Comparing computer projections for your future cash value insurance payments is part of assessing a policy. You can ask your broker for a current or in-force illustration, which will lay out the policy's premiums, death benefits and cash values. You can use this analysis to compare cash value policies to each other, or to term life policies.
Computer Projections Computer projections compare the performance of different insurance policies and predict future growth. You can receive a projection from your insurance provider or a third-party company that specializes insurance evaluations.
Depending on the type of policy, insurance providers base projections on factors including the current dividend scale, insurance costs, interest rates and projected investment returns. You can ask to see projections of both prospective and current insurance policies before making a decision.
An in-force illustration, also known as a current illustration, evaluates your current policy's rate of return, and allows you to determine whether it matches your insurance agreement. It should account for the specific characteristics of your policy, as well as any riders attached.
Dividend Scales If you select a life insurance policy that pays dividends, such as a participating cash value policy, examine the dividend scale to see the history and projections of dividends paid by the insurer. Reviewing the dividend scale may help you understand the potential returns and decide between participating and non-participating policies.
If the dividends have a high risk and low rate of return, consider choosing a non-participating plan. If a policy's rate of return is low enough that you could do better investing your own money, consider signing up for a term life insurance plan and investing the savings.
Insurance Premiums Your policy may have high premiums to compensate for other benefits or riders attached to it. For example, if you chose a policy that passes the cash value account on to your beneficiary along with the death benefit, expect higher premiums.
Even the most intelligent and skilled insurance agent projections are approximate. Your policy may establish minimum values, but may only guarantee fixed premiums, death benefits and cash values. Policies incorporating investments and interest rates may fluctuate in response to the market, which can lead to quick gains or losses.
Securing actual cash value insurance for your home may depend on similar factors.