Premium Types

“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 “The promise has changed from “I will guarantee that the premium you see will provide the benefits you see, and maybe share future good times with you” to a promise of “I will share the good experience I expect with you now, but if it doesn’t happen you will have to pay me more than you may have expected to.“  MR. BRUCE E. BOOKER
1988, UPDATE ON UNIVERSAL LIFE RESERVES AND NON-FORFEITURE VALUES, Society of Actuaries    

PREMIUMS

-Scheduled 
-Planned
– Guaranteed Maturity – “The <Universal Life> Model Regulation assumes that future premiums will be paid at the whole life level, and calls this premium the GMP (the guaranteed maturity premium).  1984, Shane Chalke, SOA, NAIC UPDATE
-Guideline Level
-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, 

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 – 354p