Legal Definitions - Mortality Charge

A mortality charge is a fee that a person pays to their life insurance company to compensate for the potential loss that the insurer may face if the policyholder dies unexpectedly. This fee is also known as a "cost of insurance" charge (COI) and is usually deducted from the monthly payment.

For example, if a person has a life insurance policy with a monthly premium of $100 and a mortality charge of 1.25%, they would pay an additional $1.25 each month to cover the potential loss.

The mortality charge is calculated based on the insurer's expectations of future mortality, which means that the fee may vary depending on the policyholder's age, health, and other factors.

Overall, the mortality charge is an essential component of life insurance policies as it helps insurers manage their risks and provide financial protection to policyholders and their beneficiaries.