Hello,

Regarding a UL (yes, I have read my prospectus and done Google searches).

What is the difference between COI and mortality expense. I know COI is assessed on the amount at risk, and Mortality expense on the CV, but I still do not know the difference. They both sound like the same thing.

Thanks.

Mortality Charges.
This is the monthly charge that the insurance company deducts for death benefits in excess of the cash value.

It is also known as the Cost of Insurance, or COI.

Maximum mortality charges are defined in the policy. Current charges are generally substantially below the guaranteed maximum charge. The mortality charge is the product of:
– The net amount at risk at the beginning of the policy month, and
– The applicable current mortality charge for the insured’s age, sex and risk classification.
Generally, if the beginning-of-month deductions should exceed the beginning-of-month cash value, the policyowner will have coverage only for a partial month, after which time the policy will lapse unless additional
premiums are paid.
In other words: the bucket can run dry. We would not usually want this situation to occur; periodically reviewing policy performance and paying adequate premiums can avoid it.
Some carriers waive all charges (expenses and mortality charges) after a specified attained age, such as age 100.


As you can see, there is no difference, they are one in the same.

Hope this Helps,

Darrell

M & E (mortality & expense) charges on VUL cash values are often only loosely related to expected mortality, more to expense. COIs are charged on (death benefit - Cash value), while M&E;is charged on cash value. It really makes no sense to charge cash values for mortality, since they are already in the fund -- but tradition calls them M&E;.

Current COI is often the same as mortality charge (and virtually always the same as guaranteed mortality, e.g., 2001 CSO), but some ULs include other expenses in COI as well. Most contracts permit the insurer to change current COI for non-mortality reasons, but some restrict it to changes due to mortality experience. In the 1990s, many carriers added a tax element to current COIs.
Medical Insurance