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  • Steps to choosing a life insurance company
  • July 23, 2013
  • Tony Steuer

    By Tony Steuer, CLU, LA

    Selecting one life insurance company out of a pool of over 1,600 companies can be an overwhelming task, but with the assistance of some common-sense guidelines this process can become more manageable.

    The first step is to determine your insurance needs: Are you looking for short-term or long-term coverage? How much coverage do you want to purchase? How much of a commitment do you want to make?

    Having a basic understanding of your life insurance needs is a simple, effective way of narrowing down the pool of potential insurance companies and policies.

    Selecting the right life insurance company may be overwhelming, but with some assistance this process can become more manageable.

    Once your insurance needs have been established, the next step is to evaluate a life insurance company from a financial perspective.

    If you think you might need your insurance coverage for more than 10 or 15 years, it is imperative that you choose your insurance insurer carefully while also monitoring companies on a regular basis.

    While no one can accurately predict a company’s viability 20, 30 or 40 years down the line, you should do everything you can to avoid the time and expense of watching your insurer struggle through receivership and sale.

    For example, in 1997 an Oklahoma based life insurance company, Mid-Continent Life, was taken over by the state’s insurance department, which left the fate of 130,000 policy owners up in the air.

    If you are interested in making a substantial commitment to invest in a large portfolio, seeking help from an insurance analyst or independent consultant may be in your best interest.

    For those “net savvy” consumers who are pros at looking up and analyzing financial data, turning to the Internet may be in their best interest.

    Nowadays, most life insurance companies present their information and ratings online, which is free to the public.

    Don’t get caught in the trap of simply comparing two companies and choosing the better one. Instead, hold each company up to a pre-determined set of benchmarks.

    If an insurance agency wants to sell a particular company or policy, it is not uncommon for the agent to offer two or three alternatives that look worse than the one the agents want to sell.

    Finally, don’t assume that it costs more to purchase insurance from a top-rated company.

    Since insurance companies generally have comparable expenses, reserve requirements, and overall investment strategies, buying from the best does not necessarily result in higher premiums.

    Also, policy illustrations are poor indicators of how a policy will perform.

    If you seek further assistance or additional information, please feel free to email me at

About Tony Steuer

Noted insurance author Tony Steuer has spent over 25 years in the life insurance industry. Steuer’s leadership roles include serving on the California Department of Insurance Curriculum board and the National Financial Educator's Council Curriculum Advisory Panel as well as having served as President of the San Francisco Chapter of the American Society of CLU & ChFC, President of the leading Life Insurance Producers of Northern California, and as a board member of the San Francisco Life Underwriters Association. Mr. Steuer is the author of Questions and Answers on Life Insurance: The Life Insurance Toolbook, The Questions and Answers on Life Insurance Workbook and The Questions and Answers on Disability Insurance Workbook - the first two were awarded the “Excellence in Financial Literacy (EIFLE) Award from the Institute of Financial Literacy. Steuer holds a Chartered Life Underwriter (CLU) designation and also holds the Life and Disability Insurance Analyst License, a designation that is held by less than thirty people in California.

Creative Commons License
Questions & Answers on Life Insurance by Tony Steuer, CLU, LA, CPFFE is licensed under a Creative Commons Attribution 3.0 Unported License.

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