Product Specification#
Status: Draft, 2026-08-03; cross-product [REG-R#] citations extended 2026-08-06 with
the AP&P Manual appendix items read at first hand. Product sources [S#]/[R#] were
accessed 2026-08-03; the [REG-R#] entries carry their own access dates per entry in
sources.md. This document is a standardized composite
specification for reference liability-model implementation. It does not describe any
single insurer’s product. Tags [S#] and [R#] cite the product research notes
(_research/variable-ul.md); [REG-R#] cites the cross-product reference library
(references/regulatory-and-actuarial-references.md; research provenance in
_research/regulatory-actuarial.md, same R-numbering). std marks a
standardization introduced for the reference implementation (not a sourced fact);
every std table row carries a footnote with rationale and the observed range.
Facts the research notes flag as unverified remain flagged here.
Product overview and market role#
Variable universal life (VUL) is a flexible-premium individual life insurance contract whose account value is allocated by the policyholder between (a) variable investment options — subaccounts of a registered separate account, each investing in a corresponding registered fund — and (b) one or more general-account fixed options S1 S2 S3 S4. Death benefits and account values reflect investment experience; guarantees are backed by the insurer’s general-account claims-paying ability S1 S4. For statutory purposes, variable life is life insurance whose amount or duration varies with separate-account investment experience R7.
VUL is a security: the separate account registers as a unit investment trust and the contract registers on SEC Form N-6 R1; cash value is invested in policyholder-selected portfolios, investment return is not guaranteed, and FINRA regulates the selling firms and professionals R13. Prospectuses follow the N-6 item structure (Key Information, standardized fee tables, Standard Death Benefits, Loans, Lapse) R1 S1 S2 S3 S4, with summary-prospectus delivery permitted under rule 498A since July 1, 2020 R2.
The representative design below is the mainstream retail archetype (Prudential VUL Protector S1 / Equitable VUL Optimizer S2 pattern): front premium load plus multi-year per-$1,000 surrender charge, monthly deductions (COI on net amount at risk, per-policy fee, per-$1,000 face charge), an asset-based M&E risk charge on separate-account assets, death benefit options A/B with the §7702 corridor, a general-account fixed option with an interest floor, spread loans, and monthly deductions ceasing at age 121 S1 S2 S4; low-load designs exist as a variation S3 (see “Variations across insurers”).
Representative specification#
Issue rules and policy term#
Parameter |
Representative value |
Basis |
|---|---|---|
Policy form |
Flexible-premium variable universal life; account value in separate-account subaccounts plus a fixed option |
|
Issue ages |
0–85 |
|
Minimum face amount |
$100,000 |
std (1) |
Underwriting classes |
Preferred best through standard, smoker-distinct; substandard via flat extras |
|
Maturity |
None; on the policy anniversary at insured attained age 121, premiums are no longer accepted and monthly deductions cease; the policy continues to death or surrender (asset-based M&E and fund expenses continue) |
|
Renewal / conversion |
Not applicable (permanent coverage; no renewal or conversion mechanism) |
std (2) |
Footnotes:
std Minimum face. Observed: $75,000 for issue ages 18–75, $50,000 (0–17), $100,000 (76–80), $250,000 (81+) S1; a possible $10,000 policy minimum noted in footnotes S2. $100,000 chosen as a single round figure inside the observed band for retail protection/accumulation VUL.
std Statement of absence. The retrieved filings describe no renewal or conversion features for the base policy S1 S2 S3 S4; recorded here as an explicit modeling boundary.
