Planned Premium

Planned Premium
- For UL and VUL Plans, this is the Amount of Annual Premium that the Policyholder Plans to pay at Issue.
  - Typically this is the Billed Amount.
- For Whole Life and Term Plans, this is the Annual Required Premium.

2006 - SOA - Minimal Policyholder Behavior Format, Society of Actuaries - 4p

LEGAL CASE - Blumenthal v New York Life
- ...the facts are controverted that the policy clearly and unambiguously informs a reasonable insured that the policy will lapse if only the planned premiums are paid.

Case 5:08-cv-00456-F Document 85 Filed 06/01/10 Page 15 of 37 - PLAINTIFF'S RESPONSE TO DEFENDANT'S MOTION FOR SUMMARY JUDGMENT AND BRIEF IN SUPPORT

It should be noted that a policy would not necessarily be classified as a "scheduled premium" policy simply because the specifications page might set forth a "planned premium" (a concept characteristic of current universal life insurance policies).
- This is because the planned premium, in most cases, is set by the insured, not the insurer.

-- ACLI

1983-1, NAIC Proceedings

You may opt for a "planned" or "target" premium--a predetermined amount to be paid on a regular basis to help protect you from lapsing the policy.

-- Key Features of Universal Life Policy - Consumers Union

1994-1, NAIC Proc.

Our sales illustrations are developed to comply with state laws and regulations.
- While the expiration date of the policy is not required by law, it is an important feature because it lets the customer know how long the policy will remain in-force, based on guaranteed factors and planned premiums.
- (p187 of 1991-1992 - SOA - Final Report* of the Task Force for Research on Life Insurance Sales Illustrations, Society of Actuaries --- [BonkNote] --- 142p)

2020 0221 - AAA to NAIC (IULSG) - American Academy of Actuaries - Comment - Mr. Fred Andersen Chair, IUL Illustration Subgroup - 144p

You generally pay a planned premium designed to keep the policy in force for life, and accumulate cash value, based upon the interest and expense and mortality charges you assume.
- It is important that these assumptions be realistic because if they are not, you may have to pay more to keep the policy from decreasing or lapsing.
- On the other hand, if your experience is better then the assumptions, than you may be able in the future to skip a premium, to pay less, or to have the plan paid up at an early date.

You do not have to pay the planned premium, but if you pay less, the benefit may be more like term insurance, which is only in force for a limited time and builds no cash value.
On the other hand, if you pay more, and your assumptions are realistic, it is possible to pay up the policy at an early date.

Q: Is an approach for flexible premium contracts which depends on a planned periodic premium workable and/or desirable?
<Participant Responses>
- Not sure how to work such an approach. Section 5c of Standard Nonforfeiture Law might provide guidance.
- This is a reasonable approach, at least for nonforfeiture.
- Doubtful that this approach will work. The committee that drafted the model regulation felt that an approach based on planned periodic premiums was open to manipulation.
- We are using this technique now because it is practical. However, it is not totally satisfactory because it is subject to manipulation.
- Would be opposed to a planned periodic premium approach if it left any room for manipulation.
- Too much room for manipulation in the planned periodic premium approach.
  - However, something like a guaranteed maturity premium which cannot be manipulated might be acceptable.
- There have been discussions in our office to prohibit the use of planned premiums in the sales material.
- New York used a planned periodic premium approach prior to this year, according to their circular letter.
  - Dropped it in this year's legislation.
  - Not sure how workable it was.
  - New York received criticism, saying it could be manipulated.

1987-4, NAIC Proceedings

The alternative of basing the initial expense allowance on a policyowner's "planned premium" was considered but rejected as artificial and subject to substantial manipulation by agents and/or insurers.

1988-2, NAIC Proc.

NAIC
MDL-585 - NAIC Universal Life Model Regulation
- The alternative of basing the initial expense allowance on a policyowner's “ planned premium” was considered but rejected as artificial and subject to substantial ...
MDL - 270-1 - NAIC VARIABLE LIFE INSURANCE MODEL REGULATION
- It should be noted that a policy would not necessarily be classified as a scheduled premium policy simply because the specifications page might set forth a planned premium (a concept characteristic of current universal life insurance policies).
- This is because the planned premium, in most cases, is set by the insured, not the insurer.