Life Assurance Cost

Life Assurance Cost: Factors Affecting Charges

Life assurance is an extremely attractive type of investment as it provides life insurance as well as cash earnings from its investment component. A key issue in the purchase of this type of policy is price and there are a number of factors that go into calculating the life assurance cost.

Monthly Premiums

When you purchase life assurance, you will be required to pay monthly premiums. Underwriters usually base their computations on the type of policy that you want and the amount of coverage that you want to be protected for. Most insurance companies also ask for your health or medical information as this is one of the factors that figure in importantly in the calculations. Naturally, the healthier you are the less you have to pay in monthly premiums. Depending on each company’s regulations, age and lifestyle habits may also be evaluated.

To bring down the cost of your monthly premiums, a common recommendation is to start looking after your health. You should quit smoking and maintain an active lifestyle although you should keep away from dangerous activities as these are seen as risk factors by insurance underwriters.

Other Fees

Life assurance cost also depends on certain inclusions that you want to be added to your policy. For instance, some companies offer a waiver of premiums feature in their policies. This essentially affords you a payout if you are out of work and unable to pay the monthly premiums due to a debilitating illness. The insurance company charges a separate fee for this protection but some companies incorporate it into the monthly premiums.

Some companies also charge extra fees when processing claims so make sure to check by reading the key facts document or by asking a representative to detail all extra charges.

Since your policy has an investment component to it, certain types of cover may entail other costs such as a monthly policy fee for endowment policies. And of course, if you choose to surrender your policy at an earlier date, there are additional charges that you will have to pay.

Taxes

Normally, life insurance benefits are considered non-taxable income and for policies with a cash value component, there is commonly no taxes imposed upon the amount that your policy accumulates. However, depending on the type of investment that you choose, the money earned by the investment fund may be taxed at different rates. Tax rulings are amended every now and then but you should consider allocating for this possible extra expense on your life assurance cost. GP