# Lapsation Rate in NPR PBR Calculation

a. What is the meaning of ‘Lenght of Level Premium Period after Increase’. Can there be 2 level term periods?

b. Why there is only a maximum of 10 mentioned in the ‘Lenght of the level premium period prior to increase’, if the level term could be 15, 20, 30. How would this term level be calculated if the level term period is more than 10?

Thank You so much

Source of the Image: Pg-49 of the VM-20 Regulation (https://content.naic.org/sites/default/files/pbr_data_valuation_manual_current_edition.pdf)

Sure. There were, for example, 5-year renewable term products – the premium was level for 5 years, then bumped up to a new amount for the next 5 years, and so on up until it ended near some maximum attained age. I also dimly recollect seeing a 10-year renewable term product (i.e. the premium popped up every 10 years). Those were all old products though – it’s not a common design these days.

The last entries in that table are for prior period terms in excess of 10 years. A level term of 15, 20 or 30 years is in excess of 10 years, and so would still be subject to one of those last 4 entries. Which one would apply would depend on the length of the next level period (and, if the subsequent level period is only a single year, on the size of the premium increase).

EDIT: Note that the PP’s in the first two columns of the table are different (PP = premium period). In the first column PP is the length of the prior premium period (before the premium increase), while in the second column the PP refers to the length of the level premium period after the increase.

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Many Thanks Jraven!