Premiums

The complications begin with a very simple question:

  • What's the premium for Universal Life?
    • It could be almost anything.
  • Then what's the cash value?
    • That depends on the premium.

>>>>>  It is the relationship between the premium and cash value that determines the product characteristics of Universal Life.

--  BEN H. MITCHELL

1981 - UNIVERSAL LIFE, Society of Actuaries - [PDF-16p]

  • The agent said that Universal Life policy premiums would stay the same, but I came to realize that this is not true of our policies.
  • ...what bothers me is that I am afraid that this same misleading information may be the basis of my children's and grandchildren's ... planning...

--  STATEMENT OF GLORIA DARLEEN NEWBERRY

1993 - GOV - When Will Policyholders Be Given The Truth About Life Insurance - [PDF-354p]

 

<Limits on premiums, TEFRA??, GMP>

 

Ted Becker of the Texas State Board of Insurance also said the group had questions on whether or not some limitations should be put in the contract as to the total amount of future premiums to be accepted.

2. Report of Universal Life Advisory Committee

1983-2, NAIC Proceedings

In short, Petitioner <ACLI> states, the guideline annual premium equals the annual premium necessary to keep the policy ·in force for the life of the insured.

1983 - Federal Register, Vol.48 No. 231.  November 30, 54043

A regulator had told them that in that case they should not treat their universal life as though it was a whole life policy matured by paying the GMP <Guaranteed Maturity Premium>.

Rather, you should assume that people will pay the guideline level premium, and that will give you a policy that provides guaranteed coverage for something less than the whole of life.

--  Daniel J. McCarthy

1999 - Valuation Actuary Symposium, Society of Actuaries

Guaranteed Gross Premium - <Bonk: Same as Guaranteed Maturity Premium?>

For purposes of determining the guaranteed gross premiums used in the demonstration in Section 6.B.2:
a. For universal life policies, the guaranteed gross premium shall be the premium specified in the contract, inclusive of any applicable policy fee, or if no premium is specified, then the level annual gross premium at issue that would keep the policy in force for the entire period coverage is to be provided based on the policy guarantees of mortality, interest and expenses; and

b. For policies other than universal life policies, the guaranteed gross premium shall be the guaranteed premium specified in the contract, inclusive of any applicable policy fee. (p20-25)

2021 - NAIC Valuation Manual

PREMIUMS

-Scheduled 
-Planned
- Guaranteed Maturity -
-Guideline Single
-Target


"Commissioner Willis said the trouble with disclosing that the premium might at some point "resume" is that the premium never stopped. It is misleading to make a consumer think the premium is not being paid."
1994-3, NAIC Proceedings

Related:

Universal Life Insurance Model Regulation (#585)

- Guaranteed Maturity Premium (GMP)
- Guaranteed Maturity Fund (GMP)
- 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." 
"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. "As a result, it is expected that most universal life insurance policies will be sold as permanent plans."

...the "premium outlay" terminology was changed to "net payment."

1981 INDIVIDUAL LIFE INSURANCE COST DISCLOSURE ISSUES, Society of Actuaries

The thrust of this development says the deal needs to be articulated.

This deal has several components, and one is with respect to premiums. If they are not guaranteed or fixed, there needs to be an understanding of how they can vary.

-- Walter S. Rugland:

1996 - Nonforfeiture Law Developments, Society of Actuaries - 23p

 

Media - USNews

Universal life insurance, like whole life insurance, is a type of permanent life insurance policy that accumulates tax-deferred cash value.

The policy stays in effect for as long as you remain alive and pay the premiums.

https://www.usnews.com/360-reviews/life-insurance/universal-life-insurance

Premiums - Actuarial vs Not Actuarial?
https://actuarialtoolkit.soa.org/tool/glossary ---  "actuarial terms and definitions"

 

Actuarial - Gross Premium, Net Premium

Not Actuarial? - Planned Premium, Target Premium, Scheduled Premium, Guideline Level Premium, Guideline Premium, Guaranteed Maturity Premium, 

  • These figures illustrate the nature of the life insurance business.
  • Policyholders pay premiums to the company over the life of the policy.  (p12)

2001 - RISK MANAGEMENT PRACTICES AND REGULATORY CAPITAL CROSS-SECTORAL COMPARISON, Basel Committee on Banking Supervision, The Joint Forum