Cost of Insurance Definition
The Dictionary of Insurance Terms and Definitions
Each premium you pay for life insurance covers several expenses, such as maintenance charges, premium taxes, and cost of insurance (COI). Cost of insurance is what the insurer charges you to cover its mortality expenses (the money it pays out in death benefits). Loading costs (that is, the costs involved in placing policies) may also be included in COI.
Your cost of insurance is based on the value of your policy and the mortality risk of the person(s) you propose to insure. To adjust the price of your policy, you may change the type of insurance, expirationof coverage, or face amount. As for your mortality risk, you don't have as much control to make immediate changes. Mortality risk is based on your age, sex, substance abuse, measurements, and health class.
Your best bet for improving your mortality risk is to get the best health class possible. For help finding the carrier that will assign you the cheapest health class, you should enlist the aid of an independent agent (that's a life insurance agent that isn't employed by any single insurer). Use an agent that has experience with a good variety of reputable insurers, so his/her knowledge of their individual underwriting practices can help you identify the one that will judge your medical condition most favorably.
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