Automatic binding limit is the maximum total face amount on a life insurance risk that a carrier can automatically cede to reinsurers under its treaties without individual facultative review. It represents the top end of the automatic binding authority range and is typically defined by age, product type, and underwriting class. The automatic binding limit, combined with the carrierTMs own retention, determines the maximum line size that can be issued quickly on a standard or substandard basis. Cases exceeding the automatic binding limit must be referred to reinsurers facultatively, often increasing review time and case complexity.

Underwriters consider automatic binding limits when evaluating jumbo cases or multiple policies on the same life. They aggregate in'force coverage and pending applications across carriers to ensure that total exposure does not exceed treaty limits. BGAs and large'case designers often ask about automatic binding limits when structuring key person, buy'sell, or premium'financed arrangements. When a case approaches or exceeds the limit, advisors should be prepared for facultative review, possible capacity reductions, or alternative carrier strategies. Understanding automatic binding limits allows advisors to design large cases realistically and avoid surprises late in the underwriting process.