The determination of an individual member's benefits by reference to contributions paid into the scheme in respect of that member, usually increased by an amount based on the investment return on those contributions. A term used in unitised business. Mortality charging is a method of dealing with a guaranteed death benefit. The sum at risk is normally only the excess of the sum assured over the unit account. This is because the unit account is normally extinguished on death.
Implicit mortality charging is also possible.
This involves charging for expected death benefits through the visible charging structure of the product eg the allocation rate. An empirical rule which describes the pattern of mortality rates as a function of age. Profit arising to an insurer under a block of policies as a direct result of favourable mortality experience ie lighter than expected for assurances, heavier for annuities and pure endowments. A term assurance with a sum assured decreasing more or less in step with the debt outstanding under a mortgage loan. Normally issued with a single premium.