Modeling

Modeling

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 reserves and surrender charges

---

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 PROCEEDINGS – SESSION 8
Life and Deferred Annuity Liability Models – Society of Actuaries