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Life Insurance Cost Indexes

In order to compare policy costs, you need to consider all features of the policy, including:

  • Premiums
  • Cash values
  • Dividends

Life insurance cost indexes use one or more of these factors to give you a convenient way to compare relative costs of similar policies. They take into account a number of variables to generate a comparison that is easy to understand.

Surrender Cost Index

This insurance cost index is useful if cash value levels are the most important features you are considering. It helps you compare costs if at some point in the future you choose to surrender the policy and collect the cash value.

Net Payment Cost Index

Use this insurance cost index if your primary concern is the amount of death benefits provided. It helps you compare future costs, such as in 10 to 20 years, if you continue to pay premiums and do not take the policy’s cash value.

How to use life insurance cost indexes

In general, keep in mind that a smaller cost index usually means that policy is a better buy—but only if you are comparing similar policies. Also consider these guidelines for using insurance cost indexes when making your decisions:

  • Cost comparisons should only be made between similar life insurance policies. Those policies should provide the same basic benefits and require roughly the same premiums for the same amount of time. The more identical the policies are, the more reliable the cost comparison will be.
  • Compare insurance cost index numbers only for the kind of policy, for your age and the amount you intend to buy. No one company offers the lowest cost for all insurance, at all ages. Get the insurance cost index for the actual policy you intend to buy, including such details as age of insured and amount of insurance requested.
  • If there is only a small difference in index numbers between policies, consider other features when making your choice, including service and convenience.
  • Be sure you can afford the premiums and you fully understand the policy—cash values, dividends, and death benefits. You should also consider how well the company will provide service in the future.
  • Life insurance cost indexes apply to new policies. You should not use them to determine whether to drop an existing policy. If a replacement is suggested, ask for information from the company that issued your current policy before you act.

Request an application without cost or obligation

Email us or call 1-800-704-2180. Remember, it costs nothing to apply and you have 30 days to review the policy.