Evaluating Life Insurance Companies
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Evaluating Life Insurance Companies
When choosing a life insurance policy, you will evaluate its premiums, its payouts, and any other provisions that are important. But equally important is evaluating the companies themselves? Why? Because their strength as an insurance company affects their ability to pay claims. After several years of paying thousands of dollars in premiums, you would hate to find yourself unable to get the insurance money you had counted on getting.
Things To Know
- The strength of an insurance company affects its ability to pay claims.
- Many insurance companies pay to be rated by various ratings services.
- