Product Specification#
Status: Draft, 2026-08-03 (underlying research accessed 2026-08-03).
Scope note: this is a standardized composite specification for reference modeling — it does
not describe any single insurer’s product. It is assembled from the primary and regulatory
sources catalogued in sources.md and extracted in _research/whole-life.md. Tags
[S#] (primary product documents) and [R#] (regulatory/actuarial references from the product
research file) and [REG-R#] (cross-product reference library,
references/regulatory-and-actuarial-references.md; research provenance in
_research/regulatory-actuarial.md, same R-numbering) mark sourced facts. std marks standardizations
introduced for the reference implementation; every std table row is footnoted with its
rationale and the observed range across insurers. Facts the research file could not verify are
flagged unverified.
Product overview and market role#
Whole life (WL) insurance is permanent life insurance with level guaranteed premiums, a level guaranteed face amount, and a schedule of guaranteed cash values that reaches the face amount at age 100 (the endowment-at-100 design), with coverage in current policy forms continuing to a contractual maturity at age 121 [S1] [S3]. The mainstream U.S. product is participating (par) WL sold predominantly by mutual insurers: policies share in divisible surplus through annual Board-declared dividends that are not guaranteed [S1] [S3] [S4]. The surveyed mutuals have paid dividends without interruption for well over a century: one has done so since 1847 [S12], a second since 1854 [S9], a third since 1868 [S2] and a fourth since 1872 [S4]. That fourth carrier alone expects a $9.2 billion dividend payout for 2026, of which roughly $7.9 billion goes to whole life policyowners [S5].
Product menus converge on a common chassis: a level-pay policy (premiums payable to roughly age 95–121), limited-pay variants (10-pay, 12/15-pay, 20-pay, paid-up-at-65), and, at some carriers, accumulation-oriented short-pay designs (one such design is 10-pay with a $10,000 minimum annual premium at issue ages 0–60 [S10]; another offers payment periods from 5 years to age 100 [S13]).
A structurally distinct sub-market is non-participating simplified-issue final-expense (FE) WL: small faces ($2,000–$50,000), issue ages 45+, health-question underwriting without exams, level or graded death benefits, and an explicit policy fee [S6] [S7] [S8]. This library models both: a primary par design (“RefWL-Par”) and a secondary FE variant (“RefWL-FE”).
For liability modeling, WL’s economics are dominated by the guaranteed cash value schedule, the dividend scale (interest, mortality, and expense margins under the contribution principle [S4] R6), paid-up additions (PUA) compounding [S14], policy loans with direct recognition [S1] [S3], and low, level lapse behavior on mature par blocks (see technical notes).
Representative specification#
Secondary design: non-participating simplified-issue final-expense WL (“RefWL-FE”)#
Parameterized from the FE carrier’s simplified-issue plan (level and graded benefit variants) [S6] [S7] [S8].
Table 5 — RefWL-FE#
Parameter |
Representative value |
Basis |
|---|---|---|
Participation |
Non-participating |
unverified — no retrieved document for this plan mentions dividends [S6] [S7] [S8]; modeled non-par (q) |
Underwriting |
Simplified issue: health questions, Rx/MIB checks, tele-interview; no exams |
[S6] [S7] |
Level plan |
Issue ages 45–85; face $2,000–$50,000 ($5,000 min in WA; $2,000–$40,000 in CA) |
[S6] [S7] [S8] |
Graded plan |
Issue ages 45–80; face $2,000–$20,000 |
[S6] [S7] |
Graded death benefit |
Natural-cause death in policy years 1–2 pays 110% of premiums paid; accidental death pays full face from day 1 |
[S6] [S7] |
Classes |
Level: Standard Tobacco / Non-tobacco; Graded: single Standard class |
[S7] |
Sample annual premium rates per $1,000 |
Level male NT: age 45 $24.99, age 65 $59.05, age 85 $202.19; Level female NT age 65 $42.48; Graded male age 65 $103.00, female age 65 $69.50 |
[S7] (California edition) |
Policy fee |
$36 per year, added to all premiums |
[S7] |
Modal factors |
Semi-annual 0.52; quarterly 0.275; monthly 0.089 |
[S7] |
Guaranteed values |
Builds cash value (loanable); premiums never increase; benefits never decrease |
[S8]; CV basis not published — std (r) |
Maturity |
Age 100 (120 in FL); face less loans and loan interest paid at maturity |
[S8] |
Suicide exclusion |
2 years (1 year in ND); return of premium less loans |
[S7] |
Representative model point |
Male NT, issue age 65, $15,000 level plan: annual premium 15 × $59.05 + $36 = $921.75 |
[S7] rates; model-point choice std (s) |
Footnotes:
(q) Participation status is a research gap: final-expense WL from the FE carrier is generally non-participating unverified. Modeled as non-par; confirm from a specimen policy.
