It’s a big decision with some long-term repercussions to your financial health – purchasing a life insurance policy. Making the correct life insurance company choice requires proper preparation and careful information gathering. While you might think the process will leave you feeling overwhelmed and nervous, it doesn’t have to be that way. In this article, we’ll cover the qualities of the ideal life insurance company.
Unlike other forms of insurance such as auto insurance, life insurance isn’t renewed on an annual basis and far fewer claims are filed.
What Should I Look for in a Life Insurance Policy?
A policy should cover all insurance needs and be easy-to-use, especially when it comes time for a beneficiary to claims the insurance proceeds.
A life insurance applicant should only seek out life insurance companies that have a solid financial history, and that track record demonstrates a company’s ability to meet the current and future financial obligations of their customers.
This historical information is reviewed and analyzed by five independent rating agencies whose records are available to the public – free of charge. These rating agencies are – A.M. Best Company Inc., Fitch Ratings, Moody’s Investors Services, Standard & Poor’s Insurance Ratings Service and Weiss Ratings.
A good rating indicates a company’s ability to pay out insurance proceeds, whether that be tomorrow or 50 years from now.
Each rating agency uses its own rating system that may slightly differ from another agency. To be on the safe side, it is best to research the ratings from at least two different agencies and figure out why the rates may differ.
How to Check Ratings for Insurance Companies
Five financial rating services rank insurance companies based on their financial strength and stability, so take the time to check out each company’s financial rating:
A.M. Best Co. (www.ambest.com)
908-439-2200
Fitch Ratings (www.fitchratings.com)
800-893-4824
Moody’s Investor Service, Inc. (www.moodys.com)
212-553-0377
Standard & Poors (www.standardandpoors.com)
800-523-4534
Weiss Ratings (www.weissratings.com)
877-934-7778
How Do I Evaluate Financial Strength of A Company?
When evaluating the financial strength of various life insurance companies, be sure to also evaluate the types of policies that are offered. A company may have a stellar rating from all four agencies but they may not offer certain policies or specific policy features.
For example, if policy conversion is extremely important to an applicant then he or she should only research companies that offer this feature. Don’t waste time looking at companies that don’t satisfy all of your insurance needs. As mentioned above, life insurance isn’t something you renew every year, so make sure you love the qualities of your company and the policy you purchased.
While financial strength and policy features are important, you also want to make sure your insurance company has a history of excellent customer service. This comes into play when you are purchasing your policy, if and when you make any changes to it and, ultimately, when your beneficiary collects the insurance proceeds.
It’s recommended to look at customer reviews and complaints, as an insurance company will always speak highly of themselves, but be sure to take every complaint with a grain of salt as their issue may have been a one-time incident.
For more information regarding customer service, search the Better Business Bureau website, the National Association of Insurance Commissioners’ database and even your state’s insurance commissioner records.