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Silly question. But lets say I write a policy today and that policy is 42/month EFTand the policy has a $30 application fee. So that works out to $2.50 per month. I year 2 will the monthly adjust to $39.50. I should know this, but I have no idea. Please advise.
The policy fee does have a legit purpose for companies. I used to wonder why they had it if they pay us commission on it. But it's a way they can offer a more competitive premium on larger cases but add more profit for themselves on the tiny cases where their profitability usually takes a hit.
With no policy fee a Company much prefers $100,000 premium written on 100 cases over $100,000 premium written over 250 cases.
With a policy fee it evens it up a bit more because they are collecting more premium per dollar of death benefit on small cases than they are on larger cases.
the policy fee goes away when they die or cancel.