This module introduces the universal life contract, a life insurance policy that permits flexible premium payments and death benefit coverages. There are two main types of contracts: Type A, where the benefit coverage is level, and Type B, where the benefit consists of an underlying account value plus a constant death benefit (or constant amount of pure insurance).
For each policy type, this module shows how to recursively calculate account values. Account values are then used to determine profits on an annual basis that can be used for profit testing.