R.F.S.
How to Solve for the Rate Per Thousand
Greetings!

There may be times when you have a company's pre-calculated monthly premiums available but no rate card and your client wants a face amount not printed in your pre-calculated rate book.
 

 

How to Solve for the Rate Per Thousand

 From the Pre-calculated monthly bank draft premiums for 
 
Term or Whole Life/ Final Expense Life premiums
 
 
 
Example:
A company's monthly pre-calculated premium for a $15,000 whole life is $59.59... and
 

we want to sell this client a $12,000 whole life and do not have a rate card available with the rate per thousand. 
Begin...
 

Take the $59.59 and divide it by the bank factor (.0875 with this company) = $681.03 annual premium. 
 
Now subtract the policy fee ($36 with this company) =$645.03. 

Now divide that amount $645.03 by 15 (number of thousand face amount) = $43.00 the rate per thousand.
Now do the reverse...
 

Multiply the $43.00 (rate per thousand) times 12 (face amount you now want)= $516.00
Now add back the policy fee of $36= $552.00.  
Now multiply the $552.00 by the bank draft factor (.0875) = $48.30 the monthly premium for $12,000.
 
Remember You MUST know each company's specific (1) policy fee for that product and you must know the company's (2) monthly bank draft factor to figure the correct amount. These policy fees and factors vary by company.
 
The "X" factor: Some companies, such as American Amicable, have 'face amount bands' on Term sales (not whole life or final expense life) that may affect these premiums on Term sales.   

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Sincerely,
 

GREG ROSENTHAL    770-968-5757
R.F.S.