How to Compare Life Insurance Policies & Prices
Comparing life insurance policies is not always as simple as looking at the premium. Various features of a particular product could make it worthwhile to pay a slightly higher price. Make sure you start out by comparing products that fall in the same category, such as term, whole life and universal life.
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Term Life Insurance
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Term life insurance is an affordable product designed to meet short-term needs. For a proper comparison, ensure that the premiums are guaranteed for the same initial term duration and compare the renewal premiums. The policy with the lower initial premium may have a drastically higher renewal premium. If you intend to keep that coverage past the initial term period, you may find it more economical in the long run to take the policy with the higher initial price.
Whole Life Insurance
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Whole life insurance covers you for your entire lifetime and typically carries guaranteed premiums with guaranteed cash values. The premium plays a large part in the value of whole life insurance. Make sure the premium is fully guaranteed and compare cash value projections. Some policies with higher premiums can yield higher cash values and become a more worthwhile investment down the road.
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Universal Life Insurance
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Universal life insurance is a combination of lifetime insurance coverage with the potential to build an investment with higher premiums. In the case of universal life insurance, the premium is almost a non-issue. What's more important is whether the policy features a minimum threshold premium that keeps the policy in force as long as it is paid. Beware of policy illustrations that show high cash values. These may not be guaranteed and more than likely are based on unrealistic investment return assumptions.
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