elected at issue, irrevocable |
|
Death benefit options |
Option A (level) and Option B (face + AV); Option C out of scope |
|
Issue ages |
18–85 |
|
Rate classes |
6 classes: Preferred Plus NT, Preferred NT, Standard Plus NT, Standard NT, Preferred Tobacco, Standard Tobacco |
|
Minimum face amount |
$100,000 |
|
Maturity |
None — no maturity date; charges and premiums cease at attained age 121, coverage continues for life |
|
Anchor model cell |
Male 35, Standard Nonsmoker, $100,000 face, Option A, GPT |
Footnotes to std rows:
Portfolio crediting chosen over new-money. Observed: Symetra CAUL uses new-money (each net premium earns its declared rate locked for 12 months from receipt) S1; Protective and the Pacific Life specimen use periodically declared portfolio rates S2 S3. Portfolio-style is the more common design and the simpler modeling default [unverified as to market share].
GPT chosen per the task’s representative design and because the specimen cell itself elects GPT S3; CVAT (minimum DB floor 101% of AV in the specimen implementation S3) is the alternative under IRC 7702 R2.
Options A and B are universal across the fetched products; a return-of-premium Option C is offered by some (Symetra caps C at 2x initial face S1; Pacific Life offers C S3) and is excluded to keep the reference recursion minimal.
Observed issue-age ranges: 15 days–85 including a juvenile class S1; 18–85 with preferred classes capped at 75 S2; 18–85 for the GUL contrast product S4. The composite drops juvenile issues.
Observed: 6–7 classes typical (Symetra 7 including juvenile S1; Protective 5 S2; Nationwide 6 S4).
Observed: $100,000 all classes S1; $50,000 Non-Tobacco/Tobacco and $100,000 preferred classes S2.
Interest#
Parameter |
Representative value |
Basis |
|---|---|---|
Guaranteed minimum annual effective interest rate |
2.00% |
|
Current declared annual effective rate (snapshot) |
4.00% |
std (8) |
Crediting frequency (contract) |
Daily, 365-day year, at no less than the guaranteed rate; excess interest discretionary, uniform by class |
|
Rate on loaned AV |
Guaranteed rate (2.00%) |
Observed guaranteed minimums: 2% (Symetra, 2014-era form still sold in 2023) S1; 2.5% (Protective, 2015-era form) S2; 3% policy years 2+ (Pacific Life 2008-era form) S3. Guaranteed minimums correlate with issue era; new issues cluster at 2% or below following the 2021 IRC 7702 rate change (transition insurance interest rate 2%) R2 [unverified for the market generally]. 2.00% chosen as representative of current new issues.
Current declared crediting rates are not published in the fetched public documents, and the Symetra current-rates page returned HTTP 403 S5. 4.00% is a pure modeling assumption for the snapshot current scale; the model should treat it as a non-guaranteed element revisable under ASOP 2 discipline R8.
Charges (per policy unless stated; “current” = snapshot NGE scale, “guaranteed” = contractual maximum)#
Parameter |
Representative value |
Basis |
|---|---|---|
Premium expense load — current |
6% of each premium, all years |
|
Premium expense load — guaranteed maximum |
9% of each premium |
|
Per-policy administrative charge |
$7.50/month, current = guaranteed, to age 121 |
|
Per-unit (coverage) expense charge |
$0.26 per $1,000 face/month, policy years 1–10; $0.156 per $1,000/month years 11 to age 121; 0 thereafter |
|
Guaranteed maximum monthly COI rates |
Specimen table per $1,000 NAAR by policy year (issue age 35): yr 1: 0.10090; yr 5: 0.12840; yr 10: 0.19940; yr 20: 0.45950; yr 30: 1.27900; yr 40: 3.23010; yr 50: 9.24140; yr 60: 23.81220; yr 70: 46.82420; yr 77: 77.62690; yrs 78–86 (attained ages 112–120): 83.33330 (= 1000/12); yr 87+ (age 121+): 0 |
|
Current monthly COI rates |
60% of the guaranteed maximum rate at every duration |
std (12) |
Rider charges |
0 (base model carries a placeholder) |
scope std (see Riders) |
Observed premium loads: 6% current / 9% guaranteed max, all years S1; 10% all years, single stated rate S2; 6.95% guaranteed max, current may be lower S3. The Symetra pair is adopted because it exhibits the typical current-vs-guaranteed NGE gap; the load itself is a non-guaranteed element in that design S1.
