What to Look for in a Life Insurance Company

Keys to Look for When Making the Choice

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Whether you are single, a couple, or a family with children, life insurance is one of the most important purchases you will ever make. There are many benefits of life insurance to your family including peace of mind for your family’s future and the security of knowing your loved ones won’t be burdened with paying for end of life expenses during a difficult time. There are even ways you can use life insurance to save for retirement or for major financial expenses such as a college education or remodeling a home. 

Before purchasing a life insurance policy, you need to know how to choose the best coverage available to fit your insurance needs and budget. Here are a few tips in evaluating life insurance companies that will help you make an educated choice.

Policy Offerings

When deciding on a life insurance company, you’ll want to consider the policy options available. This applies regardless of whether you want whole life insurance (lifetime coverage) or term life insurance (temporary coverage available most commonly in 10-, 20, or 30-year limits). 

The life insurance companies with the most flexible coverage plan options will allow you to convert a term life insurance policy into a whole life insurance policy at the end of the policy term. Look for this type of flexibility when choosing your life insurance company. Depending on the types of policy riders available, you can add coverage for things like critical illness coverage, coverage for children, accelerated death benefits, unemployment protection and more.

Cash value is also another important policy option to check for when deciding on a life insurer. Cash value policies are types of whole life insurance policies that allow you to borrow from your life insurance policy to use for financial needs such as tuition or college expenses, medical bills, or home improvement projects. 

Financial Stability

How able is an insurance company to pay any claims you may have? Do you have to worry about an insurance company becoming insolvent? Does the insurance company make wise investment decisions to maximize its return on investment (ROI)? You can find out all of this information and more by checking out the insurer’s financial strength ratings.

The companies with the best financial records have an “A” rating or above. Depending on the insurance rating organization’s rating system, the meaning of a rating will vary. You can visit each organization’s page to learn more about how it rates insurance companies.

These insurance rating organizations can help when you’re researching insurance companies: A.M. Best, Weiss Ratings, S&P, Fitch, and Demotech.

Customer Service

You want an insurer that values your business and will always strive to find you the best policy at the most reasonable price. Organizations that evaluate the customer service records of an insurance company look at how well it responds to and resolves customer complaints, claims service, pricing, the purchasing experience, and overall satisfaction level. There are some great options for checking out the customer service record of an insurance company you are considering employing.

 J.D. Power & Associates: Most of the insurance rankings for customer service awards are based on actual customer surveys. For example, J.D. Power & Associates ratings are based on feedback through customer surveys and its ratings tell you whether an insurance company is among the best, better than most, about average or below industry standards.

Insure.com: Insure.com’s People’s Choice Awards uses a methodology of collecting responses to customer surveys for auto, home, health, and life insurance carriers. The insurance companies are evaluated for the price, customer service, website ease-of-use, and how likely a customer is to recommend the insurance company.

Better Business Bureau: The Better Business Bureau allows customers to post complaints against companies and allows the insurance company the chance to resolve any complaints. Based on the customer reviews, an insurance company receives a 1-to-5 star rating. 

Because deciding on a life insurance company will have such a great impact on you and your family’s future, you should take adequate time to evaluate what each insurance company has to offer and make a decision based on the best policy value and coverage options to secure your family’s financial future. 

Article Sources

  1. J.D. Power. "Ratings & Awards: Insurance." Accessed Dec. 24, 2019.

  2. Insure.com. "Methodology & Disclaimer." Accessed Dec. 24, 2019.

  3. Better Business Bureau. "Overview of Ratings." Accessed Dec. 24, 2019.