Guideline Premium Test Calculator
Check if your life insurance policy meets IRS Guideline Premium Test requirements. Calculate GSP and GLP limits instantly.
Policy Details
Compliance Results
Enter policy details and click "Check Compliance" to see results
Guideline Premium Test
Life insurance policies offer tax advantages, but the IRS wants to make sure they're truly insurance and not just investment vehicles. The Guideline Premium Test is their way of checking this by comparing your premiums against calculated limits based on your age, the policy type, and other factors.
If your premiums stay within these guidelines, your policy keeps its tax benefits. If they exceed the limits, the policy might be seen as a modified endowment contract (MEC), which changes how it's taxed. This calculator helps you check compliance before you buy or adjust your policy.
How the Calculator Works
Guideline Single Premium (GSP)
This is the maximum lump-sum premium you can pay without violating the test. It's calculated as:
GSP = Face Amount × Single Premium Factor
The factor comes from IRS actuarial tables based on your age and policy type.
Guideline Level Premium (GLP)
This is the maximum annual premium you can pay. It's calculated as:
GLP = Face Amount × Level Premium Factor
This factor considers both your age and the policy duration.
Example Calculations - Various Scenarios
| Face Amount | Issue Age | Policy Term | Policy Type | Annual Premium | GSP Limit | GLP Limit | Status |
|---|---|---|---|---|---|---|---|
| $250,000 | 40 | 20 years | Whole Life | $4,500 | $95,000 | $5,100 | ✅ Pass |
| $500,000 | 35 | 25 years | Universal Life | $8,500 | $190,000 | $11,200 | ✅ Pass |
| $300,000 | 45 | 15 years | Whole Life | $7,200 | $102,000 | $6,800 | ❌ Fail |
| $200,000 | 30 | 30 years | Indexed UL | $3,800 | $72,000 | $5,200 | ✅ Pass |
| $400,000 | 50 | 10 years | Universal Life | $12,000 | $116,000 | $8,400 | ❌ Fail |
| $150,000 | 25 | 20 years | Term Life | $1,200 | $48,000 | $2,100 | ✅ Pass |
| $600,000 | 42 | 25 years | Whole Life | $15,500 | $228,000 | $16,200 | ❌ Fail |
| $350,000 | 38 | 20 years | Variable UL | $6,800 | $115,500 | $8,200 | ✅ Pass |
| $275,000 | 55 | 10 years | Universal Life | $8,900 | $63,250 | $3,800 | ❌ Fail |
| $180,000 | 28 | 15 years | Whole Life | $2,400 | $72,000 | $3,200 | ✅ Pass |
| $450,000 | 47 | 18 years | Indexed UL | $11,200 | $148,500 | $9,600 | ❌ Fail |
| $320,000 | 33 | 22 years | Universal Life | $5,600 | $115,200 | $7,400 | ✅ Pass |
| $550,000 | 52 | 12 years | Whole Life | $18,500 | $141,900 | $9,200 | ❌ Fail |
| $225,000 | 31 | 25 years | Term Life | $2,800 | $72,000 | $3,400 | ✅ Pass |
| $380,000 | 44 | 16 years | Variable UL | $9,800 | $123,200 | $7,900 | ❌ Fail |
| $290,000 | 36 | 20 years | Universal Life | $5,200 | $104,600 | $6,400 | ✅ Pass |
| $475,000 | 49 | 14 years | Whole Life | $13,200 | $133,950 | $8,100 | ❌ Fail |
| $195,000 | 27 | 18 years | Indexed UL | $2,600 | $70,200 | $3,500 | ✅ Pass |
| $525,000 | 46 | 19 years | Universal Life | $12,800 | $173,250 | $11,300 | ❌ Fail |
| $340,000 | 39 | 21 years | Whole Life | $6,900 | $122,400 | $7,600 | ✅ Pass |
| $410,000 | 53 | 11 years | Variable UL | $14,300 | $102,850 | $6,200 | ❌ Fail |
| $265,000 | 34 | 23 years | Indexed UL | $4,400 | $92,950 | $6,100 | ✅ Pass |
| $575,000 | 48 | 17 years | Universal Life | $16,800 | $184,750 | $12,500 | ❌ Fail |
This table shows 20 different policy scenarios with varying face amounts, ages, terms, and policy types. Green checkmarks indicate policies that pass the Guideline Premium Test, while red X marks show policies that would fail and potentially lose tax advantages.