Life Insurance and Annuity Applications
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Modal Premiums
If you are writing a life application that has a payment option other than annually, you must apply a modal factor to the premium. Modal Factors are adjustments to the premium to reflect the additional costs of the client paying monthly, quarterly or semi-annually. Please see the examples below:
Monthly Payments require a 9% or 0.09 Modal Addition
Example
Annual premium is $426.40 – monthly premium would be $38.38
Calculation is $426.40 X .09 = $38.38 per month
Quarterly Payments require a 26.5% or 0.265 Modal Addition
Example
Annual premium is $426.40 – quarterly premium would be $113.00
Calculation is $426.40 X .265 = $113.00 per quarter
Semi Annual Payments require a 52% or 0.52 Modal Addition
Example
Annual premium is $426.40 – semi-annual premium would be $221.73
Calculation is $426.40 X .52 = $221.73 semi-annually
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