Life · Chapter 6 · Premiums
Premium Factors — Mortality, Interest, Expenses
Definition
The three factors in gross premium calculation: mortality (probability of death — the biggest factor), interest (insurer's investment return — higher assumed rate = lower premium), and expenses (the loading charge: operating costs, commissions, reserves, profit). Premiums are figured per $1,000 of coverage.
In plain English
What you pay = how likely you are to die + what the insurer can earn investing your money − minus that, plus their overhead.
Exam tip
Mortality has the GREATEST impact on the premium. Memorize M-I-E.
Easy to confuse with
These are what this term gets tested against — if you can't tell them apart cold, drill the contrast.
Related terms