Institutional pricing: Policies identified as "Institutional" are designed to include volume discounts and economies of scale available to large individual transactions and/or large groups of policies. As such, "Institutional" policies are characterized by high minimum policy face amounts and/or high minimum premium requirements, and offer low and/or levelized Premium Loads, and/or low Cash-Value-Based "wrap fees", and/or low or no Termination Fees (i.e., Surrender Charges), and/or low Fixed Administration Expenses, and/or low Cost of Insurance (COI) Charges. Depending upon the administrative requirements and/or underwriting concessions (e.g., Guaranteed Standard Issue or GSI arrangement in corporate benefits settings) for a given policy/group of policies, "Institutional" policies can include higher Fixed Administration Expenses, and/or higher Cost of Insurance (COI) Charges than "Retail" policies, so long as the total overall cost remains less than "Retail" policies.
Retail pricing: The Policies identified as "Retail" are designed to be available to the broadest possible market, and are priced for large, non-selective risk-pools of individual policyholders that rely on the "Law of Large Numbers" to provide the insurer with the greatest predictability in claims experience, but at the expense of averaging claims costs for high- and low-risk segments of the pool as well as higher operating expenses per policy. As such, "Retail" policies are characterized by low minimum policy face amounts and/or low minimum premium requirements, and high Cost of Insurance (COI) Charges, and/or high Fixed Administration Expenses, and/ or high Premium Loads, and/or high Cash-Value-Based "wrap fees", and/or high Termination Fees (i.e., Surrender Charges).
Institutional and Retail Pricing are determined by a variety of pricing factors, the two most notable are lower cost of insurance and/or lower expenses. Examples of Institutionally priced policies:
i. The Society of Actuaries (SOA) tracks policies with face amounts of $1,000,000 and more separately because the mortality rates for those policies are lower than that for policies with lower face amounts.
ii. Corporate Owned Life Insurance (COLI) policies tend to have lower cost structures that are spread out over time.