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Lighthouse Financial Services Company — What Beacon Index Advantage is, what it is deliberately not, and which gate authorized each answer. Version 1.1, adopted 11 June 2026 and frozen until Gate 2 on 01 April 2027.
15
Requirements in scope
2
Withdrawn at Gate 1
3
Crediting strategies
1.1
Current version
Contents
1. Why There Is No BRD
This program produces no business requirements document, and the absence is a decision rather than an oversight.
| Question | Which document answers it |
|---|---|
| Why should the carrier build this at all? | Gate 1 Business Case Package — market, economics, capital, dissent, the vote |
| What exactly is being built? | This document |
| Does what was built match what was asked for? | Requirements Traceability Matrix |
A BRD would sit between the first two and duplicate both. In practice it would restate the
business case in requirement language and restate the requirements in business language, and the
first time the two drifted apart nobody would know which was authoritative. The three documents
above each answer exactly one question and none of them answers another's.
2. Product Definition
| Attribute | Definition |
|---|---|
| Product type | Single-premium deferred fixed indexed annuity. State-filed, not registered (D-01). |
| Rider | Guaranteed lifetime withdrawal benefit, optional at issue (D-05). Pricing assumes 62% election. |
| Surrender charge | Seven-year declining schedule. |
| Crediting strategies | Three at launch — see §4. |
| Index | Calder Balanced 5, under license (DEP-04). |
| Target average case | $118,000. A pricing and distribution assumption, not a contractual minimum. |
| Launch footprint | 46 states. New York excluded — see the Regulatory Filing Plan. |
| Distribution | Existing IMO and broker-dealer relationships only (A-05). No new channel is built. |
3. Requirements by Area
The requirement set below is the same set the Requirements Traceability Matrix traces — one list, read two ways. The Authorized column records which gate released the funding for the stage that builds each item, because in this program a requirement does not exist until a gate has paid for it.
Product chassis
| ID | Requirement | Source | Authorized | Status |
|---|---|---|---|---|
| PR-01 | Single-premium deferred fixed indexed annuity chassis | Gate 0 concept · D-01 | Gate 0 | In scope |
| PR-02 | Seven-year declining surrender-charge schedule | Gate 0 concept | Gate 0 | In scope |
Rider
| ID | Requirement | Source | Authorized | Status |
|---|---|---|---|---|
| PR-03 | Optional GLWB rider (not embedded) | D-05 | Gate 0 | In scope |
Crediting strategies
| ID | Requirement | Source | Authorized | Status |
|---|---|---|---|---|
| PR-04 | Fixed account crediting strategy | D-03 launch set | Gate 1 | In scope |
| PR-05 | One-year point-to-point on the Calder Balanced 5, capped | D-03 launch set · DEP-04 | Gate 1 | In scope |
| PR-06 | One-year performance-triggered crediting strategy | D-03 launch set | Gate 1 | In scope |
Regulatory footprint
| ID | Requirement | Source | Authorized | Status |
|---|---|---|---|---|
| PR-09 | Compact-route filing across member states | D-06 · A-02 | Gate 1 | In scope |
| PR-10 | Separate SERFF filings for California and Florida | D-06 · DEP-02 | Gate 1 | In scope |
| PR-11 | New York excluded from launch scope | A-03 · D-02 · GC-02 | Gate 1 | Excluded |
| PR-12 | Compliant hypothetical performance illustrations | NAIC #275 · R-08 | Gate 1 | In scope |
| PR-13 | Suitability and best-interest advisor training | NAIC Model Reg #275 | Gate 1 | In scope |
Risk and capital
| ID | Requirement | Source | Authorized | Status |
|---|---|---|---|---|
| PR-14 | In-house hedging of the GLWB guarantee | D-08 · A-06 | Gate 1 | In scope — at risk |
| PR-16 | GLWB risk transfer via reinsurance | DEP-05 | Gate 1 | In scope |
Platform and operations
| ID | Requirement | Source | Authorized | Status |
|---|---|---|---|---|
| PR-15 | Extension of the incumbent admin platform (no new system) | D-07 · A-04 | Gate 1 | In scope |
| PR-17 | New business issue and policyholder servicing capability | Gate 1 scope | Gate 1 | In scope |
Distribution
| ID | Requirement | Source | Authorized | Status |
|---|---|---|---|---|
| PR-18 | Distribution through existing IMO/BD relationships only | A-05 | Gate 1 | In scope |
4. The Three Crediting Strategies
| # | Strategy | ID | Definition |
|---|---|---|---|
| 1 | Fixed account | PR-04 | A declared-rate account with a guaranteed minimum. The floor of the product and the option a risk-averse buyer defaults to. |
| 2 | One-year point-to-point on the Calder Balanced 5, capped | PR-05 | Index credit measured over a one-year term against a cap illustrated at 9.25%, with a competitive floor of 8.50% fixed at Gate 1. The strategy the product leads with and the one carrying the hedging load. |
| 3 | One-year performance-triggered | PR-06 | Pays a declared rate if the index is flat or positive over the term and zero otherwise. Simpler to illustrate than a capped strategy and cheaper to hedge. |
Three strategies is a Gate 1 outcome, not an original design choice. The concept carried five.
