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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Life Insurance Rates

Even for families on a budget, life insurance should be considered a necessity. Life insurance doesn't have to break the bank. Term life insurance policies offer financial security and peace of mind for your family. Understanding how companies set term life insurance rates can help you find the cheapest life insurance possible.
Term life insurance basics

Term insurance policies generally have fixed premium rates that provide life insurance coverage for a specific length of time, known as the term. Policies with 20-year terms are most popular, but shorter or longer terms are also readily available from many of the best term life insurance companies.

If you are a young family on a budget, term life offers the biggest bang for your buck. Compared to permanent life insurance policies, these plans often provide the largest death benefit for the lowest premiums.

Three factors have the greatest impact upon term life insurance rates:

   1. Age
   2. Gender
   3. Health class

Life insurance risk classifications

Of the three primary factors, your risk class is the one which you have the most control. Most life insurance companies require the completion of a lifestyle questionnaire and medical exam. The company is looking to see whether you use tobacco, maintain a health weight, have any existing medical conditions or have a family history of health problems.

Life insurance companies generally rely on a series of standard and preferred risk categories. The better your classification, the lower you can expect your term life insurance rates to be. For example, the Savings Bank Life Insurance Company of Massachusetts uses the following six classifications:

   1. Preferred Plus Non-Nicotine
   2. Preferred Non-Nicotine
   3. Select Non-Nicotine
   4. Standard Non-Nicotine
   5. Preferred Nicotine
   6. Standard Nicotine

Low cost life insurance and the best time to buy

You may be thinking that it would be better to wait until you have more room in your budget before buying life insurance. That could be a mistake. While your financial situation may improve, there can be a significant "cost of waiting" if you put off purchasing life insurance. According to the American Council of Life Insurers, those who are younger and healthier will have the lowest rates.

New York Life has identified three ways in which postponing the purchase of life insurance can cost you:

   1. Premiums can increase as you age
   2. You may develop a health condition
   3. You may pass away unexpectedly, leaving your family without financial protection

Age as a key factor in premiums

Along with your health, age plays the biggest role in determining premiums. Why? Because life insurance rates are based on how much risk there is that you are going to die. If you are 33 years old and purchase a 20-year term life policy, there is a very good statistical chance that you will make it to age 53.

Now, if you are 53 years old and purchase 20-year term insurance, your mortality risk is considerably higher. To compensate for increased risk, the company charges higher premiums.

Gender can also influence term life rates for similar reasons. Statistically men have shorter life spans than women, so therefore their rates often increase at a higher rate as they age.

By purchasing when you are young, you can lock in low cost life insurance rates. If you think you will need more protection or a longer term in the future, it is still a good idea to buy when you are young. Also, look for term life plans that offer guaranteed renewals or convertible policies that can later be transitioned to permanent life insurance.

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Why Buy Life Insurance

Why do people buy life insurance? We work hard for a living. Sometimes the income earned affords us a comfortable life. In other cases we just barely make ends meet. Why then should we purchase a product that pays when we die? In some cases these policies are bought because it is simply common sense to protect our families or a possibly a business. In other cases it is a matter of passion. It is a deep desire on the part of a parent or spouse to protect surviving family members.

    * Young Married People

      It seems obvious why young married people would buy life insurance. You have just said "I do". You are burning up with a deep passion for your mate. You want the best for your partner. You feel a powerful need to protect your spouse. You have provided the house, food to eat, nice clothes and you are having a grand time. You have a truly fulfilling life and you never want it to end. What if you should die? Your absence will hurt but you surely want to be assured your partner doesn't need financially. You therefore buy a policy to guarantee that the spouse you love won't lose everything as a result of your death.

      If the partner is good at handling money you leave a lump sum. If you have your doubts you provide an income.

      You later have children. When you see that beautiful child you feel something that you were not aware that a human being could feel for another. You feel a kind of love that have no words to describe. You don't think of it at that point but sometime in the near future you know you must buy some life insurance to guarantee the financial future of that child. As s/he grows up you know that you want this child to be secure. You know you want a college education to be guaranteed. You save for these things but you need to be assured that the funds will be there even after your premature death.

    * Later Years

      The children are now grown. You have put them through college and they are doing just fine in whatever fields they choose. You and your partner for life continue enjoying life. You have these policies you bought to protect the family in the early years. Should you keep them? Yes you should as you still want to guarantee your spouses financial security. Even if you have accumulated great wealth you still need to keep those policies as something new comes into play. I refer to Estate Taxes. A good chunk of your estate will go to the Federal Government. Life insurance can be used to offset the Federal Estate Tax.

    * Business Owners

      People who own businesses have powerful reasons to buy life coverage. Whether you are a sole proprietor, have a business partnership arrangement or are a shareholder in a closely held corporation there is always a need for insurance protection in case of premature death. A good policy from a good company can guarantee the continuation of your business.

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