Permanent Plan

The 818(c) election is another issue that is being looked at by the Service.

  • In the Hutton ruling, the Service specifically took a caveat indicating that they were saying nothing with respect to this issue.
  • One question that was discussed briefly was what was the plan of insurance?
    • How do you know whether you have a permanent policy that qualifies for $21 per thousand,
    • or a term policy that qualifies for $5,
    • or perhaps some that qualifies for nothing.
  • That is an unanswered question.

-- William B. Harman, Jr. IL

1981 - SOA - Universal Life (RSA81V7N412), Society of Actuaries - 16p

1. Universal Life Insurance Model Regulation 

Drafting Note:

  • Although highly flexible, universal life insurance is generally considered a permanent life insurance plan.
  • Most companies encourage a premium level which will provide lifetime insurance protection.
  • Every universal life insurance policy of which the drafters are aware has a “net level premium” that could be computed which would guarantee permanent protection.
    • <Bonk: Is this true anymore?  ie.  Guaranteed Maturity Premium>
  •  As a result, it is expected that most universal life insurance policies will be sold as permanent plans. (p5)
    • <Bonk: Is this true anymore?  ie.  "r-ratio"
      • The letter “r” is equal to one, unless the policy is a flexible premium policy and the policy value is less than the guaranteed maturity fund, in which case “r” is the ratio of the policy value to the guaranteed maturity fund.
      • The guaranteed maturity fund at any duration is that amount which, together with future guaranteed maturity premiums, will mature the policy based on all policy guarantees at issue.

VM-51: Experience Reporting Formats

Permanent Plans:

  • 010 = Traditional fixed premium fixed benefit permanent plan\
  • 011 = Permanent life (traditional) with term
  • 012 = Single premium whole life
  • 013 = Econolife (permanent life with lower premiums in the early durations)
  • 014 = Excess interest whole life
  • 015 = First to die whole life plan (submit separate records for each life)
  • 016 = Second to die whole life plan (submit separate records for each life)
  • 017 = Joint whole life plan–unknown whether 015 or 016 - (submit separate records for each life)
  • 018 = Permanent products with non-level death benefits
  • 019 = Permanent plans 010, 011, 012, 013, 014, 015, 016, 017, 018 combined (i.e. unable to separate) 
  • p306 (51-16)

2022 - NAIC - Valuation Manual - 338p

VM-51: Experience Reporting Formats

Universal Life Plans (Other than Variable), issued without a Secondary Guarantee:

  • 061 = Single premium universal life
  • 062 = Universal life (decreasing risk amount)
  • 063 = Universal life (level risk amount)
  • 064 = Universal life – unknown whether code 062 or 063
  • 065 = First to die universal life plan (submit separate records for each life)
  • 066 = Second to die universal life plan (submit separate records for each life)

2022 - NAIC - Valuation Manual - 338p