Two were withdrawn under GC-01 because the platform and the illustration engine could not
support them, and the reduction is recorded in the traceability matrix as withdrawn rows rather than
deletions. It has a consequence the Board was told about at the time and which has since been
carried as risk R-12: with three strategies rather than five, demand concentrates, and
hedging concentrates with it.
5. Deliberately Out of Scope
A requirements document that lists only what is in scope invites the reader to assume everything else was forgotten.
| Not in scope | Why | Recorded as |
|---|---|---|
| Registered index-linked annuity (RILA) features | D-01 | A buffer or floor structure with market-value risk to the contract holder would make this a registered product, pulling it into the SEC and FINRA lane and adding a prospectus, a registration statement and a broker-dealer distribution model. The program is a state-filed product by decision, not by omission. |
| Embedded (non-optional) GLWB | D-05 | Embedding the rider would raise the guarantee exposure on every policy issued rather than on the 62% who elect it, and would price the benefit into contracts sold to buyers who do not want it. |
| Participation-rate (PR-07) and monthly-averaged (PR-08) crediting strategies | D-03 / GC-01 | Withdrawn at Gate 1. The platform could not support the first without custom development (R-04) and the illustration engine could not produce compliant hypothetical performance for the second (I-02). Withdrawn, not deferred — there is no roadmap entry. |
| New York (PR-11) | D-02 / GC-02 | Excluded from launch scope with a deferral memorandum recording the conditions for revisiting. This is an exclusion, not a cut — it was never in scope. |
| A new administration platform | D-07 | The incumbent platform is extended. Replacement was assessed at Stage 1 and would have consumed the program's entire budget without producing a product. |
The distinction between withdrawn and excluded is load-bearing. The two
crediting strategies were in scope and were removed; New York was never in scope and has a deferral
memorandum. Collapsing them into a single “out of scope” list would make a considered
scope decision look like a cut and a cut look like a considered scope decision.
6. Versioned by Gate
| Version | Date | Change |
|---|---|---|
| 0.1 | 05 Feb 2026 | Concept requirement set tabled at Gate 0, including five proposed crediting strategies. Authorized for Stage 1 feasibility work. |
| 1.0 | 30 Apr 2026 | Tabled at the first Gate 1 convening. Not adopted — the gate recycled before the requirement set was scored. |
| 1.1 | 11 Jun 2026 | Adopted at the Gate 1 second convening. Five crediting strategies reduced to three under GC-01 (D-03); New York recorded as excluded under GC-02 (D-02). This is the version Stage 2 is building against. |
| — | — | No version has been issued since. The document is frozen until Gate 2. |
A PRD that can change between gates is a PRD nobody can build against. Between gates this
document is frozen. Teams build against a set that cannot move under them, and anyone who wants it
to move has to take that want to a Board with the authority to say no. That is slower than a change
board, and it is the mechanism the methodology chose — because the alternative is a
requirements set that drifts quietly and a gate that scores it against criteria it no longer
matches.
This is also why the program keeps no change control log. There is nothing for one to record: material change is a gate re-submission, and the gate package is the record. Change within a stage that does not alter this document is handled by the owning team and does not need a register to prove it happened.
Version 1.0 was tabled and never adopted. It went to the first Gate 1 convening on
30 April 2026, which recycled before the requirement set was scored. The version is kept
in the history rather than renumbered away, because a document whose version history shows only
successful adoptions is a document that has quietly deleted its own most instructive event.
7. Open Questions
| ID | Question |
|---|---|
| PQ-01 | Does the rider election assumption survive contact with the market? Pricing assumes 62%. Nothing in Stages 2–4 can test it; the first real reading is months after launch, and the Benefits Realization Plan records it as BEN-02 with a Month 3 first read. |
| PQ-02 | Is the illustrated cap defensible for a full year? 9.25% against a peer 9.00%, with a competitive floor of 8.50% fixed at Gate 1. Option costs move; the floor does not. If option budgets compress (R-03), the cap moves toward the floor and the product's headline advantage narrows. |
| PQ-03 | What happens to the strategy mix if one strategy dominates? R-12 anticipates concentration. The PRD defines three strategies but sets no allocation limit, and no requirement here would prevent 80% of premium landing in one of them. |
| PQ-04 | Does the product need a roadmap it does not have? The two withdrawn strategies are withdrawn, not deferred, and the program has no vehicle for “version 2” scope. That is correct for a launch program and it means the first post-launch enhancement request has nowhere to go. |
Owned by D. Falkner, VP Product Development, under G. Marchetti, Chief Product Officer. Maintained through the gate process by C. Tyrrell, NPD Program Manager. Related: Requirements Traceability Matrix · Gate 1 Business Case Package · Regulatory Filing Plan · Glossary.