Universal Life Modeling Example

Funding Levels 

• Universal life plans offer the policyholder great flexibility in their use of the plan -- from a term plan to an investment vehicle.

The funding level affects:

• 1. Universal life commissioners reserve valuation method reserves -- In particular the r factor is the ratio of the actual fund value to the guaranteed maturity fund.
• Since r is capped at I00%, using a ratio based on the average fund for all policies may not produce the actual reserve

1994 - Valuation Actuary Symposium - Session 8 - Life and Deferred Annuity Liability Models - Society of Actuaries - 32p