Monthly deductions (taken at each monthiversary from account value)#
Parameter |
Representative value |
Basis |
|---|---|---|
Cost of insurance (COI) |
Monthly rate per $1,000 of net amount at risk (NAAR = death benefit − account value, floored at zero); rates vary by sex, class, attained age, band, duration |
|
COI guaranteed maximum basis |
2017 CSO, sex-distinct smoker/nonsmoker ultimate ANB tables |
|
COI rate cap |
$83.34 per $1,000 per month (observed $83.33–$83.34 across filings; ≈ 1/12 of $1,000 — the monthly rate that fully consumes the NAAR near attained age 120/121; interpretation unverified) |
|
COI current scale |
Input scale; default placeholder = 50% of guaranteed 2017 CSO maxima; representative disclosed anchor: male 45 standard nonsmoker year 1 — guaranteed $0.22, current $0.04 per $1,000 |
|
Per-policy administrative charge |
$10.00 per month, all years |
|
Per-$1,000 face charge |
$0.20 per $1,000 of initial face amount per month, all years; current = guaranteed |
Footnotes: 4. std NAAR floor at zero. Sources define the net amount at risk (NAAR) as death benefit − account value S2; the explicit floor at zero (corridor keeps DB ≥ AV in normal operation) is a modeling standardization. 5. std Current COI proxy. Full current COI tables by age/sex/class/duration are not publicly disclosed — only min/max/representative rates appear in prospectuses; actual scales live in policy data pages and actuarial memoranda; a model needs a proxy such as a percentage of 2017 CSO [unverified, recorded as a research gap]. Observed representative points: current $0.02–$83.34 (rep female 43 preferred best $0.13) S1; $0.01–$83.34 (rep male 35 elite $0.08) S2; max $83.33333/min $0.02667 (rep max $0.17771) S3; guaranteed $0.01–$83.34 (rep male 45 std NT yr 1: gtd $0.22, curr $0.04) S4. 50%-of-CSO is a placeholder for the current scale, to be replaced per model point; disclosed year-1 current/guaranteed ratios are much lower (select effect). 6. std Per-$1,000 charge shape. Level $0.20 is Equitable’s representative charge on initial base face, payable all years S2. Observed range: $0.07–$8.21 per $1,000 (rep $0.21; current first 7 years only) S1; $0.15–$0.47 (rep $0.20) S2; up to $0.31263 (rep $0.1262) S3; guaranteed $0.09–$11.39, current $0.00–$3.81 plus a $29–$40 coverage charge S4. Setting current = guaranteed = $0.20 all years avoids a second NGE dimension.
Asset-based charges (separate-account assets)#
Parameter |
Representative value |
Basis |
|---|---|---|
M&E risk charge — current |
0.45% effective annual rate, deducted daily against variable investment options (reference model approximates monthly) |
|
M&E risk charge — guaranteed maximum |
0.60% effective annual |
std (8) |
Fund operating expenses |
Per-subaccount expense ratios borne via unit values; observed lineup range 0.29%–1.18% |
S1 (9) |
Footnotes: 7. std Deduction frequency. S1 deducts daily via unit values; S2/S3/S4 deduct monthly S2 S3 S4. The reference model applies the asset charge in the monthly unit-value factor (see technical notes) — a monthly approximation of daily accrual. 8. std Guaranteed M&E ceiling. Observed: 0.45% (S1, level not split current/guaranteed in the fee-table extract) S1; 1.00% years 1–10 / 0.50% after (Equitable) S2; 0.6% maximum, guaranteed for policy years 1–20 (Lincoln) S3; 0.36% max / 0.20% current (Pacific Life) S4. 0.60% adopts the Lincoln ceiling as a mid-range guaranteed maximum over the S1-based 0.45% current rate. 9. Cross-insurer fund-expense ranges: 0.55%–2.88% gross / 0.54%–2.57% net S2; 0.46%–2.54% S3; 0.08%–1.93% S4. The reference model collapses the lineup to two representative subaccounts (equity 0.75%, bond 0.55% expense ratios) — std, chosen inside the observed ranges; see technical notes.