(r) std FE guaranteed CV basis: no CV table or basis is published in the retrieved documents. The reference implementation reuses the RefWL-Par nonforfeiture machinery (2017 CSO / 4%, endow at 100) for the FE variant’s CV schedule as a standardization.
(s) std model point: age-65 male NT at $15,000 sits centrally in the issue-age and face ranges [S6] [S7]; the premium is computed from the sourced CA rate table [S7].
Contractual mechanics#
Notation here is shared with the technical notes: policy year t = 1, 2, …, issue age x,
face F, gross annual premium G, guaranteed cash value at the end of year t CV_t,
dividend D_t, PUA face PUAF_t, PUA cash value PUACV_t, loan balance L_t.
Death benefit provisions#
Following one carrier’s contractual formula [S1]:
DB_t = F (base face)
+ PUAF_t (paid-up additions face)
+ term rider face (if any)
+ dividend accumulations (option C balances)
+ dividends credited at death (not modeled — [std], Table 3 note (m))
+ unwaived premium refund beyond month of death (not modeled — [std])
− L_t − accrued loan interest
− premium due and unpaid
− accelerated benefits previously taken
In the reference model with the PUA dividend option: DB_t = F + PUAF_t − L_t std
(simplification of the [S1] formula to the modeled components).
Guaranteed cash value mechanics#
Guaranteed cash values are contractual, printed in the policy, and must be at least the Standard Nonforfeiture Law minimum: cash surrender value ≥ present value of future guaranteed benefits (including existing paid-up additions) minus the present value of future adjusted premiums, minus indebtedness R1. Adjusted premiums are a uniform percentage of gross premiums such that their present value at issue equals the present value of guaranteed benefits plus the statutory acquisition-expense allowance: 1% of the amount of insurance plus 125% of the nonforfeiture net level premium, with the NNLP capped at 4% of the amount R1. The nonforfeiture basis for current issues is 2017 CSO mortality R3 at the Valuation-Manual nonforfeiture interest rate (historically 125% of the statutory valuation rate, floored at 4.00% R1); the representative contract uses 4.00% [S1].
Contractually: CV_t grows on the guarantee basis and equals F at age 100 [S1] [S3];
PUACV_t equals PUAF_t at age 100 [S1]. The reference model reads CV_t from a table input
generated on the 2017 CSO / 4% basis (technical notes give both the conceptual formula and the
practical treatment).
Dividends and credits#
Dividends are declared annually by the Board and are not guaranteed [S1] [S3] [S4]. The determination follows the contribution principle: divisible surplus is allocated to policies in proportion to their contribution to it R6. One carrier’s published mechanics are the model’s anchor: the annual dividend equals the excess of an experience-based accumulated value — beginning guaranteed value plus premium, less a mortality-and-expense charge based on actual company results, accumulated at the dividend interest rate — over the ending guaranteed value [S4]. Equivalently, a three-factor formula with interest, mortality, and expense margins against the guaranteed basis; the exact carrier parametrizations are proprietary, so the reference parametrization is std (technical notes). Dividend scales vary in practice by sex, class, band, issue age, duration, and loan status under direct recognition [S3] [S1].
Dividend options (union across carriers, [S2] [S3]): cash; reduce premium (excess to cash or to PUAs); accumulate at interest (rate declared annually); paid-up additions (default [S1] [S2]); one-year term variants (OYT up to cash value, up to 2× face, or to a target face with PUA balance — six lettered dividend options at one carrier [S2]; at another, OYT = guaranteed CV via a term-purchase rider [S3]); premium offset [S2] [S3]; loan/loan-interest repayment [S2] [S3]. The reference model implements cash, premium reduction, accumulation, and PUA (Table 3).
