Definitions for "Target Premium"
With flexible-premium life insurance policies, this is the recommended premium to help assure that the policy will not terminate.
(VUL/VL, UL, SL) Initially developed to overcome the concern of companies in under-funding of flexible premium contracts (by setting an ideal “target”) it is also a basis of compensation as the commission is a percentage of the target premium. Theoretically, the target premium is adjusted when crediting rates rise or fall changing the funding needs of the policy. See also Commission Options.
The amount of premium on flexible premium policies on which full commissions are paid. Policies that allow flexible premiums often achieve much of their competitive posture in high-premium scenarios by having lower commission rates apply to the excess premiums paid above the target premium.