Can anybody share what’s Mortality charges in whole life insurance?

Hi anon,

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A mortality charge is basically the cost of providing the coverage to you.

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This is basically calculated based on a rate table for your gender, age, and smoking status (typically) and then multiplied by the sum at risk.

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So, as a simplified example, if you have $200K coverage on a life plan today, and you paid $2K in premiums, the sum at risk is now $198K (the insurer will pay you $2K plus another $198K from their pool, should you die this year). if, as a male non smoker, your mortality charge is $1 per $1K for your age today, then it costs $198 to cover you for your $198K coverage. The remaining money will either be invested in the par fund (since it's a whole life) or go towards distribution costs if any.

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Mortality charges are often seen in ILPs in the form of a table, but traditional whole life plans have their mortality charges factored into the premium already, which gives a guarantee that if you pay your premiums, you get your coverage (unlike ILPs where coverage may lapse if investment returns are not good and your mortality charges escalate in later years)

In whole life insurance, mortality charge is the amount charged every year by the insurance company to provide the life coverage to the policyholder on the life insured.