Permanent Protection Plan

Reference should be made to a feature known as the Permanent Protection Plan developed in connection with Group insurance on the Renewable Term basis. The purpose of this plan was to meet the demand for low cost life insurance on a group basis, and at the same time to provide older and more permanent employees with a specified amount of fully paid up life insurance upon retirement or termination of employment. The program was a combination of term insurance purchased on an annual basis and permanent insurance purchased each year in small units by single premium payments.

Under a typical policy, the permanent insurance feature became automatically available when the employee completed certain requirements, such as a specified period of continuous service and attainment of a specified age (normally 40 or 45). Prior to that age the entire group insurance was on the usual term basis. Beginning with the specified age, however, a fixed amount of permanent insurance was purchased each year for each employee in a given salary class, so that while his total amount of insurance remained constant, his permanent insurance increased and the term insurance decreased correspondingly.

The unit of permanent insurance to be purchased each year may, for example, have been such that after 25 years a contributor (age 40 to age 65) would have accumulated approximately half the total life insurance for his salary class. Apparently a worthwhile development, this permanent protection feature was in the experimental stage for quite sometime.

The unit of permanent insurance to be purchased each year may, for example, have been such that after 25 years a contributor (age 40 to age 65) would have accumulated approximately half the total life insurance for his salary class.