Each dollar of dividend under the PUA option buys 1 / NSP_{x+t} of paid-up face, where
NSP_{x+t} is the attained-age net single premium on the guarantee basis std (Table 3
note (k)). PUAs are themselves dividend-eligible [S14], increase the death benefit dollar-for-
dollar of face, and are surrenderable at their cash value [S9]/std.
Policy loans#
Loans are available at any time (including policy year 1) up to the cash value of base plus additions less loans and loan interest to the next anniversary [S1]. The representative loan rate is fixed 6% in arrears (5.66038% in advance) with direct recognition: dividends on loaned values reflect loan-rate interest rather than the portfolio DIR [S1] [S3]. Unpaid loan interest capitalizes on the anniversary [S1]. Loans and accrued interest reduce death proceeds and surrender values [S1] [S3] [S9]. Market alternatives — one carrier’s electable variable loan rate (Moody’s-linked, 4.5% floor, no direct recognition) [S1] and another’s default adjustable loan rate (no direct recognition) [S3] — are out of scope. Sustained heavy loan utilization can trigger overloan protection mechanics (one carrier’s rider: forced RPU when the loan exceeds 99% of CV, insured ≥ 75, duration ≥ 15) [S11]; not modeled.
Grace, lapse, and reinstatement#
31-day grace [S1] [S3]. On default, the elected (or automatic std) nonforfeiture option
applies: cash surrender (CV_t + PUACV_t + dividend accumulations − L_t), reduced paid-up
(face = surrender value divided by the attained-age NSP), or extended term insurance (level
term of face DB_t − L_t for the duration purchasable by the surrender value at the
attained age) [S3] R1; the paid-up benefit must be at least actuarially equivalent to the cash
surrender value R1. Reinstatement within 5 years with evidence of insurability and payment of
arrears with 6% compound interest [S1] [S3].
Maturity, conversion, and exchanges#
The contract matures on the anniversary nearest age 121 [S1]; the guaranteed CV equals face at
age 100 and the PUA CV equals PUA face there [S1], so from age 100 the policy is economically
an endowment riding at face. The reference model pays F + PUAF as a maturity benefit at age
100 and terminates std (technical notes). Term-to-WL conversions are permitted market
practice [S1] and enter the model only through model-point provenance; 1035 exchanges [S1] [S3]
are out of scope.
Riders#
In scope#
Paid-up additions rider (flexible PUA purchases). Policyowner payments (scheduled plus catch-up/unscheduled) purchase paid-up additions directly. Observed mechanics: one carrier’s rider — expense charge 7.5% of each payment on 10/15-pay, 10% on other products, guaranteed maximum at the same level; minimum initial scheduled payment $300/yr; +10%/yr increases without evidence up to 100% cumulative [S3]; another carrier’s PUA riders cap payments at an Annual Payment Limit set at issue [S11]. Reference parametrization: PUA rider premium
A_tbuysA_t × (1 − 0.10) / NSP_{x+t−1}of paid-up face (BOY payment, attained agex+t−1) — a 10% load std chosen from the observed 7.5%–10% current-charge range [S3] (guaranteed maxima equal the current charges at that carrier [S3]). Rider PUAs merge into the same PUA account as dividend PUAs.Term-blend rider (target face with crossover). A one-year-term plus PUA blend maintains a Target Face Amount: each year the dividend (plus rider premium) first buys OYT for the gap between target and permanent face, remainder buys PUAs; as PUAs grow, term is displaced until crossover to fully paid-up coverage. Observed: two lettered dividend options at one carrier (target ≤ 9× base; increasing-target variant) [S2]; a blend rider at a second (target ≤ 300% of base, expense charge current 8–10% capped 10–12%, requires a companion dividend option) [S3]; and a term-and-PUA blend rider at a third [S11]. The reference model implements a simplified blend (technical notes) with target = 2× base face std (inside all observed caps).
