Glossary

Planned premium

The premium amount and frequency a universal life owner chooses to pay, which can differ from the minimum needed to keep the policy in force.

Also called: scheduled premium

A planned premium is the payment schedule you pick when you buy a flexible-premium policy such as universal life insurance. The insurer bills that amount, and the policy illustration projects values assuming you pay it, but it's a plan rather than a contractual obligation.

Universal life separates the premium from the policy's internal charges. Each month the insurer deducts the cost of insurance and fees from the account value and credits interest. If you pay less than planned, or skip payments, the policy stays in force as long as the account value covers the deductions. Hypothetically, if your planned premium is $300 a month and deductions are $250, the extra $50 builds value; pay nothing for a year and those deductions come straight out of the account.

The trap is assuming the planned premium guarantees coverage. Many policies sold when interest rates were high were funded with planned premiums based on crediting rates that later fell, and owners discovered the account was draining. Unless the policy has a secondary guarantee and you meet its premium requirement, coverage depends on the actual account value. Ask for an how to request and read an in-force illustration every few years to see whether your planned premium still carries the policy to the age you need.

Last reviewed October 4, 2026

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Related terms

Universal life insurance Permanent life insurance with flexible premiums and an adjustable death benefit, built on an account credited with interest and charged monthly costs. Minimum premium The lowest payment a universal life policy requires to stay in force, or to keep a no-lapse guarantee active, during a stated period. Target premium An insurer-set premium level for a universal life policy that determines the agent's full commission rate and often anchors funding plans. Policy illustration A year-by-year projection of a policy's premiums, cash value and death benefit, showing guaranteed figures beside non-guaranteed current assumptions. Lapse The end of coverage because a premium went unpaid past the grace period or, in universal life, because cash value could no longer cover the charges. Secondary guarantee A universal life feature that keeps coverage in force for a set period or for life, even if account value hits zero, as long as required premiums are paid.

Related guides

Current-assumption universal life and crediting rates Current-assumption universal life credits interest and charges costs at rates the insurer can change. How crediting rates work and what to watch for. How universal life insurance works Universal life splits a permanent policy into a cash account and monthly charges. See how premiums, interest, costs and death benefit options fit together. How to request and read an in-force illustration An in-force illustration projects your existing policy forward from today's values. How to ask for one, what to check, and the warning signs. How to read a life insurance illustration A life insurance illustration is a projection, not a promise. How to read the guaranteed, midpoint and current columns and the NAIC rules behind them. Why universal life policies lapse, and how to prevent it A universal life policy lapses when its account value cannot cover monthly charges. The causes, how grace periods work, and a checklist to keep it in force.