In an Adjustable Whole Life policy, what effect do higher than expected expenses have on future premiums?

In an Adjustable Whole Life policy, when expenses are higher than initially expected, it directly impacts the cost structure of the policy. The premiums for this type of insurance are calculated based on projected expenses, mortality, and investment returns. If actual expenses exceed these projections, the insurer needs to adjust its pricing to maintain profitability and ensure that the policy remains adequately funded.

Consequently, future premiums may likely increase to cover the additional costs incurred. This adjustment is necessary to ensure that the policy can continue to provide the intended coverage and benefits to the policyholder. By raising premiums, the insurer aims to stabilize the financial outlook of the policy against the backdrop of unexpectedly high expenses. This mechanism helps maintain the policy's viability over time, balancing both the insurer's financial health and the policyholder's coverage needs.

Thus, in the context of the impact of higher expenses on future premiums in an Adjustable Whole Life policy, the correct response reflects the realignment necessary to address budgetary discrepancies and sustain the policy integrity.