New, dynamic DOLI / 7-pay / corridor factors / NSPs / etc

Curious what y’all’s experience is so far with various life products having to be redesigned to accommodate the new dynamic standard for the definition of life insurance and the factors that follow from it.

Obviously, something needed to be done because of the historically low interest rate environment we find ourselves in, which clearly wasn’t anticipated when 7702 was first signed into law.

My question is this: I am familiar with the CVAT products that I work with, and those are generally defined formulaically at the product level based on the prescribed methods. What about GPT factors? Those are a specific, prescribed table from which none may deviate. Do we know if there is an effort to redefine the GPT table in light of the new changes?

There are several reasons to consider it (first and foremost, GPT products are more-or-less broken for the last several years). My particular reason is in light of 7702(f)(7). A product not in a 7-pay period but less than 15 years old is subject to rules regarding how much the benefit can be reduced along with a cash withdrawal. Regardless of whether a product is CVAT or GPT, the table used in determining the recapture ceiling is based on the GPT table.

With CVAT corridor factors being redefined with a significantly lower interest rate, this is likely to break F7 calcs to the point that tax-free withdrawals of basis will be unavailable entirely for the first 15 years of a contract issued 2020+.

One would hope that the GPT table will also be reconsidered at some point, preferably before 2027, when the new products are no longer in the initial 7-pay period.


The GPT factors can use 2%/4% for GLP/GSP starting in 2021. The interest rate used by GLP and CVAT is the same rate in 7702. GSP rate is defined as GLP rate plus 2%. Hope that helps.

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That partially helps. However, I’m more concerned about the GPT corridor factors that are used to calculate the recapture ceiling for F7 benefit reductions. The GPT corridor factors are dictated by 7702(d) itself, and are fixed:

These are the factors prescribed in 7702(f)(7)(D), “whether or not subsection (d) applies to the contract”. In other words, I work almost exclusively with CVAT contracts, and often find myself applying the F7 test (which uses GPT corridor factors). The F7 test is likely to be broken in practice as we are required to use the nearly 40-year-old corridor factors prescribed in 7702(d).

I plan on testing and verifying the above concern once the companies that I work with publish their products for 2021 (they were a bit blindsided by the new regs and are a bit behind).

So my question is, has 7702(d) been amended or replaced for contracts issued 2021+? If not, it should be strongly considered.

7702(d) has not been amended or replaced. While this doesn’t resolve your concerns, keep in mind that the corridor factors were the results of negotiations between Treasury and industry and do not purport to be actuarially derived like NSPs.

That’s my understanding as well. Thank you for verifying. Looks like I’ll be performing some tests in a month or two.