Policy Pricing Calculator

Returning users may click here to go directly to the Policy Pricing Calculator (PPC)

Despite a confusing variety of products and terms, insurance pricing is always based on three components:

• Claims paid for death benefits, or Cost of Insurance (COI)
• Expenses associated with policy design and administration (E)
• Investment earnings (i%)

In other words, premiums are always based on this formula:

Premiums = COI + E - i%

The Pricing Calculator uses this formula to calculate example premiums, premium loads, cost of insurance charges, policy administration expenses, cash-value-based "wrap-fees", cash values, and death benefits for a hypothetical policy based on TheInsuranceAdvisor.com, Inc. (TIA) benchmarks, and to demonstrate how different pricing assumptions impact premium prices and policy performance. TIA benchmarks are derived from industry standard mortality tables (see Society of Actuaries 75-80 Basic Select & Ultimate Gender Distinct Mortality Tables at www.soa.org), industry aggregate expense ratios (see Society of Actuaries Generally Recognized Expense Table for 2001 also at www.soa.org), generally accepted actuarial principals, and an assumed policy earnings rate of your choosing. The hypothetical policy values produced by the Policy Pricing Calculator do not reflect an actual product for sale, nor do they reflect the mathematical average of all products, but instead illustrate example policy pricing and performance intended as representative of an “average product”.

In other words, because the Policy Pricing Calculator uses TIA Benchmarks derived to be representative of an "average product" based on "average" premium loads, "average" policy administration expenses, "average" cost of insurance charges, and "average" cash-value-based "wrap-fees", you can expect to find certain products will offer lower premium loads, and/or lower policy administration expenses, and/or lower cost of insurance charges and/or lower cash value fees, and therefore will illustrate a lower premium, higher cash values, and higher death benefits, or some combination thereof. Conversely, you can also expect to find certain other products will offer premium loads, policy administration expenses, cost of insurance charges and/or cash value fees which are higher than the above benchmark "averages", and these other products will, therefore, illustrate a higher premium, lower cash values, and lower death benefits, or some combination thereof.

To learn more about why some products may have lower cost of insurance charges while other products will have higher cost of insurance charges, click here to learn more about the pricing of Cost of Insurance Charges, or click here to go directly to the Policy Pricing Calculator (PPC).