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Whether you are purchasing
term insurance or permanent life, one of the most important issues to
consider is the financial health of the company that’s providing the
insurance. After all, you want to make sure the company will still be in
business when your beneficiaries need that payoff. To check the financial
health of an insurer, you should turn to one or more of the companies that
make a business of analyzing players in the insurance industry. There are
about a half dozen such rating services, with the best-known including
Standard and Poor’s,
A.M. Best,
Moody’s,
Duff and Phelps
and Fitch.
Each of these services
grades the life insurers on financial strength, using letter grades to
indicate how secure they consider the company. The actual grades vary by
rating company. S&P uses AAA as its highest, for example, and
A.M. Best uses A++.
Insurance Company Rating
Categories indicates the rating service’s opinion of an insurer’s
ability to meet its obligations to policyholders, based on the insurer’s
reported financial performance over several years.
Click here to view our insurance
carrier rating chart.
Along with financial
health, you want to choose a life insurance company that is responsive to
its policyholders. That’s why it is a good idea to check with your state’s
insurance regulating body to make sure there are no serious complaints
against any of the companies you are considering.
Another factor that can influence
which policy to choose is the availability of riders that you want
to purchase. With a term policy, for example, you might want to
make sure the policy is guaranteed renewable, so that you could
continue to have insurance even if your health deteriorates and
other companies might consider you uninsurable. Perhaps you would
want a convertible policy, which allows you to switch from term
insurance to whole life with no questions asked, another way to
guarantee that you can purchase insurance even if your health
declines.
When
deciding among permanent life insurance company policies, you should be
interested not only in the death benefit, but in the potential growth of
the cash value that these kinds of policies offer. Because these
policies are more complex than term policies, you may have to dig a little
deeper to make your comparison.
For each policy, your
agent will present a number of illustrations showing how the cash value
might grow, based on various assumptions about fund returns, fees and
other factors. Make sure the assumptions used in the examples are based on
the company’s recent experience. Find out which figures are guaranteed. Go
with the most conservative estimates -- compare policies based on the
assumption that they will earn the lowest return presented and you will
incur the highest charges presented.
When you are buying a
variable or universal life insurance company policy, another issue to
consider is what funds are offered. In these kinds of policies, you direct
where you want your investment to go. Generally, the insurer will offer a
range of investments, from safe, fixed-income funds to stock and
high-yield bond funds which offer the potential for more income but which
come with a higher risk.
Fees can be another
concern for permanent life insurance company policies, especially if you
are planning on tapping into that cash value. To
fairly compare policies, take a look at fees, including management fees
and penalties that could eat up your cash value if you decide to surrender
the policy.
Please feel free to
contact our insurance agency
at any time and speak with one of our highly qualified representatives.
For over 20 years our agency has been providing families with quality
insurance products & services.
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