Out of scope (present in market, listed for completeness)#
Waiver of premium on disability (6-month wait, own-occ definitions, terminates ~65) [S1] [S3] [S11]; accidental death benefit [S6] [S11]; guaranteed insurability / purchase options [S3] [S11]; children’s term [S11]; accelerated death benefit for terminal illness (near- universal, 12-month prognosis) [S6] [S11] [S12]; chronic illness / LTC acceleration and LTC riders with lien mechanics [S3] [S11] [S12]; index participation features [S1]; overloan protection [S11]; exchange-of-insured and other business riders [S1] [S3] [S11]; FE accidental death rider (additional DB = face) [S6].
Variations across insurers#
Premium period menus differ but converge on level-pay-to-~100/121 plus {10, 12/15, 20}-pay plus paid-up-at-65; every surveyed carrier offers a 10-pay [S1] [S3] [S10] [S13]. Representative choice: pay-to-100 base + 10/20/65 variants — the intersection of the menus.
Guaranteed CV interest: one rate for all products at one carrier (4%) vs. product-specific 2%–3.75% at another (with 0% after age 100) [S1] [S3]. The guarantee rate must therefore be a per-product model parameter. 4.00% chosen: it is the first carrier’s contractual basis and the Model 808 floor [S1] R1.
First-year dividend: paid by one carrier [S3], not paid by another [S1]. Chosen: none in year 1 (Table 3 note (j)).
Loan regimes: fixed-with-direct-recognition vs. variable/adjustable-without-direct- recognition; one carrier defaults to fixed 6% with DR (VLR electable at year 10) [S1], a second defaults to ALR without DR (fixed 6% + DR electable at issue) [S3], and a third’s loan rate is variable [S9]. Direct recognition is always paired with the fixed rate [S1] [S3]. Chosen: fixed 6% with DR — it is the regime that interacts with the dividend scale and therefore the one worth modeling explicitly.
Dividend banding by face exists at one carrier (level-pay, $1M+) and at another (all products, multiple bands) [S1] [S3]. Not modeled: a single-band reference policy avoids carrying band schedules.
Term-blend mechanisms are universal but carrier-named — three of the surveyed carriers each brand their own [S2] [S3] [S11]; a single generic blend rider represents them.
Policy fee: $0 / $50 / $36 observed [S1] [S3] [S7] — see Table 2 note (d).
Accumulation-oriented WL (short-pay, early-CV designs at three of the surveyed carriers [S3] [S9] [S10] [S13]) is represented only through the 10-pay variant; early-CV enhancement mechanics are not separately modeled.
FE WL differs structurally (tiny faces, 45+ issue, simplified issue, graded DB tier, explicit fee, endow at 100, no dividends mentioned) [S6] [S7] [S8] — hence the separate RefWL-FE variant rather than parameter overrides on RefWL-Par.
Regulatory context#
Standard Nonforfeiture Law (NAIC Model 808). Sets the minimum cash surrender values and paid-up nonforfeiture benefits that define WL’s guaranteed value floor: the adjusted-premium method with the 1%-of-amount + 125%-of-NNLP expense allowance, actuarial equivalence of paid-up options, smooth progression of CV schedules, and the nonforfeiture interest rule (historically 125% of the valuation rate, min 4.00%; Valuation-Manual-prescribed for current issues) R1. The representative 4%/2017 CSO guarantee basis is exactly this law’s current operative basis [S1] R1 R3.
Standard Valuation Law (NAIC Model 820) and the Valuation Manual. Model 820 is the legal
root of statutory reserving (CRVM, minimum standards, and — post-2009 amendments — the
principle-based valuation sections that make the Valuation Manual operative) REG-R1. The
law is codified in the AP&P Manual as Appendix A-820, which has now been read in full and
supplies what this library previously took at one remove REG-R153. Its ¶11 prints the CRVM
this product runs on — modified net premiums as a uniform percentage of the respective
contract premiums, an expense allowance capped at the net level annual premium on the
nineteen-year premium whole life plan at an age one year higher than the issue age, and a
reserve that is “the excess, if any” — with no discrepancy against the Model 820 print
REG-R153 ¶11. Its ¶¶7–10 make the valuation interest rate computable rather than merely
named: I = .03 + W(R1 − .03) + (W/2)(R2 − .09) rounded to the nearer quarter of 1%, on the
lesser of the 36- and 12-month Moody’s seasoned-corporate-bond averages ending June 30 of the
year preceding issue, with W from the ¶8.a life table by guarantee duration — .50 to
10 years, .45 over 10 to 20, .35 over 20 — and a life-only half-of-1% stability rule against
the published prior-year rate REG-R153 ¶¶7–10. W is a per-model-point lookup, not a product
constant: RefWL-Par runs to maturity at 121 and always takes .35, while RefWL-FE matures at 100,
so its issue ages 80–85 fall in the .45 band.
