Which statement best describes the target premium for flexible-premium products?

Which statement best describes the target premium for flexible-premium products?

• A. The premium set by the policyowner that never changes.
• B. The premium calculated by the insurer's actuaries that will maintain the death benefit for the insured's lifetime.
• C. The minimum premium required to keep the policy in force for a year.
• D. The premium priced to guarantee a specific rate of return on the cash value.

Answer: (B)

In flexible-premium life policies, the target premium is the amount determined by the insurer’s actuaries that would fund the policy so the death benefit can be kept in force for the insured’s lifetime. This figure accounts for the policy’s cost of insurance, expenses, and the cash value needs to offset those costs over time. Paying at least the target premium helps ensure the policy remains in force and the death benefit stays intact, whereas paying less can lead to lapse unless other factors cover the shortfall, and paying more mainly affects cash value growth rather than the fundamental goal of keeping the benefit guaranteed.

In flexible-premium life policies, the target premium is the amount determined by the insurer’s actuaries that would fund the policy so the death benefit can be kept in force for the insured’s lifetime. This figure accounts for the policy’s cost of insurance, expenses, and the cash value needs to offset those costs over time. Paying at least the target premium helps ensure the policy remains in force and the death benefit stays intact, whereas paying less can lead to lapse unless other factors cover the shortfall, and paying more mainly affects cash value growth rather than the fundamental goal of keeping the benefit guaranteed.