Surrender charges and transaction fees#
Parameter |
Representative value |
Basis |
|---|---|---|
Surrender charge period |
First 14 policy years; applies on lapse, full surrender, or face decrease (pro rata on decreases) |
|
Surrender charge level |
Initial $18.00 per $1,000 of face, declining linearly to zero at the end of policy year 14 |
std (10) |
Withdrawal fee |
$25 per withdrawal; minimum withdrawal $500 |
|
Transfer fee |
12 free transfers per year; $25 each thereafter |
Footnotes: 10. std Surrender charge scale. Complete per-$1,000 schedules by issue age/class are in contract data pages, not prospectus bodies (research gap); only ranges, representative values, and durations (10/14/15 years) were extractable. Observed: initial $5.31–$54.56 per $1,000 (rep female 43: $17.55), 14 years S1; $11.40–$48.50 (rep male 35: $18.29), 10 years (+10 after face increases) S2; none S3; max $49.72, 15 years per coverage layer S4. $18/1,000 sits on the two representative observed points; linear runoff is a standardized shape.
Death benefit options and §7702 mechanics#
Parameter |
Representative value |
Basis |
|---|---|---|
Option A (Type A / Option 1) |
DB = face amount (level); NAAR shrinks as fund grows |
|
Option B (Type B / Option 2) |
DB = face amount + account value |
|
Corridor minimum |
DB ≥ corridor factor × account value; representative GPT factors 250% (ages ≤40), 215% (45), 185% (50), 150% (55), 130% (60), grading to 100% at ages 90–95 |
|
§7702 test |
Guideline Premium Test (GPT) for the baseline model point; CVAT/GPT elected at issue in practice |
|
DB option changes |
Permitted subject to approval; face adjusted so total DB is unchanged at the change date |
|
Automatic DB increase |
Insurer may increase DB to preserve §7702 qualification and refuse premium breaching guideline limits |
|
DB offsets |
Death benefit payable reduced by outstanding policy debt and, during grace, amounts needed to keep the policy in force |
Footnotes: 11. std Corridor interpolation. S2 quotes quinquennial representative factors; §7702(d) prescribes 250% for attained ages 0–40 declining to 100% at ages 90–95 R3. The reference model linearly interpolates between the quoted ages and grades to 100% at 95. 12. std Test election. Both tests are observed; GPT chosen for the baseline because the corridor-factor mechanics are fully specified by the sourced factor table S2 R3. CVAT variation: alternate DB = account value × reciprocal of the net single premium at 2% interest and 2017 CSO mortality (101% above age 99) S2; the 2% rate traces to the post-2020 §7702(f)(11) “insurance interest rate” with its 2021 transition rate R3.
Fixed option and policy loans#
Parameter |
Representative value |
Basis |
|---|---|---|
Fixed option crediting |
General-account option, credited daily at a declared effective annual rate; guaranteed minimum 1.0% |
|
Current declared rate (baseline) |
1.0% (= floor) |
std (13) |
Fixed-option transfer-out limit |
Greater of 25% of option value or $2,000 per contract year |
|
Loan value |
99% of cash value in variable options plus 100% of the remainder |
|
Standard loan (years 1–9) |
Charged 2.0% effective annual; loaned amount credited 1.0% (net spread 1.0%) |
|
Preferred loan (from 10th anniversary) |
All loans: charged 1.05% vs credited 1.0% (net spread 0.05%) |
|
Loan interest |
Due each contract anniversary; capitalized if unpaid |
|
Loan collateral |
Loaned amounts moved from investment options to a general-account loan account |
|
Excess-debt default |
Debt ≥ fund less surrender charge triggers default |
Footnotes: 13. std Declared rate. Current declared fixed-account crediting rates are nonguaranteed and not stated numerically in the filings beyond floors (research gap). Baseline sets declared = floor; observed floors: 1.0% S1, 1.5% (GIO) S2, 2.0% S4, loan account ≥0.25% S3.
Grace, lapse, reinstatement#
Parameter |
Representative value |
Basis |
|---|---|---|
Default test |
Policy in default when fund less surrender charge less debt ≤ 0 (or debt ≥ fund less surrender charge), unless a no-lapse guarantee applies |
|
Grace period |
61 days from notice; notice premium ≈ 3 months of deductions; death benefit during grace equals the death benefit in effect (net of amounts due) |
|
Reinstatement |
Within 3 years of termination with evidence of insurability and payment covering ≈3 months of deductions plus premium charge |
Contractual mechanics#
Notation here matches the technical notes (technical-notes.md); formulas are stated
per policy month t with monthiversary processing.
