Permanent Life Insurance

Term Insurance -- The contributing company is to determine for itself which of its plans are to be treated as term insurance and which as permanent.

  • The original instructions gave as a suggested definition of term insurance "that it is any policy with a premium rate less than 90% of the no profits rate for Ordinary Life, and including all 'half rate' policies."
  • As participating companies may have difficulty with this suggested definition, it is recommended that, with respect to new issues entering the investigation, pure term policies and special step-rate policies with an initial premium that in the first two policy years averages not more than about 50% of the ultimate premium be treated as term insurance, and that other policies be classified as permanent plans.
  • Combinations  of permanent and term insurance, such as Family Income, Family Maintenance or Double Protection policies, should be classified as permanent insurance.

The plan classification at the time of original issue is to be retained during the life of the policy.

  • Thus, a term policy converted to permanent insurance would remain in the term category

1949 - SOA - Report of the Committee on Mortality Under Ordinary Insurances and Annuities, Society of Actuaries - 12p

- <Bonk: first split term / perm

Conversion Privilege

  • Conversion to any permanent plan may be made as of present, intermediate, or original date by payment of appropriate reserve difference.

1950 - SOA - National Service Life Insurance, Society of Actuaries - 19p

  • 20. Aetna does not dispute that Mr. Pflugfelder described the Policies as "permanent insurance." He did so correctly, as Plaintiffs concede.
  • 21. Aetna does not dispute this paragraph, but adds that Plaintiffs never asked what the term "permanent insurance" means.

DEFENDANT AETNA LIFE INSURANCE AND ANNUITY COMPANY'S RESPONSE TO PLAINTIFFS' SEPARATE STATEMENT OF ADDITIONAL UNDISPUTED MATERIAL FACTS - Document 65 - Filed 06/02/03 Page 6 of 32

  • Furnishes Permanent Protection. The ordinary life policy furnishes permanent protection in the sense that it never has to be renewed or converted.  (p85) - In "Whole Life" Chapter

1950 - Book - Life Insurance, Huebner

  • In essence, the model regulation <Universal Life Model Regulation> assumes that at issue, all universal life policies are permanent plans.
  • The r-ratio is meant to measure the extent to which the policy is on track" as a permanent plan.

2018 - Book - Statutory Valuation of Individual Life and Annuity Contracts | 5th Edition -- Claire, Lombardi and Summers

  • Mehr - Textbook
    • 3 ways – ART, Fixed Premium WL, Paid up WL

6. Other matters submitted for our consideration:

  • (a) Mr. Bruce E. Shepherd, Executive Vice President, Life Insurance Association of America, presented a resolution to the committee recommending that policyholders should not surrender or lapse an existing policy of permanent life insurance and replace it with new life insurance.
  • A copy of the resolution is attached. (p517)

1961-2, NAIC Proceedings

6. Discuss Amendments to Life Insurance Buyer's Guide

  • Mr. Dunlap said that a small group consisting of Mr. Higgins, Brenda Cude (University of Illinois Cooperative Extension Service), and Chris Kite (FIPSCO) and himself had rewritten the buyer's guide (Attachment One-C) keeping in mind a number of basic concepts:1) revise the illustrated policy interest rates to conform to the newly adopted life illustrations model; 2) rewrite the sections describing the type of life insurance to reflect the products available in today's market; 3) address the importance of maintaining the policy in force rather than replacing a policy; and 4) update to better address the cost comparison indices.
  • Mr. Dunlap said the subgroup needed the assistance of the whole working group in determining the value of cost indices to determine how to revise that section. He said once that revision had been accomplished, he thought the product would be ready to adopt.
  • Commissioner Wilcox asked if this meeting was the first exposure of the draft. He said it was very important to get comments and invited those in attendance to respond to the draft in writing to Ms. Johnson. He invited comments also on the issue of cost indices.
  • Mr. Foley suggested using the term "permanent insurance" rather than "cash value" because of the possibility of a change in the life nonforfeiture law.
  • Commissioner Wilcox suggested that this change might be far enough in the future that it may not be appropriate to include in this draft but should be considered.

1996-1, NAIC Proceedings