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What are the fees associated with my life insurance policy?

The fee structure of each insurance company varies widely. However, here are the common fees you should understand, compare, and contrast regarding permanent life insurance: Premium expense charge - a percentage of the premium you put into the policy, which could range from 4-8%. This is used to pay state and local premium taxes due for the life insurance company. Asset charge - some companies charge an annual asset charge, similar to a management fee, on the cash inside of the investment account. This asset charge could range from 0.76%-0.86%. Per 1,000 base charge - this is a charge that is applied in the first 10 years of the policy, which is used to cover the costs associated with setting up the policy, including marketing costs, paying medical examiners, obtaining physician records, etc. Per policy charge - an administrative charge, this goes towards keeping records of the policy such as accounting and bookkeeping. This is taken out per month from the policy and can range from $5-$10 per month. Loan interest charge - some companies will charge an interest rate on the cash that you retrieve from your policy. This interest rate will decrease your death benefit unless you pay back the amount that you’ve retrieved from your policy. At Amplify, we recommend cash value life insurance policies that have no loan interest rate so you are not being charged for taking out the cash or investment value within your policy (and you don’t have to pay it back). Withdrawal fee - typically a fee around $25-100 per time you withdraw from your policy. This fee goes towards administrative and accounting costs of withdrawing from your account.

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