Premium provisions. Premiums are flexible in amount and timing after the required initial premium; minimum subsequent premium $25 S1. Each premium P is reduced by the premium load γ (current 4.0% std, guaranteed ≤ 6.0% S2) and the net premium P·(1−γ) is allocated to subaccounts and the fixed option per the policyholder’s allocation percentages (whole-percentage allocations; a model-point attribute). The insurer may refuse premiums that would breach §7702 guideline limits or force a death-benefit increase, and MEC-creating premium must be removed timely S1 R3 R4.
Account value. Account value AV = Σᵢ subaccount values + fixed-option value + loan-account value S1 S2 S3 S4. Subaccount values evolve with unit values driven by gross fund performance less fund operating expenses less the asset-based M&E charge (daily in the contract S1; monthly approximation in the model std). The fixed option accrues daily interest at the declared rate, floor 1.0% S1.
Monthly deduction. At each monthiversary, the insurer deducts from account value:
MD_t = COI_t + e_pol + e_face · F_0/1000
COI_t = c_t · NAAR_t / 1000, NAAR_t = max(0, DB_t − AV_t)
with e_pol = $10.00 S2 S4, e_face = $0.20 per $1,000 of initial face F_0 S2, and c_t the current monthly COI rate per $1,000, bounded by the 2017 CSO guaranteed maximum S2 S4 R12 and capped at $83.34 S1 S2 S4. The deduction is taken from unloaned accounts pro rata std. Current charges are nonguaranteed elements: the insurer may raise them up to guaranteed maxima, by class, and cannot recoup prior losses or distribute prior gains S1 R11.
Death benefit. Option A: DB_t = max(F_t, κ_t·AV_t). Option B: DB_t = max(F_t + AV_t, κ_t·AV_t). κ_t is the GPT corridor factor at attained age S2 R3. The amount payable at death is DB_t minus outstanding policy debt and any amounts required during grace S1 S3.
Charges and credits. The asset-based M&E charge (current 0.45% p.a. S1, guaranteed max 0.60% std) and fund expense ratios reduce unit values; all other charges are explicit deductions. The baseline excludes insurer-specific credits — Prudential’s persistency credit (0.40% p.a. of unloaned fund from the 9th anniversary) S1 and Equitable’s Investment Expense Reduction (≥0.15% daily unit-value credit) S2 are documented as variations std.
Loans. A loan up to the loan value (99% of variable cash value + 100% of the remainder S1) moves collateral from the investment options into a general-account loan account S3. Interest is charged at 2.0% (standard) or 1.05% (preferred, from the 10th anniversary) and the loan account is credited 1.0% S1; interest is due each anniversary and capitalized if unpaid S1. Debt reduces the death benefit and surrender proceeds; debt ≥ fund less surrender charge triggers excess-debt default S1. Overloan protection riders exist (exercise charges 3.5% of fund S1; 1.12%–4.52% of accumulated value S4) but are out of the baseline.
Withdrawals. Minimum $500, $25 fee; remaining cash surrender value must cover two months of deductions S1. Under Option A a withdrawal reduces the face amount (proportionate reduction S2) and can trigger a pro-rata surrender charge S1.
Grace, lapse, reinstatement. Default occurs when AV − surrender charge − debt ≤ 0 unless a no-lapse guarantee applies S1; a 61-day grace period follows notice, with a notice premium of ≈3 months of deductions S1, consistent with the Model 270 minimum grace and DB-during-grace requirements R8. Reinstatement within 3 years requires evidence of insurability and ≈3 months of deductions plus premium charge S2.
Age 121. From the anniversary at attained age 121: no further premiums accepted, no monthly deductions; asset-based charges and fund expenses continue; the policy continues to death or surrender; lapse only from excess debt S1 S2 S4.
