The next time a life-insurance agent tries to dazzle you with his moves, you may want to let an expert run in-ter-fer-ence.
You can get help deciphering the policy illustration - the sales tool that shows how well a cash-value life-insurance policy can perform over time.The numbers representing cash-value buildup over 20 years or more are often impressive. But it's hard to tell whether the assumptions underlying the illustration are realistic or how the policy might compare with others.
Two services can help make sense of those mind-numbing projections.
For $100, Beacon Co., of West Bloomfield, Mich. (1-800-824-1274), compares your policy illustration with its own performance benchmarks for life policies.
Its report tells you whether the illustration is realistic - or assumes returns that are too high or expenses that are too low - and whether the policy is competitive or overpriced.
Granted, $100 isn't cheap. Sending in two or three prospective policies gets pricey, and the analysis wouldn't help you choose between two policies if both are judged to be "realistic" and "competitive."
But avoiding a bad policy could save you thousands over the decade or two you should plan to keep a cash-value policy.
A less-expensive alternative is the National Insurance Consumer Organization's (NICO) "Rate of Return" service.
This service compares a cash-value policy with buying term insurance - "pure" insurance without any cash buildup. Then it estimates what you'd have to earn investing the difference to outperform the illustrated policy. The higher the rate of return, the better the policy.
At $35 for the first policy and $25 for each additional one (sent with the policy illustration to NICO ROR Service, 121 N. Payne St., Alexandria, VA 22314), this service is an excellent value.
NICO director James Hunt, a veteran actuary and former commissioner of insurance in Vermont, personally reviews each illustration and appends his recommendations.
993 The Kiplinger Washington Editors Inc.