How do you compare universal life insurance quotes?
Comparison-shopping for universal life insurance quotes is by no means a simple task. There is a sea of life insurance instant quote tools on the world wide web that can get you started. However, you still need to consider some basic issues before you go about comparing different universal life insurance quotes.
What matters the most in evaluating a universal life policy, is the policy performance, i.e. you need to envisage how the policy will perform in the future. There are four basic components to a universal life insurance policy, which determine the policy performance:
- Mortality costs - the cost of life protection determined by your odds of dying at the moment;
- Earnings - including dividends and interest rates;
- Administrative expenses;
- Lapse rate - determined by the number of policies that stay in force.
All these variables affect the performance of the policy, but some of them are relatively constant. The frequent changes of the interest rates have a large impact on the performance of a universal life policy. In addition, changes in mortality rates can also affect the policy performance, but such changes do not occur very often.
Things to Consider When Comparing Universal Life Quotes
- If you use an instant online quote tool to compare universal life quotes, you will need to provide detailed information about yourself, including age, sex, weight, smoking status, medical personal and family history, driving history and hobbies - all these factors affect the pricing and it is therefore crucial to be as precise as possible.
- Smoking strongly affects the premium rate amounts. For example, a 29-year-old woman from California with normal blood pressure, normal weight, no driving license and no serious conditions in her medical record, who, however, smokes 3-4 cigarettes a day would like to purchase a universal life policy with face amount of $500,000. According to an online quote tool, she qualifies for annual premiums ranging from $2,474 to $4,120. If she was a non-smoker, she would fall into the "preferred plus non-tobacco" class, and her premium would be between $1,340 and 2,360, depending on the insurer.
- When you apply for universal life insurance, the insurer or the agent will present you a policy illustration estimating the policy's future values. However, do not take this illustration in good faith: policy illustrations are sales tools accentuating the positive aspects and not presenting the risks that all the variables can adversely affect the performance of the policy.
- Last but not least, do not forget to check the financial rankings of the insurance company: it should be A or A+.
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