Observed per-policy charges: $10/month current, $30/month guaranteed max S1; $5/month all years to 121 S2; $7.50/month (specimen) S3. The specimen value is adopted (implementation anchor); the model treats it as both current and guaranteed, understating the observed guaranteed max (up to $30 S1).
Observed per-unit charges: rate per $1,000 face varying by sex/class/issue age/size/duration S1; per $1,000 of initial face by age/sex/class, all years to 121 S2; $26.00/month per $100,000 years 1–10 then $15.60/month years 11–86 (= $0.26 then $0.156 per $1,000/month; the higher first-10-year charge is acquisition-cost recovery) S3. Specimen values adopted verbatim for the anchor cell; the year-10 step-down is retained.
The specimen guaranteed COI table is a 2008-era (2001 CSO basis) table S3; no 2017 CSO-era specimen COI table was obtained (research gap). Guaranteed rates for policy years not listed are interpolated log-linearly std. The current scale (60% of guaranteed, flat across durations) is a pure modeling assumption: current (non-guaranteed) COI scales are not published in public documents — only guaranteed maxima appear in the specimen S3. All three current-assumption source products charge COI monthly per $1,000 of net amount at risk with current scales at or below guaranteed maxima S1 S2 S3; charging less than maximums must be uniform by class S3.
Surrender, withdrawal, loan#
Parameter |
Representative value |
Basis |
|---|---|---|
Surrender charge — initial amount |
$9.00 per $1,000 initial face |
std (13) |
Surrender charge — runoff |
Declines linearly by $1.00 per $1,000 per year, amortized monthly (1/12 per month); zero from the start of policy year 10 |
9-year pattern S1 S2; monthly amortization mechanics S3; amount std (13) |
Surrender charge — layers |
Each face-increase layer carries its own schedule; face decreases do not reduce the surrender charge |
|
Cash surrender value (CSV) |
AV − surrender charge |
|
Net cash surrender value (NCSV) |
CSV − policy debt |
|
Partial withdrawal |
From first policy anniversary; minimum $200; fee $25; no surrender charge assessed on withdrawal |
|
Free partial withdrawal amount |
10% of AV per policy year, first withdrawal each year |
|
Policy loan — charged rate |
2.75% annual, accrued daily, capitalized if unpaid at policy year end |
|
Policy loan — credited rate on loaned AV |
2.00% (guaranteed rate) — 0.75% guaranteed spread |
|
Maximum loan |
AV − 3 x most recent monthly deduction − surrender charge − existing policy debt |
|
Loan repayment priority |
Payments while a loan is outstanding are treated as loan repayments unless designated as premium |
Observed surrender charge designs: 9-year decreasing schedule, rate per $1,000 by sex/class/issue age S1; declining over first 9 policy years, pro-rata partial charge on face decreases S2; fixed dollar schedule — initial $921 per $100,000 (= $9.21 per $1,000) reducing by $92.10/year amortized in monthly twelfths, zero after end year 10 S3. The composite takes the 9-year runoff (the modal length) with the specimen’s monthly-amortization mechanics and rounds the specimen’s initial level to $9.00 per $1,000.
The specimen’s free-withdrawal carve-out is: first withdrawal in a policy year, during the first 15 policy years, up to the lesser of $10,000 or 10% of net cash surrender value; withdrawals under Option A that would increase the net amount at risk otherwise reduce total face S3. The composite simplifies to 10% of AV per year with no 15-year limit, which is the pattern the task standardizes on.
Observed loan designs: fixed accrual up to 3.25% with the loaned AV credited at the 3% guaranteed rate (0.75% spread) S3; 5% in arrears with 2.5% credited (2.5% spread) S2; variable rate at Moody’s Corporate Bond Yield Average, floor 3% S1. The composite keeps the specimen’s 0.75% guaranteed spread on top of the std 2.00% guarantee, giving a 2.75% charged rate.
Contractual mechanics#
Death benefit provisions#
Option A (level): DB = total face amount F. Option B (increasing): DB = F + AV S1 S3.
The DB payable is the greater of the option amount and the minimum DB under the elected qualification test S3. Under GPT the minimum DB is AV x the corridor factor at attained age S3 R2:
Attained age
Corridor %
Attained age
Corridor %
0–40
250
61
128
41
243
62
126
42
236
63
124
43
229
64
122
44
222
65
120
45
215
66
119
46
209
67
118
47
203
68
117
48
197
69
116
49
191
70
115
50
185
71
113
51
178
72
111
52
171
73
109
53
164
74
107
54
157
75–90
105
55
150
91
104
56
146
92
103
57
142
93
102
58
138
over 93
101
59
134
60
130
(Specimen GPT corridor table; it implements the IRC 7702 cash value corridor S3 R2.)
