Comparing Costs

The next order of business is to shop for a good buy. Your chances are better if you use a special cost index developed to help in shopping for life insurance and available from the producer or the insurance company. The price of a given type of policy can vary from one company to the next. Moreover, companies are not equally competitive for all policies. Thus, one company might have a competitively priced policy for 24-year olds but not for 35 year olds.

The cost index provides you with a number that reflects the price of a policy - a policy with a smaller index number is generally a better policy with a higher index number. Your producer or life insurance company can give you more information about the cost index. In addition, it is important to remember the following points:

Cost comparisons can only be made between similar life insurance plans.
Index number comparisons should only be made for your age, for the kind of policy you intend to buy and for the amount of insurance you plan to purchase.
Small variations in index numbers might be offset by other policy features or differences in the quality of service you get from the company or agent.
Base your decision not only on a low index number, but also on whether you can afford the premium; whether you understand its cash values, if any, its dividends, if any, and its death benefits.
Do not use the cost index to determine whether your current policy should be replaced by a new one. The index applies only to comparisons of new policies.

November 07, 2009