Finance Quick Answers
How can I compare insurance policies with different terms and amounts of coverage?
It is helpful to think of it as annual cost per $1,000 of insurance, using this formula:
Annual Insurance Premium
= Annual cost per
$1,000 of Coverage
Number of $1,000s of Coverage
Annual Insurance Premium =
Annual cost per $1,000 of Coverage X Number of
$1,000s of Coverage
Do the math for each policy you are considering and compare. This works for all types of insurance.
Brenda Procter, M.S., Consumer and Family Economics, College of Human Environmental Sciences, University of Missouri-Columbia
If you'd like to learn more about this and other personal finance topics, the University of Missouri offers 'Personal & Family Finance,' a correspondence course, through the Center for Distance and Independent Study (800-609-3727). Information about this course is available at http://cdis.missouri.edu/CourseInfo/DetailCourseInfo.asp?1985.
Last update: Tuesday, July 22, 2008