Riders#
In scope (specified; excluded from the baseline projection std):
No-lapse guarantee (NLG) rider — documented as a variation, not in the baseline. Observed forms: built-in 5-year limited guarantee plus premium-funded lapse protection rider from year 6 S1; age-graded no-charge rider guaranteeing 15 years at issue ages 0–70 grading to 5 years at 80+, subject to specified guarantee premiums, terminating if debt exceeds account value S2; premium-test no-lapse provision S3; priced flexible-duration rider ($0.00–$0.15 per $1,000 NAAR monthly, rep $0.05) tracked via a shadow fund with notional 5.50% no-lapse premium load and 10% excess premium load, funds floored at zero S4. For shadow-account mechanics see the guaranteed-UL technical notes (
products/guaranteed_ul/technical-notes.md; research provenance_research/guaranteed-ul.md); statutory note: VUL with secondary guarantees is a distinct valuation category (code 090) in the ULSG reserving category under VM-20 R7.Overloan protection rider — prevents lapse from excess debt; one-time exercise charge 3.5% of the fund S1 or 1.12%–4.52% of accumulated value (rep male 85: 2.97%) S4; Equitable instead offers a Loan Extension Endorsement forcing DB option A S2. Interacts with loan mechanics; excluded from baseline.
Out of scope (listed only; observed charges recorded in the research notes): accelerated death benefit / chronic & terminal illness riders (BenefitAccess, Living Needs S1; Living Benefits, LTC Services S2; Premier LTC, Terminal Illness S4); layered term riders (ART/Scheduled ART/SVER S4); disability waiver riders S1 S2; children’s term S1 S2; accidental death S1; guaranteed insurability S2; enhanced early cash value riders S1 S2; charitable legacy S2; index-linked account options on the VUL chassis (Equitable MSO II S2; Pacific Life Indexed Fixed Options S4).
Variations across insurers#
Load structure. Two archetypes: (a) front-loaded + back-loaded traditional VUL — premium loads 6%–7.5% max (current 3%–4%) plus 10–15 year surrender charge S1 S2 S4; (b) low-load/no-load — no premium load, no surrender charge, compensated through asset-based and per-$1,000 charges S3. The baseline follows (a) because it remains the dominant retail pattern.
M&E / asset charge. 0.20% current/0.36% max monthly S4; 0.45% daily S1; 0.6% max monthly S3; 1.00%/0.50% duration-tiered monthly S2. Baseline: flat 0.45% current under a 0.60% ceiling — mid-range, avoids duration tiering.
COI basis. All quote per-$1,000-NAAR monthly rates capped near $83.33–$83.34; guaranteed maxima moved from 2001 CSO (older generations, e.g., S1) to 2017 CSO S2 S4; two-tier COI structures and face-amount banding exist S1; gender-neutral policies use an 80% male/20% female blended 2017 CSO table S2. Baseline: 2017 CSO sex-distinct, no banding — the current-generation norm.
Death benefit options. A and B universal S1 S2 S3 S4; return-of-premium Option C (DB = face + premiums − withdrawals, subject to a limit) only at Pacific Life among the four S4; Lincoln pivots on a Target Age with an expected Option 2 → Option 1 switch S3. Baseline: A and B only.
Secondary guarantees. From short built-in guarantees S1 S3, age-graded 15→5-year riders S2, to priced flexible-duration shadow-fund riders S4. Baseline excludes the NLG (see Riders) so that base-contract lapse mechanics stay clean; the guarantee is a documented variation.
Fixed/indexed options. Floors 1% S1, 1.5% S2, 2% S4; indexed accounts bolted onto the VUL chassis S2 S4. Baseline: single fixed option, 1% floor — S1’s fixed option, whose transfer-out and loan mechanics the baseline already adopts; indexed options are separately-prospectused add-ons out of scope.
Loans. Net spreads 0.05%–1.0% duration-dependent S1; Moody’s-linked charged rate, spread 1% → 0% from year 11 S2; flat 0.25% S3 S4. Baseline: S1’s fixed 2.0%/1.0% then 1.05%/1.0% — fully specified numerically in the source.
Credits. Persistency credit 0.40% from year 9 S1; unit-value expense reductions S2; duration step-downs of loads/M&E S1 S2. Excluded from the baseline for parsimony; material for calibration to any specific insurer.
