It can be hard to choose a life insurance company with both good customer service and good financials. It seems that almost every life insurance company simply offers “the lowest rates in the industry” (or so they claim). Given the large number of shady and “scammy” life insurance companies out there, how do you choose a reputable one? How do you choose one with good financial health that won’t cut and run when you go to make a claim?
Picking A Good Insurance Company
Fortunately for the consumer, there are a few things you can do to make sure you choose a life insurance company with good financial status that is also a reputable provider. The main things that you should look at when choosing a company are:
Strong Financial Condition
Its vital to choose a life insurance company that will stay in business for at least as long as you have coverage. There are a number of rating agencies you can look at to number how strong your potential life insurance company is financially. We’ll talk about this in more detail in a moment.
Long Business History
Life insurance providers that have been in business for a long time have a long history that they are financially stable and able to pay out on claims. Typically, businesses that have been around a while will not try to scam you.
Good Customer Reviews
A company that is recommended by your friends and family and that people are genuinely satisfied with is very important. You should ask around to get recommendations from people you trust. Often times, you’ll hear of companies to avoid – it may be best to steer clear of those ones. You can read a site like ConsumerAffairs.com to get unbiased reviews of nearly every life insurance company.
Quality Customer Service
It’s important to make sure the life insurance provider you are doing business with is customer oriented. If they avoid the “hard hitting questions” about your life insurance policy, are unclear of certain things, and/or refuse to help you, you probably won’t want to be doing business with them.
Checking The Financial Health Of The Life Insurance Company
The financial health, one could argue, is the most critical component of a life insurance company’s evaluation. Paying out on benefits is why people buy life insurance in the first place.
In order to get an idea on a company’s financial health, you can analyze them yourself on a rating firm’s website. All the firm’s listed below are free to use, but may require you to create an account.
AM Best
AM Best analyzes financials of insurance companies and has been doing so for over 100 years. While other ratings firms may evaluate other industries, AM Best only works in the insurance industry. This gives them a unique advantage in grading insurance providers’ ability to meet its obligations to its policyholders and shareholders. When browsing AM Best, you should look for insurance companies with ratings of B+ or better and have a Financial Size of at least IX or higher.
Moody’s
Moody’s evaluates a company’s ability to meet its debt obligations. You might find the Moody’s website difficult to use, but insurance company ratings are on there. Look for a company with a rating of at least A (AAA is the highest). You should also look for a company with a Positive (POS) or Stable (STA) outlook.
Standard & Poor’s
Like Moody’s, Standard and Poor’s evaluates the financial health of companies in many industries. When checking out Standard and Poor’s ratings, look for life insurance companies that invest in high-risk assets. These companies may be smart to avoid.
Fitch
Fitch provides ratings similar to the three other rating agencies listed above. They give each company a letter grade indicating its financial strength and also its future outlook.
The Final Word On Choosing A Healthy Life Insurance Company
While strong financial health is vital, it is not the only thing to consider when choosing a life insurance company. You not only want to make sure the company is financial healthy, but you would also want to make sure it has other qualities of a good life insurance company. After all, how well a company can balance a balance sheet is only part of the equation.
