Life insurance quotes: how to read the policy illustration
When you are searching for cheap life insurance, it is important to understand how to read the Life insurance policy illustration. If you are only looking at Term Life Insurance, the illustration is straightforward to read. The illustration presents you with the period of or term of coverage and the expected benefits payout. It gives the premium schedule, and the payout for each year based on premiums paid.
However, Permanent insurance like whole life and universal illustrations can be a bit more difficult to read. Because permanent insurance is also a form of investment, understanding how it pays out and what the cash value over time can be quite complicated.
Here are some terms you should familiarize yourself with:
Policy cash value - this is the value of eh policy based on the scale of premiums paid to date. A good valued policy will have a cash value not too far above the premium payment for the period. Say over 5 years you have paid close to $5,000 in premiums but the cash value of the policy is only $700 after 5 years, the policy is to loaded with commissions and hidden costs. Be away that almost 50% of permanent insurance is surrendered, cashed in, within the first 10 years.
Surrender Fee - this fee or fees apply to the policy if you cash the policy in before 100 years of death. The amount is variable depending on the insurer. When comparing cheap life insurance policies it is important to pay attention to any surrender fees and their percentages of the cash value.
Guaranteed value - this is a cash value (minus the surrender fees), that the insurance company will pay regardless of how well the investments performed. This represents a risk that the insurance company is taking. It is generally used as an enticement to get you to purchase the policy.
Dividend options - your payment of dividends from the investment portion of your policy have a couple of applications. You have the option to use it to buy more insurance, or reinvest back into the investment portion of your policy. You should discuss this option with your agent. When comparing quotes make sure you are comparing similar options.
Whether you are looking for term, whole or universal let us help you get the life insurance quotes that meet your needs. We are happy to assist you in finding the right insurer to set up a policy that protects you and your family.