The next order of business is to shop for a good buy. Your chances are better if
you use a special cost index developed to help in shopping for life insurance and
available from the producer or the insurance company. The price of a given type
of policy can vary from one company to the next. Moreover, companies are not equally
competitive for all policies. Thus, one company might have a competitively priced
policy for 24-year olds but not for 35 year olds.
The cost index provides you with a number that reflects the price of a policy -
a policy with a smaller index number is generally a better policy with a higher
index number. Your producer or life insurance company can give you more information
about the cost index. In addition, it is important to remember the following points:
- Cost comparisons can only be made between similar life insurance plans.
- Index number comparisons should only be made for your age, for the kind of policy
you intend to buy and for the amount of insurance you plan to purchase.
- Small variations in index numbers might be offset by other policy features or differences
in the quality of service you get from the company or agent.
- Base your decision not only on a low index number, but also on whether you can afford
the premium; whether you understand its cash values, if any, its dividends, if any,
and its death benefits.
- Do not use the cost index to determine whether your current policy should be replaced
by a new one. The index applies only to comparisons of new policies.