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In the last 20 years, assumptions about how long policyholders will voluntarily keep their policies (if not resulting in a death claim) have become a pricing consideration in developing new policies and illustrations. It's also important for an insurance company to sell a significant number of policies to help drive down its unit expenses; the more policies, the more that fixed expenses can be spread against the total, and the lower those costs will be for individual policies. An insurance company that can manage its expenses will have an edge in producing profits for its policyholders (mutual insurers) or increased revenue per share for its shareholders. An insurance company's expenses - other than mortality expenses - include rent, utilities, wages, taxes, and sales commissions, to name just a few. General Account policies include Whole Life, Universal Life, No Lapse Universal Life, Adjustable Life, and term. The portfolio rate of return will vary with the level of safe returns available in the current economy. Income from its investment portfolio will be the principal driver of the investment component of dividends or the interest crediting rate on UL, non-par Whole Life (WL), or Adjustable Life policies. These assets consist of a significant percentage (typically 80-90 percent or more) of high grade bonds and mortgages, plus a relatively small portfolio of equities, and myriad other incidental investments. Health insurance companies maintain policy reserves in their General Account to be able to at all times cover their liabilities - principally death and living benefits associated with policies they have sold.

This estimate is translated into its Cost of Insurance (COI) element in Current Assumption policies. At the outset, an insurer's mortality expense is an estimate based on current experience, yet its future experience will change. Mortality expense, therefore, is a fundamental element of the expenses to be met by a health insurance company as it sells policies to millions of individuals and for which death claims will be paid out over many years.