Before you can determine whether a premium is reasonable, you have to know how insurance companies determine the cost. So many of the costs are hidden inside the cash value, projected earnings, and dividends that figuring out how much you’re actually paying isn’t as easy as it sounds, even with term insurance. You know how much goes out of your checking account each month for the policy. And you know at the end of each year how much the surrender value is, if you have a cash-value policy. Theoretically, you can just subtract the amount in your account from the amount you paid out. But what about next year? What about cancellation charges? The next sections take you through the basics.
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