Court Decision Impacts Life Insurance Cost Calculations
A recent ruling by a Federal Appeals Court has provided clarity on the interpretation of life insurance policies, specifically regarding the calculation of cost of insurance (COI) charges.
The policies typically state that the issuer bases the COI charge on factors such as sex, age, risk class, and expected future mortality experience. Kansas City Life, in this particular case, had contended that the policy language allowed them to consider additional variables in their calculations.
However, the 8th Circuit Court of Appeals has rejected that argument, ruling that the insurance company cannot include their own profits and expenses in the COI calculations.