Option changes: to A or B only, at most once per policy year; total face is adjusted so the DB is unchanged at the change date; a change is rejected if it would create a MEC unless requested S3.
Death benefit proceeds = DB − policy debt − due and unpaid monthly deductions during grace; interest is paid on proceeds from the date of death S3.
Face increases require evidence of insurability (specimen: insured no older than 90, minimum increase $25,000) and create a new coverage layer with its own COI rates, coverage charge, and surrender charge; decreases are limited to one per year, none in year 1, and reduce layers LIFO S3 S2.
Account value mechanics#
The contract credits interest daily (365-day year) at no less than the guaranteed rate; excess interest is discretionary and uniform by class S3. The contractual roll-forward S3:
On the policy date: AV = net premium − first monthly deduction.
On each other day: AV = prior-day AV + interest + net premiums received − withdrawals and withdrawal fees − (on a monthly payment date) the monthly deduction.
The monthly deduction is taken on each monthly payment date (the same day each month as the policy date) before the monthly deduction end date (attained age 121), and pays for the FOLLOWING policy month’s coverage S3.
Charges and credits#
monthly deduction = per-unit coverage charge
+ per-policy administrative charge
+ rider charges
+ cost of insurance (COI) charge [S3]
COI charge = (monthly COI rate / 1000) x NAAR [S3]
NAAR = DB (as of the most recent monthly payment date) / NAAR factor
− AV (measured at the beginning of the policy month,
before the monthly deduction) [S3]
The NAAR factor discounts one month at the guaranteed annual rate: the specimen shows 1.0024663 = 1.03^(1/12) at its 3% guarantee S3; at the composite 2.00% guarantee std the factor is 1.02^(1/12) = 1.0016516 (derived). Guaranteed maximum COI rates grade to 1000/12 per month at attained ages 112–120 (a single month’s charge equals the full NAAR) and to zero at 121+ S3. The insurer may charge current rates below the guaranteed maxima, uniformly by class S3; guaranteed maxima are capped by CSO valuation mortality — 2001 CSO on the 2008-era specimen form S3; 2017 CSO for new issues on/after 2020-01-01 R4 [unverified — from search-result context, not a fetched primary document].
Loans#
Available on the sole security of the AV (specimen: after free-look; minimum loan $200) S3. Maximum loan = AV − 3x most recent monthly deduction − surrender charge − existing policy debt S3. Interest accrues daily at the charged rate (composite 2.75% std, footnote 15), is due at policy year end, and is capitalized if unpaid S3. The loaned portion of AV is credited at the guaranteed rate (a design feature in both fetched fixed-loan products) S2 S3. Payments while debt is outstanding repay the loan unless designated as premium S3.
Withdrawals (partial surrenders)#
Allowed on/after the first policy anniversary; minimum $200; fee $25; no surrender charge on withdrawal; remaining net cash surrender value must stay >= $500 (specimen) S3. Under Option A a withdrawal that would increase the NAAR reduces total face, except for the free partial withdrawal amount (composite: 10% of AV per policy year, first withdrawal each year std, footnote 14) S3. Under Option B withdrawals reduce AV only S3.
Grace, lapse, reinstatement#
Grace is triggered if AV less policy debt on a monthly payment date cannot cover the current monthly deduction S2 S3; the Model 585 default definition is lapse when NCSV first equals zero, with grace of at least 30 days and 30-day advance written notice R1. Composite: 61-day grace S2 S3; required payment >= 3x the monthly deduction due plus premium load S3; if the insured dies in grace, proceeds are reduced by overdue charges; on expiry of grace unpaid, the policy terminates with no value S3. Reinstatement within 5 years with evidence of insurability and the catch-up premium described above S3.
Renewal / conversion / maturity#
There is no renewal or conversion structure (coverage is permanent and premiums flexible). The policy does not mature: at attained age 121 monthly deductions cease, premiums are no longer accepted, loans and loan repayments remain available (loan interest continues to accrue), withdrawals are not allowed, interest continues to be credited, and coverage continues for life S3; Protective similarly discontinues premiums and charges at attained age 121 S2. IRS guidance on post-age-100 coverage was noted as unsettled in the specimen S3.
Riders#
In scope (described, charged at 0 in the base model std): none are projected in the base reference model; the monthly-deduction formula carries a rider-charge term as a placeholder so that rider modules can be added without changing the recursion S3 formula structure.
