Cost of insurance policy is an important factor you should consider, while taking any insurance cover. An expensive cover may be a good coverage, more comprehensive or be just the same policy albeit available at higher cost. There are many methods to calculate the cost of an insurance cover. Some of the commonly used ones are listed here:

- Traditional net cost method

- Interest adjusted net cost method

- Equal outlay method

- Cash accumulation method

- Rate of return method

In traditional net cost method, all premiums are added, deduct this figure from dividends, and then further deduct it from the surrender value. The amount remaining is cost of insurance cover. Interest adjusted net cost method is useful for considering all premiums, death benefits, interest component. This method takes care of all inflows and outflows of an insurance cover.

Equal outlay methods can be used to compare two insurance covers. This method can be used to compare two polices, where premiums are equal, but other benefits are different.

Cash accumulation method is a new way of calculating costs and can be used for comparing term cover with whole life insurance cover as well as coverage with different premiums also.

Whatever method you employ, things like taxes are considered, other than the death benefits, coverage etc for that policy. If you have taken the group employer policy, employer is required, by law, to withhold fringe benefit tax from your salary.

If you find the calculations described above little tiresome, just compare various insurance quotes on types of the cover they provide. The cost will vary depending on your age, gender, occupation etc. The cost may vary from term life insurance and whole life insurance. Each insurance firm follows a set of unique guidelines and practices, so if you see different premiums for similar coverage, do not be surprised. You can simple total the net present value of all future cash flows towards the premiums of policy and then discount the future cash flows.

Costing the insurance cover is not easy as adding on all the premiums. If you will like to calculate exact cost of insurances cover available in the market, all you have to do is ask your financial adviser to do it for you. You can factor all the tax savings that you will get by paying premiums. If you pay higher premium, you save taxes from your income. A financial adviser is trained in such calculations and can prepare detailed quoted for you to review. That ways you can analyze yourself which policy suits you best. Analyzing cost of insurance policy, be it life insurance policy, or health care policy is essential as there are so many choices available in the market. Today, insurance products are getting more complex day by day and if one does not analyze thoroughly, one may end up buying a not so great insurance cover.