The most important factor to consider when choosing a whole life insurance policy is how much money it will generate. Bankrate.com identified tips that can help consumers figure out the value of an insurance policy before purchasing it including asking for help and looking to the future.
According to the news source, estimating how much a policy will yield in 10 to 20 years can be confusing for consumers. Tony Steuer, a life insurance analyst, told the news source that asking for help is important when researching life insurance policies.
Consumers should also look the future, as life insurance is a long-term investment. Some policies take as long as 10 years for the annual rate of return to be positive. Glenn Daily, a certified financial planner and insurance consultant, told the news source consumers should research the annual year-by-year rate of return for the first 20 years on the policy before purchasing, or look to the next five to 10 year rate of return on existing plans.
"By examining how their whole life policy is performing on a yearly basis, consumers can get a firm idea of what kind of performance they can expect in the near future," Daily told the news source.
With the uncertain current economic climate, existing policyholders should have their policy reviewed so they understand what value it holds. The Day recently reported that within the last 10 years insurance companies have introduced new, more efficient life insurance policies in response to longer life spans and a more competitive market.
In the review, policyholders should have all payment options explained to them, as well as a breakdown of the internal rate on return on the policy.