Commonly attached riders on this chassis, for context:
Terminal illness accelerated death benefit: e.g., up to 75% of DB, $500,000 max, 12-month prognosis, no surrender charge on the lump sum S1; up to 60% of DB or $1 million S2.
Chronic illness acceleration: up to 50% of DB ($500,000 max), ADL/cognitive triggers, lien design; optional up to 100% of DB with 2% monthly benefit capped at the IRS per diem x 30 S1; ExtendCare chronic illness rider S2; LTC rider, cash indemnity 2%/3%/4% monthly up to 2x the HIPAA per diem S4.
Out of scope: accidental death benefit S1 S2; children’s term S2; disability benefit crediting a monthly amount to the policy S2; additional/annual renewable term riders including additional-insured term S1 S3; surrender value enhancement rider S3; charitable giving benefit (+1% of face) S1; return-of-premium windows on GUL S4; income provider option (installment DB payout) S2; no-lapse guarantee/shadow-account endorsements S1 S2 S4 (see footnote 17).
Variations across insurers#
Crediting style. New-money 12-month rate locks per premium (Symetra CAUL S1) vs periodically declared portfolio rate (Protective S2, Pacific Life S3). Representative choice: portfolio — more common and the simpler modeling default [unverified as to market share].
Guaranteed minimum interest. 2%–3% among fetched forms, correlated with issue era (3% on the 2008 form S3; 2.5% on the 2015 form S2; 2% on the 2014/2023 form S1). Chosen: 2.00%, representative of the post-2021 IRC 7702 rate environment R2 std.
Premium loads. 6%–10% S1 S2 S3; some insurers keep a current-vs-guaranteed gap (6%/9% S1) making the load itself an NGE; others state a single rate S2 S3. Chosen: 6%/9% to exercise the NGE machinery.
Per-policy and per-unit charges. Per-policy $5–$10/month current, $30/month guaranteed max observed S1 S2 S3. Per-unit charge bases differ: initial face S2 vs coverage-layer face with a step-down after year 10 S3 vs duration-varying S1. Chosen: specimen values with the year-10 step-down, because the specimen is the mechanics anchor.
Surrender charges. 9–10 year runoff is standard; expressed as rate per $1,000 by sex/class/age S1 S2 or fixed dollar amount with linear monthly amortization S3. Chosen: 9-year, dollar-per-$1,000, monthly amortization.
COI structure. All fetched products: monthly rate per $1,000 NAAR, guaranteed maxima (CSO-capped), lower current scales, rates varying by issue age/sex/class/duration S1 S2 S3. Chosen: specimen guaranteed table + flat 60% current factor std (current scales are not public — see spec footnote 12).
DB options. A and B universal; C (return of premium) offered by some S1 S3. Chosen: A and B only.
Loans. Fixed-rate with guaranteed spread (0.75% S3; 2.5% S2) vs variable Moody’s-indexed with 3% floor S1. Chosen: fixed with 0.75% spread.
Lapse protection. Short built-in NLG (5 years S1) vs optional shadow-account endorsement S2 vs dedicated GUL S4. Chosen: 5-year NLG disclosed but not modeled (spec footnote 17). The market separates “current assumption” from “lifetime guarantee” focuses, each ~27% of UL exposure, cash accumulation 33% R7.
Vintage caveat. The fetched documents span 2008–2023 form eras; parameter LEVELS are era-representative while MECHANICS are stable across eras (research file caveat). Composite levels here follow the newest-era guarantees (2%) with specimen-era mechanics.
Regulatory context#
NAIC Universal Life Insurance Model Regulation (Model 585). Defines UL and governs valuation (CRVM adaptation via Guaranteed Maturity Premium/Fund and the r-ratio), UL-specific nonforfeiture (retrospective minimum CSV with expense-allowance amortization; surrender charges permissible above that floor), mandatory policy provisions (guarantees stated in the policy; interest credits not conditional beyond 24 months; grace of at least 30 days with notice), and the prescribed annual report to policyowners R1 REG-R5 same document. The composite’s charge/guarantee structure and annual-report-driven disclosure assumptions sit inside this frame.
