What is a slack in insurance?

Question

My insurance company told me 70% of my premium is for life coverage, 27% for critical illness, and balance 3% is slack. What is this "slack"? Can anyone help me, please? Thanks!

Answer 1

The "slack" is designed to cover the future cost of insurance and any variance in the costs. That way, instead of raising you premiums as you get older and their risk increases they can dip into the "slack" and the interest it has generated to cover the rising costs without asking you for more Money.