Life insurance can be confusing for many people, and some never really understand the costs involved in purchasing coverage. In order to make the process more clear to consumers, insurance companies work to keep their customers informed of the costs associated with buying life insurance policies.. To do this, they provide a cost disclosure form so that the potential customer is aware of the long-term cost of the policy as well as the monthly or annual premium costs.
Many people do not realize that a life insurance policy can cost thousands of dollars over the course of the policy because the premiums continue to add up for years. Because of this, someone who drops a life insurance policy after several years would be forfeiting a great deal of money that only a few types of insurance policy will refund. The cost disclosure form helps to make the accumulated value of a policy more apparent for customers who would otherwise never look beyond the premium cost.
Do not confuse a cost disclosure statement with being charged more money or having hidden charges. It is not intended as a bill in any way, simply a way to illustrate the costs of the policy over time. Providing you with the disclosure is actually being done for your protection and information, in accordance with an agreement that insurance companies have reached with the Federal Trade Commission.
It is your right to know what the total cost of an insurance policy will be, not in terms of the monthly or annual costs, but in terms of the total investment into the policy. The cost disclosure form is how you are given this information. Each form is filled out specifically for the purchasing customer and provided along with the policy as a matter of course.