Its ¶16 is the aggregate nonforfeiture-basis floor, aggregate rather than seriatim and
excluding disability and accidental death benefits REG-R153 ¶16. Two limits stay: A-820
never names the 2017 CSO — ¶5.a prescribes the 2001 CSO for standard-basis ordinary issues
from 1 January 2004, later tables entering only through its forward reference or through the
Valuation Manual (¶23), so this product’s 2017 CSO basis is sourced to VM-02 R3, not to
A-820; and A-820 carves preneed policies out to Appendix A-817, which was not
retrieved REG-R153 ¶5 REG-R110. For ordinary life issued on/after 2020-01-01 — the PBR
accreditation year; the trigger A-820 ¶¶3–4 actually print is issue on or after 1 January
2017, with earlier issues grandfathered onto ¶¶5–22 and the PBR provisions stated not to
apply to them, and with no elective transition, phase-in or company election anywhere in
A-820 REG-R153 ¶¶3–4 — VM-20 governs: a seriatim net premium reserve on
2017 CSO, plus deterministic and stochastic reserves unless exclusion tests are passed;
traditional par WL typically passes the deterministic exclusion test because valuation net
premiums do not exceed the substantial guaranteed gross premiums, leaving NPR-only blocks
R3. Companies under the Life PBR Exemption (< $300M individual life premium) value under
VM-A/VM-C (pre-PBR CRVM) R3. VM-02 prescribes minimum nonforfeiture mortality/interest
(2017 CSO mandatory from 2020; preferred-structure tables prohibited for nonforfeiture) R3.
Illustrations (NAIC Model 582; ASOP 24). Par WL dividend illustrations are constrained by the disciplined current scale (based on actual recent experience, certified annually by the illustration actuary), the illustrated scale being no more favorable than the lesser of DCS and the currently payable scale, and the self-support and lapse-support tests R2. Dividend accumulation credits in illustrations cannot exceed the DCS earned rate R2. ASOP 24 governs the illustration actuary’s certification practice REG-R30. These rules discipline the non-guaranteed scale a model may treat as “current.”
Dividend and NGE standards (ASOP 15; ASOP 2). ASOP 15 requires the contribution principle for allocating divisible surplus and frames dividend-scale determination and disclosure R6. ASOP 2 governs non-guaranteed elements other than dividends (e.g., indeterminate-premium non-par WL) and explicitly excludes policyholder dividends R7 — relevant to the RefWL-FE variant only if its premiums were indeterminate (they are guaranteed level here [S6]).
Federal tax (IRC §7702, §7702A, §807). §7702 requires CVAT or GPT-plus-corridor compliance; for contracts issued after 2020 the fixed 4%/6% test rates are replaced by the lower “insurance interest rate” (2% transitional for 2021), which raised permissible WL funding levels R4. §7702A’s 7-pay test makes limited-pay WL and PUA-rider funding the main MEC risk: 10-pay premiums sit near 7-pay limits and face decreases can retroactively create MECs R5 [S3]; carriers administer 7-pay premiums on 2017 CSO [S1]. §807 defines tax reserves as the greater of net surrender value and 92.81% of the CRVM/VM reserve, capped at statutory REG-R16 — one reason the statutory projection engine also feeds the tax basis.
Experience/table infrastructure. The 2017 CSO set (valuation and nonforfeiture) is published by the SOA in composite/smoker-distinct/preferred-structure, ANB/ALB variants R8; the 2015 VBT and ILEC studies provide the experience bases for best-estimate assumptions REG-R18 R9 (see technical notes).