InsuranceFinancial Glossary
Mortality Charge
Definition
The component of a life insurance premium that covers the cost of providing the death benefit, based on the insured person's age, gender, health status, and sum assured. In ULIPs and traditional plans, mortality charges are deducted from the invested amount. In term insurance, the entire premium is essentially a mortality charge.
Why It Matters
Mortality charges increase with age and can significantly eat into ULIP returns, especially as you grow older. A ULIP started at age 40 may lose 3-5% of the annual investment to mortality charges by age 55, severely impacting the compounding of your investment portion.