Regulatory context#
Federal securities law. VUL contracts are securities registered on Form N-6 by separate accounts organized as unit investment trusts R1; the 2020 amendments (rule 498A) allow summary-prospectus delivery with the statutory prospectus online R2. FINRA regulates the distributing firms and representatives; suitability framing applies R13.
NAIC variable life regulation. Model 270 (Variable Life Insurance Model Regulation) sets insurer qualification, policy requirements (including grace-period minimums — flexible-premium grace ending not less than 61 days after specified notice, with DB during grace equal to the DB in effect), separate-account rules, and requires reserves for variable benefits to be held in the separate account on a basis consistent with the Standard Valuation Law R8; it appears as A-270 among the valuation requirements in the Valuation Manual appendices R7. That AP&P print, A-270, has since been read alongside A-585 in the free As of March 2026 manual, but no reference id was assigned to it, so nothing in this library is stated or cited from its text; everything above rests on Model 270 itself R8. The UL Model Regulation (Model 585) applies to individual UL except variable UL, which is carved out to the variable-products rules and federal securities law REG-R5 — but the AP&P appendix print does not carry that carve-out. A-585 prints definitions and valuation requirements only, no scope section and no applicability threshold of any kind, and its ¶7 definition of a universal life insurance policy turns solely on separately identified interest credits and mortality and expense charges, saying nothing about a separate account REG-R155. The carve-out is Model #585’s own text REG-R5, and Model #585 was not re-read against the appendix print, so whether the A-585 CRVM adaptation reaches a variable contract is open, not settled REG-R155.
Statutory reserves (VM-20). VUL is individual life subject to VM-20 principle-based reserves for policies issued on/after the Valuation Manual operative date: minimum reserve = NPR floor plus the excess of max(DR, SR) over aggregate NPR (less due/deferred premium asset), with exclusion tests; variable life cannot use the SET certification method R7. That operative date is 1 January 2017, now carried at first hand by the AP&P print of the SVL: A-820 ¶3 applies the principle-based ¶¶23–27 to policies issued on or after it, and ¶4 keeps earlier issues on ¶¶5–22, to which the principle-based provisions “shall not apply” REG-R153. VUL without secondary guarantees is valued in the “All Other” category (product code 080); with secondary guarantees, in the ULSG category (code 090) R7 — but that category is VM-20’s own and does not carry the XXX secondary-guarantee construction with it: A-830 excludes variable life and variable universal life outright (¶3.a.iii, ¶3.a.iv), so that appendix does not reach this product at all REG-R154. The formulaic layer under the NPR is A-820, which reaches a varying-amount, varying-premium contract through its ¶13.a extension of CRVM REG-R153, plus the A-585 universal life adaptation if it reaches a variable contract — an open question, see above REG-R155. GMDB reserves for variable life are addressed by AG XXXVII, separate-account investments by AG XXIII R7. Current edition: Valuation Manual, Jan. 1, 2026 REG-R3; the SVL is Model 820 REG-R1.
Illustrations. The Life Insurance Illustrations Model Regulation (Model 582) explicitly excludes variable life REG-R4; VUL sales illustrations are instead governed by the securities disclosure regime (N-6/498A) R1 R2 and FINRA communications rules (Rule 2211 identified but not fetched) R13.
Federal tax — product qualification. §7702 requires CVAT or GPT-plus-corridor qualification, with the post-2020 dynamic “insurance interest rate” (2% transition for 2021 issues) R3; §7702A applies the 7-pay test, with MEC status triggering less-favorable distribution taxation and material changes restarting the test R4. Separate-account diversification under §817(h) and Treas. Reg. §1.817-5 (55/70/80/90 quarterly tests, look-through for insurance-dedicated funds) is a condition of life-insurance treatment R5 R6.
Nonguaranteed elements. Current COI scales, loads, declared rates, and credits are NGEs governed by ASOP No. 2: determination policy, policy classes reflecting anticipated experience, and scales based on reasonable expectations of future experience, not recouping past losses or distributing past gains R11.