Chapter 13 Buying Life Insurance

“When you buy life insurance, it’s relatively easy to ­compare first-year premium costs. But that figure tells you nothing about what the policy will cost over the long run.”

Consumers Union

Learning Objectives

After studying this chapter, you should be able to

  • Explain the defects in the traditional net cost method for determining the cost of life insurance.

  • Explain the interest-adjusted surrender cost index and net payment cost index for determining the cost of life insurance.

  • Explain the yearly rate-of-return method for determining the annual rate of return on the saving component in a life insurance policy.

  • Describe the suggestions to follow when purchasing life insurance.

  • Understand how life insurance premiums ...

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