The amount you pay for your premiums and cash value is usually affected by fees and charges. The common word used to refer to these charges and fees is load. You can have low load policies and high load policies. Choose an insurance company that will offer you fair charges and fees for services offered.
It is important to go through life insurance policy illustrations with the help of your financial advisor, broker or insurance agent so that you can familiarize yourself with the hidden expenses that will be reflected in your insurance premiums and cash value. Make sure that you weigh your options before getting into any life insurance policy and go for whatever best suits you.
Brokers, insurance agents, investment experts and other insurance workers get money from commissions and charging fees. Commissions are usually calculated as a percentage of premiums. The more the insurance policies an insurance company gets into, the more money the agents and brokers will end up getting in form of commissions. Fees are charged especially for services offered by insurance brokers, agents and experts like giving advice and going through your documents to ascertain them.
Some of these charges and fees include the mortality and expense risk charges; it is the amount that an insurance company puts forward to compensate for the risks that they engage themselves in. If you for example get into a life insurance policy with insurance company and die some months after that, the insurance company would have incurred huge losses because your premiums would have been paid for a short time. Fund management fee is the money paid to the investors who manage and put their effort into investing your funds. In instances where you get to decide on where your funds are to be invested, the investors also get to advise you on the best choice of investment.
There is also administration fee which is paid by a life insurance policy holder for record keeping, account keeping, and other administrative activities carried out by the insurance company. These administrative expenses are deducted monthly from your cash value. Surrender charges are the charges that an insurance comp. Withholding from a life insuarance policy or any other insurance policy for that matter is more like dishonoring a contract and neglecting your agreements and obligations so the charges are usually large. Cost of insurance is the absolute cost of insurance based on your age, health, gender and other factors.
Insurance companies prefer policy holders to pay their premiums annually so that they can minimize on their transactions and record keeping costs. However, most policy holders prefer to pay their insurance premiums monthly, quarter yearly or semi annually for efficient budgeting. In this case most policy holders incur charges for fractional premiums.
Getting an insurance policy is more of an investment if not for you then for your beneficiaries. Be careful to choose an insurance company that does not exploit you with endless and uncalled for charges and fees that are not necessary. Research on the policies of different insurance companies and go for what you can manage.