What influences the premium cost of a whole life policy?

The premium cost of a whole life policy is influenced by a combination of factors, primarily mortality costs, administrative expenses, and the savings component of the policy. Mortality costs refer to the insurer's risk associated with the insured's life expectancy; the greater the risk or lower the life expectancy, the higher the premiums may be. Expenses include overhead costs that the insurance company incurs in providing the policy and managing the account. Lastly, whole life policies accumulate cash value over time, which adds another layer to the cost because a portion of each premium goes toward building this savings component. Therefore, the interplay between these elements—mortality costs, administrative expenses, and the savings account—is what ultimately determines the premium amount for the whole life insurance policy.