When you get a quote for life insurance, you expect that amount you’re given is an accurate reflection of what you’ll pay. For most life insurance policies, this is the case. For term life insurance, your premium is set before you buy the policy; this fixed amount won’t change for the life of the term, and you can budget appropriately.
That said, there can be fees associated with life insurance beyond higher premiums (which typically may come as a result of underwriting changes due to a medical exam or additional policy riders). These fees aren’t hidden, per se, they’re just not marketed and tend to live in the fine print of your policy documents.
If you’re shopping for insurance and want to know the actual life insurance costs, it’s always good to ask questions about these items up front. And if you’re in the market for a new life insurance policy, we can compare prices from several insurance companies at once to help you find the best available deal with the coverage you need.
Life Insurance Fees and Charges
Depending on the type of life insurance policy you buy, there are different fees associated with purchasing life insurance. Some, such as a surrender charge, are whole life insurance fees that only apply to policies that can build cash value. Others may be common across different life insurance companies. Common fees associated with life insurance policies include:
- Cost of insurance, or the actual cost of life insurance protection. Insurers determine this amount using your age, gender, health, and death benefit. This is the base cost of your life insurance policy.
- Administration fees help pay the costs of maintaining your life insurance policy, such as accounting and recordkeeping. To save money on these fees, choose to pay your premiums quarterly instead of monthly. This limits the amount of work that occurs on the part of the insurance company.
- Premium loads and sales charges help compensate the insurance company for the cost of sales expenses and taxes.
- A monthly per thousand charge is assessed monthly and is based on your age, underwriting classification, and gender.
- Surrender charge is only applicable to whole life and other permanent life insurance policies. If you surrender/terminate your policy during a specific surrender charge period, the insurance company will deduct this from your policy’s cash value. If you’re buying permanent life insurance, verify the length of your surrender charge policy before you make your purchase.
- Fund management fees are used to pay fund managers for their work. These fees are typically deducted from the price paid for underlying fund options and not directly from the cash value of your policy. If you’re looking at life insurance as a part of an overall investment portfolio, you’ll want to pay close attention to this type of fee.
- Mortality and expense risk charge compensates the insurance company if you don’t live to an estimated age determined by the insurance company. The insurance company will make this determination based on your age, gender, and health. Mortality and expense risk charge is usually assessed once a month.
Are there hidden fees in life insurance?
While many of the fees above are listed as part of the policy prior to purchase and can be regularly found on your monthly or quarterly statements, you may still be wondering about other hidden costs. The best way to ensure you’re not surprised by any fees or charges related to your life insurance is to partner with a licensed insurance agent who can walk you through the process of buying a policy, from the initial quote to underwriting.
Have questions about fees associated with your life insurance policy? SelectQuote can help.
Shopping for the best life insurance rates shouldn’t involve complex math or surprise fees. At SelectQuote, our licensed insurance agents help you shop and save by comparing rates from some of the most trusted insurance companies.
If you have questions or concerns about various fees related to your policy, we can walk you through them. Our goal is to ensure that you find an insurance policy that works for you, whether that’s a term life policy for affordability or a permanent life insurance policy to provide protection for the rest of your life.
To learn more about life insurance or to start shopping for a policy, contact SelectQuote today.