Life Premiums

Question 1

A measure of the number of deaths in a given population. Insurance companies use mortality tables to help predict the life expectancy and probability of death for a given group.

Answer 1

Mortality Factor

Question 2

Insurance companies invest the premiums they receive in an effort to earn interest. The rate of earnings on investments is one of the ways an insurance company can reduce premium rates. A large portion of every premium received is invested to earn interest. The interest earnings reduce the premium amount that otherwise would be required from policyowners.

Answer 2

Interest Factor

Question 3

Insurance companies are just like any other business. They have operating expenses which need to be factored into the premiums. The expense factor is also known as the loading charge. Each insurance policy an insurer issues must carry its proportionate share of the costs for employees’ salaries, agents’ commissions, utilities, rent or mortgage payments, maintenance costs, supplies, and other administrative expenses.

Answer 3

Expense Factor

Question 4

The number and kinds of benefits provided by a policy affect the premium rate The greater the benefits, the higher the premium. To state it another way, the greater the risk to the company, the higher the premium.

Answer 4

Benefits