Episode 84 of the LIFE Pod is up. Carlo Viqueira and I dig into a number that appears on every permanent life insurance illustration and almost never gets explained: target premium. If an agent has ever slid a proposal across the table at you, that number was on it. Odds are nobody said what it was for.
The natural assumption is that target premium is a suggested funding level, the amount the carrier thinks the policy should get. It isn't. Target premium is the carrier's benchmark for agent commissions and its own internal expenses. It tells you how the people selling the policy get paid. It doesn't tell you how to fund the policy well.
To be fair to agents, commissions aren't a scandal. People who do real work get paid, and designing a policy well is real work. The trouble starts when a policy gets built around the target instead of around your goal. If the goal is cash value you can actually use, Carlo and I make the case for keeping the target as small as the design allows and max funding the policy to the legal limit as early as possible.
You may want to watch for this: an illustration can look strong on the front page and still be target-heavy underneath. Same premium dollars, very different cash value ten years in. The episode covers what to ask so you can tell the difference before you sign anything.
Watch below or at this link. When you want the full education on the asset itself, that's what Lifetime LOC is for. And when you're ready to design one, Build a Life LOC walks through the decisions one at a time.