Accident Sickness Insurance Quote

There are considerable rate variations between companies. At first glance, that might seem curious since the industry uses pretty much the same data to develop their mortality rates. In practice, however, the differences in rates are quite logical. Some companies specialize in writing coverage on those whose health is substandard, while other companies take on specialized risks such as smokers and those in hazardous occupations. Even so, there are still some curious anomalies. For example, Company A might be more competitive at issue age 40, while Company B is more competitive at issue age 50. A company’s mortality experience is measured (by A.M. Best) by the rate at which death benefits are paid, compared to the company’s own actuarial expectations used to price the premium.

The difference in mortality results among life insurance companies can have a greater impact on a policy’s performance than any interest rate return/dividend.

What should I ask about a company’s mortality experience?

• Is the company projecting actual current experience or better than current experience?
• Do the mortality rates vary by product, and, if so, why?
• Does the company project an unrealistic increase in mortality expenses, and if so is it guaranteed?

The key is to determine which method is being utilized in a particular illustration; however this is not an easy task. The only method that may currently be used is to ask, and then get it in writing if you can.

Overhead Expenses include all the operating costs that the life insurance carrier incurs in the course of doing business. These costs fall into four basic categories:

(1) Cost of facilities;

(2) Data processing;

(3) Employees (labor);

(4) Sales expenses.

As with all of the components, these expense factors will vary widely with every life insurance company. Commissions are a significant part of the overhead expense factor primarily in the first year, and can have a significantly negative impact on the long term performance of a permanent life insurance product, especially in the first few years