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Always Evaluate Your Life Insurance Company for Its Financial Stability

While researching prices and coverage options to find the best insurance company for a life insurance purchase is vital, researching the companies’ financial health is just as much so. Financial strength is crucial – you need your company to be there when you need them in 10, 20, 30 years or more, when your beneficiaries will be claiming the money upon your passing.

Oftentimes, however, the financial strength ratings are a highly ignored component of the process individuals go through when purchasing life insurance.

It’s a good idea to always know how your company is fairing; pay attention to the news – if your company is mentioned, be sure you take a closer look.

Evaluate the company you would like to purchase life insurance from in these three ways:

Ratings: Financial Stability

There are five rating companies that issue financial strength ratings on life insurance companies: Standard & Poor’s, A.M. Best, Investors Service, Moody’s, TheStreet.com, and Fitch Ratings.

An insurance company’s rating should be consider a type of barometer of its ability to pay your claim at some point in the future. The higher the rating, the more assets and reserves the company has available to pay its claims. Life insurance claims are typically made a number of years after purchasing a policy, so it’s extremely vital to know where your company rates on the financial strength scale. Many factors can influence your company’s rating, including poor financial decisions and mergers, so be aware of what is going on with your particular company as often as you possibly can.

Inquire with your state

There are many states that have a compilation of complaint reports from each year, which they then use to rank companies in relation to their share of the market. Check with your state to see if they keep records on your insurance company – it’s a great way to keep tabs on them.

Certification

The industry offers “seals of approval” to life insurance companies, an Insurance Marketplace Standards Association designation. To gain membership in this organization, a life insurance company has to undergo rigorous analysis by qualified, independent evaluators. The group’s approval offers an indication of a company’s high standards, marketing, customer service, and sales.

What does it mean? Because the designation was created by the industry itself, individuals purchasing life insurance policies shouldn’t necessarily put too much emphasis on membership in the association. First of all, the group is not an enforcement group, but it can revoke companies’ certifications if members break the rules. Companies, could, however, continue to be members regardless of numerous complaints, so again, it’s probably best not to put too much stock into membership in this particular association. Memberships are only granted for a three-year period, so if it drops your company’s endorsement, that is good cause to re-evaluate the relationship you have with your life insurance company.