Article

Mortality
June 07 , 2012

Very crudely put, we are all mortal; and mortality is the probability that we die. This crude number is very important for insurance companies to decide how to much to charge in order to give you life insurance. This is usually expressed as a mortality charge – the amount of annual premium you need to pay to get Rs 1 lakh of cover.

Mortality charge depends on:

  • Your age - the older you are, the higher the charge. For instance, about Rs 50 per lakh of cover per year at age 5, to over Rs 1,500 per lakh of cover per year when age crosses 55.
  • Whether you drink or smoke - if you do, your charges may be higher. So here's a financial reason to quit!
  • Whether you have any serious ailments - if you do, your charges may be higher

In term policies, this is the only charge that is levied. In other policies, this is cut daily from the fund value of your investments.

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