Life Insurance FundamentalsQuestion 130 of 716
Which three factors are used by actuaries to calculate the gross premium of a life insurance policy?
a.Mortality, interest, and expenses
b.Lapse rate, surrender charge, and tax bracket
c.Mortality, morbidity, and inflation
d.Inflation, interest, and underwriting commissions
Explanation
Every life premium is built from three factors: mortality (the cost of expected death claims), interest (earnings expected on reserves), and expenses (commissions, taxes, salaries). Higher assumed interest lowers premium; mortality and expenses raise it.
Law Reference: Standard actuarial principlesThis topic, taught in full in the California Life & Health Insurance Producer Exam guide. California Life & Health Insurance Producer Exam — Complete Study Guide (2026) — PDF + EPUB, $19.99 · 14-day refund →
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Related questions on this topic
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PrepPass team · Verified against California Life & Health Insurance License Exam · How we review
Reviewed by John Zihao Zhang — California-Licensed Life Insurance Agent (CA Dept. of Insurance License #4396095 — verify)