What is the term for the factor added to the net premium to cover the costs of the insurer in obtaining and maintaining business?

The term that refers to the factor added to the net premium to cover the costs associated with obtaining and maintaining an insurance business is "Expenses." In the context of life insurance, the net premium is the amount calculated based solely on the cost of providing coverage, excluding administrative and operational costs. To ensure that the insurance company can sustain its operations, maintain its business, and pay claims, it must add these expenses to the net premium, resulting in the gross premium charged to policyholders.

Understanding this concept is crucial because it highlights how insurance companies determine the amounts they charge for policies. The expenses can include a range of costs, such as commissions for agents, marketing expenses, administrative overhead, and regulatory compliance costs. This thorough understanding helps policyholders appreciate the reasons behind premium pricing and ensures agents can explain the rationale to clients effectively.