Fixed Loan Fun With Simple Interest Has Incorrect Endprincipal Value After 2nd Loan (Doc ID 3063588.1)

Last updated on DECEMBER 17, 2024

Applies to:

Symptoms

Description of Issue
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After taking a second loan, the expectation is that the EndCashValue and the EndPrincipal Values on AsFundValue will be the same. However the values are different. As part of setting up advance Loan functionalities for a product, the Loan Request, Loan Repayment, Anniversary transactions in the region were tested. The interest rate calculation method for Loan Payoff fund was considered as Simple Interest instead of the existing production Compound Interest Rate calculation method. After each of the capitalization events i.e. New Loan, Loan Repayment, Anniversary, the ENDPRINCIPAL column in ASFUNDVLAUE table gets updated with the value in ENDCASHVALUE field for the Loan Payoff fund. However, when subsequent Loan is being taken, then this behavior is not followed. The data in both the fields do not match.

Note: For existing compound interest rate calculation also, the values in this field do not match. But since the ENDPRINCIPAL field is not used for the compound interest calculation, thus there is no impact in the value matching post the subsequent loan.
Compound Interest Logic – ENDRAWCASHVALUE * (1+ Interest Rate) ^ (1/365)
Simple Interest Logic – ENDRAWCASHVALUE + (ENDPRINCIPAL * Simple Interest Rate)


Expected Results
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The data in both the fields should have the same value after the subsequent loan is processed.

Steps To Reproduce
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1. Interest Rate calculation method for Loan Payoff fund changed to Simple Interest
2. Take loan on policy.
3. Validate the ENDCASHVALUE and ENDPRINCIPAL column for LoanPayoff fund in ASFUNDVALUE table. The values match in both the columns.
4. Perform Anniversary and validate the ENDCASHVALUE and ENDPRINCIPAL column for LoanPayoff fund in ASFUNDVALUE table. The values match in both the columns.
5. Perform a loan Repayment on the policy and validate the ENDCASHVALUE and ENDPRINCIPAL column for LoanPayoff fund in ASFUNDVALUE table. The values match in both the columns.
6. Perform a subsequent loan on the policy and validate the ENDCASHVALUE and ENDPRINCIPAL column for LoanPayoff fund in ASFUNDVALUE table. The values did not match in both the columns.

Cause

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