Minimum premium refers to the lowest periodic payment required to keep a life insurance or annuity contract in force under its current assumptions and guarantees. In term insurance, it usually corresponds to the fixed premium set at issue. In universal life and variable universal life contracts, minimum premium may represent the amount needed to cover monthly charges and prevent lapse, based on current cost-of-insurance, expense charges, and credited interest or investment performance. Some illustrations differentiate between minimum premium to keep the policy in force to a certain age and higher funding levels needed to build sufficient cash value or support secondary guarantees. Minimum premium is an important concept because paying only the bare minimum can leave a policy vulnerable to lapse if interest rates fall, charges increase, or performance lags projections.

In practice, advisors talk about minimum premium when clients ask, "What's the least I can pay and still keep this policy?" Illustrations often show multiple funding levels, including minimum premium, target premium, and higher amounts for cash accumulation. Producers explain that while the minimum premium might keep the policy technically in force for a period, it may not support long-term objectives such as guaranteed coverage to age 100 or meaningful cash value. Policy review meetings frequently reveal underfunded universal life contracts where clients paid only minimum premiums for years, leading to emerging lapse risk. Agencies use inforce ledgers to recalculate minimum premium requirements and recommend catch-up payments or design changes. Properly setting expectations about minimum premium versus sustainable funding is critical for client satisfaction and for avoiding surprises in later policy years.