AP&P Appendix A-585 — the valuation half, and only that half. The requirement the Valuation Manual actually routes a UL reserve to is the AP&P Manual’s Appendix A item A-585, now read in full REG-R155; the GMP/GMF construction above is therefore sourced first-hand rather than through the model regulation. Two things the print settles. It does not name Model #585 anywhere — its “Relevant NAIC Model Laws/Regulations” line names only the Standard Valuation Law (#820) — so “A-585 is Model 585 Section 5” is unsupported by it, and the two texts were not compared REG-R155 REG-R5. And it carries definitions and valuation requirements only: the nonforfeiture floor, the mandatory policy provisions and the annual report to policyowners listed in the paragraph above, together with Model #585’s separate interest-indexed UL requirements, are not in A-585 and keep citing Model #585 R1 REG-R5 REG-R155. A-585 prints no effective date and no number of any kind; every rate, table and factor is delegated to Appendix A-820 by year of issue, so no applicability date may be read off A-585 itself REG-R155 REG-R153.
IRC 7702 (life insurance definition). The contract must pass CVAT or the guideline premium test plus cash value corridor; the composite elects GPT, so the guideline premium limit and the corridor factor table are contractual mechanics S3 R2. For contracts issued after 2020-12-31 the fixed statutory rates were replaced by the dynamic insurance interest rate (2% during the 2021 transition) R2 REG-R13. Exact statutory wording should be re-verified before hard-coding (research file caveat on the automated summary) R2.
IRC 7702A (MEC). The 7-pay test with material-change and retroactive-reduction rules determines MEC status; consequences are distribution taxation changes, not cash flow changes — the insurer-side behavior in the composite is refund of MEC-causing premiums absent owner election S3 R3 REG-R14.
Valuation Manual / VM-20 (PBR). The Valuation Manual became operative 2017-01-01 and PBR an accreditation standard from 2020-01-01 R5; the operative date is printed in operative rules by the AP&P codification of the Standard Valuation Law — A-820 ¶3 applies the principle-based ¶¶23–27 to policies issued on or after “the January 1, 2017, operative date of the Valuation Manual” and ¶4 keeps earlier issues on ¶¶5–22, to which those provisions “shall not apply” REG-R153 ¶¶3–4; the 2020-01-01 accreditation date has no counterpart in A-820, which contains no elective transition, phase-in or company election at all REG-R153. VM-20 sets principle-based reserve requirements (net premium reserve plus deterministic/stochastic components with exclusion tests) for life products including UL REG-R3. This library projects gross liability cash flows only; reserve layers are pointed to, not reproduced (see technical notes).
2017 CSO. The current statutory valuation/nonforfeiture mortality family (composite and smoker-distinct, loaded/unloaded, preferred structure, ANB/ALB variants) R4 REG-R17; mandatory for new issues from 2020-01-01, used for reserves, nonforfeiture, 7702/7702A, and as the cap for UL guaranteed COI rates, terminal age 121 [unverified — from search-result context, not a fetched primary document]. The specimen’s nonforfeiture basis is the earlier 2001 CSO ANB S3.
ASOP No. 2 (non-guaranteed elements). Current credited rate, current COI, and current loads are NGEs: scales must be based on reasonable expectations of future experience, revised only when anticipated experience factors change, and not set to recoup past losses R8 REG-R26 same standard. This constrains how the model’s NGE re-rating logic may behave.
Illustrations (Model 582 / ASOP 24). Sales illustrations for this product operate under the disciplined-current-scale regime with self-support and lapse-support tests R6. Illustration mechanics are out of model scope but explain why current scales are publicly illustrated but not guaranteed.
Reg XXX / AG 38 (secondary guarantees). Relevant only if the no-lapse guarantee or a shadow-account endorsement is modeled: Model 830 Section 7 and AG 38 govern reserves for UL with secondary guarantees on pre-PBR business REG-R6 REG-R7. Excluded with the NLG (spec footnote 17). A citation caution now that the AP&P print has been read: the manual’s A-830 is a flat sequence of paragraphs with no sections at all, so a “Section 7” cite does not resolve against it — the ULSG construction sits at ¶¶29–32 — and the words “Model #830” and “Regulation XXX” appear nowhere in that print REG-R154. A-830 ¶32.b floors the ULSG reserve by the minimum reserves required by “other appendices governing universal life plans” without naming the item, and that cross-reference must not be resolved to A-585 on the A-830 text REG-R154 ¶32.
IIPRC uniform standards. Multi-state UL forms (e.g., the “ICC14”-prefixed Symetra form S1) are filed under the Interstate Compact’s uniform standards for individual flexible premium adjustable life R10 — located but not read; no facts cited from it.
Tax reserves. IRC 807 defines life insurance tax reserves off the NAIC-prescribed method (greater of net surrender value and 92.81% of the CRVM/VM reserve, capped at statutory) REG-R16 — a downstream consumer of the same projected cash flows.