Saturday, September 15, 2012

Life Insurance Companies


You know that if you are going to buy life insurance, then you are going to have to purchase it from a life insurance company. The problem, however, is that there are quite a few life insurance companies out there. Narrowing down your choices is important as is choosing an insurance company that fits your specific needs.

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Choosing the right insurance company is easy if you know what to ask. That is why we have compiled a few things that you should look for both from and about life insurance companies so that you can make a great decision about where to purchase your life insurance.
Reviewing Life Insurance Companies: How is the company doing?

You should be asking two major things about each of the insurance companies that you look at. First of all, how are they doing financially and secondly, what do their past and present customers say about them.

The financial security of the life insurance company that you choose is a major factor when making your decision about where to purchase. Many people don’t realize that a life insurance policy is not guaranteed by a government entity like a savings or checking accounts are.

If the company you choose goes bankrupt or out of business, then you lose your investment, period. There is no recourse for you, especially if they file bankruptcy. Some insurance companies do try to pay a portion of the policies they have if they realize they are heading for financial disaster, but this is not the normal procedure.

To check the financial security of a company you can visit their website to see if they have posted their financial ratings from the industry standard rating companies. There are three companies that are considered the best rating companies:

   1. A.M. Best
   2. Standard & Poor’s
   3. Fitch

Each of these companies has their own rating systems, however, which can actually lead to confusion. Typically, A.M. Best and Standard & Poor’s rate companies very closely, so those are the two you want to check if an insurance company doesn’t post that information directly on their website.

In addition to providing a rating for each insurance company, these rating companies also provide projections of future stability. These projections are based on the current growth of the company as well as the amount of polices they have and what they consider their future ability to pay on these policies will be. In essence it is an educated guess, but a guess that you should pay attention to.

Another consideration is how each life insurance company treats their customers. Most life insurance companies offer a rating system directly on their website. However, you should also take the time to search online for forums and review websites that talk about life insurance companies. This will allow you to get multiple perspectives of what an insurance company is like.

You can also check with your local insurance commission to find out if there are any outstanding complaints against an insurance company. The Better Business Bureau is another excellent source for finding out about the customer service side of a company.
Reviewing Life Insurance Companies: What are they known for?

There are life insurance companies and there are insurance companies that sell life insurance. We aren’t telling you that one is any better than another, just that some companies are more specialized than others are.

If you are comfortable making independent choices about your life insurance, then any insurance company will do. If you want detailed information and you want to know about your different options, what they can mean to you and so on, you don’t want to work with an agent that has to break out a company book to see what they can sell you.

The bottom line is that you want the insurance company to know what they are selling and to be able to advise you on your purchase. This is especially true if you are considering a variable life insurance policy that requires a lot of maintenance.
Reviewing Life Insurance Companies: How big are they?

Now, bigger isn’t always better, but companies that grow are typically companies that are doing well. If a company is 50 years old and only sells insurance in one state, you need to determine if they simply wanted to remain a local company or if they didn’t have the ability to grow because of money mismanagement, lawsuits and so on.

If they are a large company, you want to determine how many offices they have and whether they have an office or agent near you that you can speak to if you have questions or you want to make an in person change.

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