The Cost of Life: How to Use a Cost Index

December 15, 2019

They say that only two things in life are certain: death and taxes. While death is certain, it’s also very uncertain. There’s no real way to prepare for death because you don’t know when it’s going to happen. The only way to feel prepared is by ensuring you have a quality NH life insurance to provide for your loved ones after you’ve passed. The best way to decide on a life insurance policy, other than talking with professionals, is by looking at their cost index. Here is a quick breakdown on cost indexes to help you better understand your life insurance policy options.


What is a Cost Index?

Cost indexes are tools that consider premiums, cash values, and dividends when comparing similar life insurance policies. Essentially, these tools are to help decide which NH life insurance policy is of the best value. There are two major types of cost indexes. The first is the Life Insurance Surrender Cost Index. This index is for those who focus on the cash value of the policy should they want to surrender the policy in the future, and take the cash value. The second cost index is Life Insurance Net Payment Cost Index. This index is better used for those who aren’t worried about the cash value, but instead focus on the benefits after death.

How to Use a Cost Index

The main thing to keep in mind is that the lower the cost index number, the more value you’ll be getting from the policy. Here are a few things to keep in mind when looking at cost indexes:

  1. Indexes were made to compare similar policies. Only policies with the same or nearly the same benefits should be compared using a cost index.
  2. The same is to be said for comparing policies based on age. Looking at comparable policies based on your age, and how much coverage you want to buy will give a more accurate comparison point. 
  3. While cost indexes are useful for comparing, they shouldn’t be your only factor of consideration. When you have two almost identical policies with similar but different cost index number, be sure to look at other factors as well 
  4. One of these factors to take into account is the agent you’re working with. Think about how qualified the company or your agent appear to be. Picking an agent you trust is just as important as the index numbers.
  5. The cost index is only designed to compare new policies. For those who already have a policy they have been paying, talk to a professional insurance provider, preferably the provider of the policy you already have. They can help get an accurate comparison between your old policy and new ones.

nh life insurance


NH life insurance can be confusing, but cost indexes can make comparing different policies easier. Of course, there is always the team at Brownell Financial to assist you in your research as well! Contact Brownell Financial Services today and have peace of mind that your family is protected.