COI and mortality expense difference Posted: 05-22-08 02:45am
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.
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tuner
New User, Becoming EHEALTHy
Joined: 23 May 2008 Posts: 1
Posted: 05-23-08 23:52pm
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.
