Life insurance products if purchased prudently can save good amount of money for the buyer. One has to first decide the type of life insurance policies that would serve the need as well as maximize benefits- whether term or permanent life insurance.
Once the choice is made, a company with sound rating from reputed rating agencies (better if high rating is by more than one agency) is to be identified for buying the product from them. For getting ideas on the premium amount one may either search the internet or get quotes from brokers or life insurance agents. Premium on life insurance varies according to the category of the person- preferred and standard classes under both tobacco and non-tobacco categories.
Rate class can always be made favourable by a person by abstaining from tobacco and keeping fit by regular exercise. Group insurance can be cheaper than individual life insurance as it is usually sponsored and subsidized by the employer. It saves money compared to individual policy if done at an early stage of life. However in USA group life insurance is considered taxable income for the cost required to provide over USD 50000.
Life insurance being a field of business with lot of competitions, it is wise to do thorough shopping before buying the product for getting a good rate. The difference in annual premiums for identical policies from even reputed companies may vary by very wide margins and a wrong choice may see one losing hundreds of dollars. So one needs to be extra careful before buying a life insurance policy.
Comparisons of premiums on life insurance policies to find out what really benefits is a difficult exercise. One life insurance product may offer initially lower premium than another but the premium goes up at a later period to become more than the one with initial higher premium. It is again difficult to choose between two life insurance products where one is low premium with low return and the other is high premium yielding high returns. In such situations, a net cost index can be used.
Net cost index is a method standardized for conversion of these variables to one number. While small differences can be ignored, it is better if the number is lower. There may not be much real difference in values for small differences because of the approximate nature of the indexes being founded on assumptions. One can have net cost index from either the company selling life insurance or the broker making the deal with the buyer of the policy. One should look for premium rate discounts often offered by the life insurance companies for specified amounts of insurance. By going for a higher life insurance amount, the buyer gains by paying lesser premium than he would have to pay if he had opted for lower insurance amount.
Life insurance policies allow a buyer to pay premium in installments of monthly, quarterly, half yearly and yearly periodicities. However such options of paying fractional premiums may come at a cost reducing the return which would not be the case for single annual premium. This is because the life insurance companies taking advantage of a buyer’s convenience from budgetary point of view may levy high charges for payment of fractional premiums. If the levy charged is too low to be consequential, it can be ignored. However if the levy is high enough to curtail the return from the life insurance policy, it is better to pay in one or two installments by proper budgeting. Renewal guarantees in a term policy may also save money for the buyer.
