How Are Life Insurance Premiums Calculated? 
Life Insurance Premiums are calculated on three factors : mortality , interest , and expense . Mortality tables are used to determine average life expectancy , which in turn allows underwriters to give the policy a health rating that factors into the cost . The lower the underlying mortality assumption , the better the health rating and the lower the premium . Interest is the return on your premiums invested by the life insurance company . Expense is the costs involved with issuing that policy , including overhead , salary , commissions , supplies , etc. . All these together are considered in determining what rate to charge you for your policy . 