Set or "Target" Premium - Definition and Examples (2024)

FAQs

Set or "Target" Premium - Definition and Examples? ›

Target premium refers to the amount of premium that the insurance company has determined will keep the policy in force for a certain period, typically to a specified age such as 100.

The planned (or target) premium is a suggested premium that indicates the amount of premium that should keep a given universal life policy in force in the coming years. The planned premium is based on conservative financial assumptions.

The minimum premium is the premium that, if paid each year, would be just enough to keep the policy in force for the next year without the accumulation of any cash value. The universal life insurance target premium is the amount of premium that is projected to keep the policy in force for the insured's lifetime.

Target Premium refers to the suggested amount of premium that a policyholder should pay to ensure that the policy remains active and adequately funded over its intended duration.

Examples of premium in a Sentence

Noun Health insurance premiums went up again this year. The monthly premium for your health insurance is deducted from your paycheck. Many customers are willing to pay a premium for organic vegetables.

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What is the purpose of establishing the target premium for a universal life policy? The target premium is a recommended amount that should be paid on a policy in order to cover the cost of insurance protection and to keep the policy in force throughout its lifetime.

The Commissionable Target Premium (CTP) is the target premium amount excluding aviation, avocation, occupational and temporary extras on the base policy and any riders.

In insurance, the term "annualized premium" refers to the total amount of money a policyholder is required to pay in premiums over the course of a year. This is distinct from the premium payment frequency, which could be monthly, quarterly, semi-annually, or annually.

What happens when a universal life policyholder pays the target premium? Paying the target premium will build cash value in the policy, and the policy will resemble whole life insurance. The correct answer is: The policy will resemble whole life insurance.

What are the 3 factors that determine the premium for a particular policy? ›

The three primary factors used as the basis for determining premium costs in life insurance are (1) mortality (the average number of deaths), (2) interest, and (3) expenses. Other principal factors utilized to determine premium rates are age, sex, health condition, occupation, and habits.

Again, buying a Permanent or Universal life insurance policy in your 20's will allow for accumulation of considerable sums of money (lower premiums plus a cash value) and can actually save a fortune in years to come.

Broadly speaking, a premium is a price paid for above and beyond some basic or intrinsic value. Relatedly, it is the price paid for protection from a loss, hazard, or harm (e.g., insurance or options contracts). The word "premium" is derived from the Latin praemium, where it meant "reward" or "prize."

For example, if the premium for a call option is $2.50, the total cost of purchasing one options contract would be $250 (calculated as $2.50 per share x 100 shares per contract).

Broadly speaking, a premium is a price paid for above and beyond some basic or intrinsic value. The word "premium" is derived from the Latin praemium, where it meant "reward" or "prize". "At a premium" is thus meant to describe that an asset as being priced higher than it is actually worth.

In marketing, premiums are promotional items — toys, collectables, souvenirs and household products — that are linked to a product, and often require proofs of purchase such as box tops or tokens to acquire. The consumer generally has to pay at least the shipping and handling costs to receive the premium.

Premium Percentage . With respect to any Mortgage Loan, a percentage equal to the excess of the Purchase Price Percentage over 100%.

A level premium indicates: The premium is fixed for the entire duration of the contract. A level premium means that the premium remains fixed through the life of a policy.