The obvious way to compare costs of different life insurance policies is to compare the premiums charged by different companies for the same coverage. That works fine for term insurance, but not for whole life. Dividends, cash values, interest you could have earned elsewhere and the number of years a policy is kept in force also play important roles in determining the actual cost. And it is nearly impossible to tell in advance how your premium is divided among insurance coverage, commissions and company profits, how much goes into the cash-value fund, and how much interest you'll earn on the cash value. A handful of companies use something called the Barnes standard as a way of disclosing policy costs to insurance pros and financial planners, but consumers are pretty much in the dark.
Whole life benchmarks.
That adds up all your premiums over a period of ten or 20 years, subtracts anticipated dividends and cash value, then subtracts that number from total premiums to produce a startlingly low net cost of coverage. But the net-cost method ignores the fact that you could have done something else with the money and perhaps earned even more than the policy paid you in dividends. What to ask the agent. Most states require agents to provide these numbers for cash-value policies if you ask for them. Interest-adjusted costs vary according to the type of policy and your age at purchase.