modified preliminary term plan

  • An unrestricted use of the full Preliminary Term Plan is not permitted in most States. The extra amount made available for the first year expense under the full preliminary term plan is limited or modified. In some cases, the full Preliminary Term is adopted so far as ordinary life policies are concerned. Under an ordinary life policy, no reserve is required at the end of the first year and the expenses are the same as under the full Preliminary Term Plan. In the case of other types of policies, the amount that is permissible to expend is less than under the full plan. A reserve is required at the end of the first year although this reserve is lower than the sum required under the net level plan.

    Internal Revenue Service 1

1Internal Revenue Service, Internal Revenue Manual 4.42.6 Glossary, http://­www.irs.gov/­irm/­part4/­irm_04-042-006.html (last accessed Dec. 22, 2009).