Universal Life Commissions

Universal life will normally credit the premiums in the beginning of the year to the targe (basic) premium.  Once the target premium has been reached, the payments are applied to the Excess Premium.

Example Of Universal Life Commission Base Applied First

Assuming a January 2nd Effective Date, the premium of $200 per month is applied to the target premium of $1100 through May.  The June payment is split between target and excess, and the rest of the year is applied to the Excess Premium.

Here's how to set up the commissions:

1.Set up your commission rate tables with the commission rates for the commission up to target premium in the Basic Premium section and the commission above target in the Excess Premium section.
2.When you fill in the Modal Premium, enter the entire premium into the Basic Modal Premium column.  This will cause the commissions for January through May to calculate accurately.  However, June will not calculate accurately.  It will calculate too much commissions.
3.When posting the June commission you will enter an amount less than the amount calculated.  Advisors Assistant will allow you to adjust the amount due and received and you should modify the modal premium by moving the full amount from the Modal Base to the Modal Excess premium.  The following January you will want Advisors Assistant to calculate based on the Basic Premium Again.

Using this method, you only have to make one adjustment every 12 months, in the month in which the premium changes from base to excess.