Mortality Charges

In Indexed Universal Life (IUL) insurance policies, Mortality Charges represent a key financial component. They involve:

• Purpose: These charges cover the cost of the life insurance benefit.
• Factors Determining Charges: Based on the insured's age, health status, and the coverage amount.

Calculation and Impact:

• Risk Assessment: The insurer assesses the likelihood of the policyholder's death within a specific year and assigns a cost to cover this risk.
• Age-Related Increase: As the policyholder ages, these charges typically rise, correlating with increased mortality risk.
• Deduction Mechanism: Usually subtracted monthly from the policy's cash value or premium payments.

Function:

• Death Benefit Assurance: These deductions help ensure that the death benefit remains available for beneficiaries.

Understanding mortality charges is essential for policyholders to grasp how their policy's cash value and premium contributions are utilised to maintain the policy's insurance benefit.