When you sign a contract of life insurance, special attention should be paid to costs of your contract. These costs are of paramount importance in the profitability of your contract.
The costs of a life insurance contract can be distinguished as:
The starting fees
These costs are also called loading costs or selling expenses. These fees may be paid at once upon payment of funds or on each payment.
Generally, the payment at one time is not recommended by professionals, because in case of interruption of the contract, this is a problem. The entry fee of course reduce the profitability of your contract, hence the need to negotiate a good rate.
Be aware that a rate of 1.5 to 3% is the average applied by professionals. This type of contract is advantageous initially but be aware that these costs are always recovered elsewhere and over time, especially in management fees. This type of contract is therefore detrimental over time. It is better to negotiate a contract with high entry rates and are amortized over the medium and long term than the reverse.
Management fees
Expenses are paid annually on the stock. A rate higher than 0.7% is disadvantageous for a contract. Feel free to negotiate rates below 0.6% because these costs determine the profitability of your contract of life insurance on the medium and long term.
The costs of arbitration
These costs relate to multiple insurance carriers. These are fees charged when switching from one investment vehicle to another. A rate of up to 0.9% is generally applied.
The annual management fee
Other costs related to the management of investment funds and the transaction costs of these funds are paid annually. These “hidden costs” can reach 3-4% and it is very important to negotiate the details of your life insurance policy.