Life Insurance Charges And Fees
Getting quotes is the first step in buying a life insurance policy
, and this process can be a little bit confusing for the average person. When you look at a quote, it could be made up of several different charges and fees that do not make sense. If you are confused about the charges and fees that life insurance companies charge, here are a few things to consider.High Load vs. Low Load
During the process of shopping around for a policy, you may hear the terms "high load" or "low load." The term "load" is simply a way of referring to the charges and fees associated with the policy. If a life insurance policy has a high load, it means that the commission and other charges are high.
Paying the Agent
When getting life insurance quotes, some of the cost of the policy will go toward paying the agent. Agents can make money in a few different ways. For example, many life insurance agents make a commission based on the total value of your policy. Some make a flat fee for the service that they provide. A few life insurance agents make a flat fee, and then get a commission when you buy a policy as well.
Other Charges
Besides paying the insurance agent for the policy, you will also have a number of other charges that are associated with the policy. When getting life insurance quotes, it is important to look at these fees, and make sure that you are not being overcharged.
Some policies charge administration fees. These fees help with the management of the insurance company and marketing. The mortality and expense risk charge is a fee that you pay to compensate the insurance company for the risk that it is taking on by offering policies. You might also see a surrender charge listed on the policy. This is the amount of money that the insurance company will take out of the cash value if you decide to surrender your policy before a certain date.
Some life insurance policies also charge fund management fees. If you are putting money into a life insurance policy that helps you accumulate a cash value, you will be putting your money into investment funds. These funds are managed by professional money managers, and these fees compensate them for their efforts.
Making the Decision
After you have fully evaluated the fees charged by the life insurance company, you can make a more educated decision. Your decision should be based solely on price, but it should play a role in the decision.
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