Life & Health Insurance Practice Exam 2025 – Your All-in-One Guide to Exam Success!

In calculating life insurance premiums, the factor that reflects expected earnings on the premiums received is interest. Insurance companies invest the premiums they collect, and the returns on these investments provide additional revenue. This income from investments helps in offsetting the costs of paying claims and operating expenses, allowing the insurer to offer policies at competitive rates.

When calculating premiums, actuaries consider the expected rate of return on invested premiums to determine how much they need to charge to maintain financial stability while still being able to fulfill future claims. A higher expected interest rate can lower the premium rates that need to be charged, as the insurer anticipates earning more from investments over time.

The other factors like mortality, loading, and expenses are essential components in premium calculations but do not directly pertain to the earnings aspect. Mortality refers to the likelihood of insured individuals passing away within a certain period, which affects claims expenses. Loading is an extra charge added to cover overhead and administrative costs. Expenses relate to the operational costs incurred by the insurance company. None of these factors represent the earnings aspect of the premiums received.