What is the Guideline Premium Test (GPT)?
A. The GPT sets a minimum relationship between the death benefit and the policy value. The ratio is 250% at attained ages 0 – 40 and decreases to 100% by attained age 95. In addition, at any time, the total of the premium payments less any withdrawals may not exceed the greater of the Guideline Single Premium (GSP) or the sum of the Guideline Level Premiums (GLP) to that same date. The GSP is the total of premium payable at issue to fund the future benefits of the policy. The GLP is the level annual amount payable over a period, extending to the insured’s 100th birthday, to fund the future benefits of the policy. The GLP is substantially larger for policies with an increasing Death Benefit Option. If a policy fails the GPT, in order to bring the policy into compliance, one of the following items must occur: A portion of the paid premium amount must be refunded or the Face Amount must be increased (requiring evidence of insurability).
