How to Buy the Most Suitable Insurance Product?(2)

by Life Insurance May. 06,2023
How to Buy the Most Suitable Insurance Product?(2)

First, the cost of insurance. Although the basic principles of these three types of cash value insurance are the same, all of them deduct insurance premiums and additional costs for cash investment, but one of the special features of whole life is that its insurance costs are fixed and therefore are insured when the age of the person is still young, the proportion of the premium paid to cover the insurance cost is much higher than other similar insurance products; and as the age of the insured grows, the insurance cost of other insurance products will continue to rise, and Whole Life always If it remains unchanged, it will be lower than the other two types of insurance products.


Secondly, from the perspective of investment dividends, Whole Life invests in the bond market, floating dividends; Universal Life invests in the interest rate market, floating dividends; Variable Universal Life (VUL) is invested by the policyholders independently, and the investment returns are not capped or guaranteed; Indexed Universal Life (IUL) is tracked by insurance companies for stock market indexes, and investment returns have both a cap and a bottom.


However, with the financial innovation, the boundaries of the above three types of cash value insurance have become increasingly blurred, and insurance companies have begun to combine more different investment market strategies, dividend policies, and insurance cost calculations to launch more new products. Therefore, when choosing different types of insurance products, the policyholder must understand the insurance terms related to the above three aspects before making a decision.When choosing different types of cash value insurance, policyholders should also consider their original intentions. If the policyholder wishes to maximize the return on investment, it is important to consider the conditions of the investment dividends; if you prefer relatively low premiums, you should spend more time understanding the terms of insurance costs.


After deciding to buy a certain type of cash insurance, the policyholder can compare the same products from different insurance companies in the following aspects.


1 Income distribution clause:

What is the dividend rate? Is it capped? Guaranteed? How to make a portfolio investment? What financial markets should you invest in?


2 Cost of insurance (cost of insurance):

This is a very important part. Because the cash surrender value insurance dividend is determined based on the investment income of the investment account (premium less insurance and other fees). The cost of insurance generally increases with the age of the insured. If the cost of insurance is too high, the part of the premium that can be used for the investment is lower and the resulting benefits may be too low.


3 additional costs (premium cost):

Additional costs include insurance company management fees, fund management fees, investment management fees and other types of costs.

Each policyholder wants to buy the most suitable insurance product, and comparing the different insurance products requires careful office work. Therefore, it is particularly important to select insurance brokers with a high professional level and a strong communication capacity, which can make the buying process more efficient and avoid the possibility of buying the wrong product from the future and having to give up insurance later and incur losses. If the insured can clearly understand the purpose of taking out insurance and the most important points before communicating with the insurance broker, he can not only master a certain initiative in the communication process, but also make the right choice when of decision making.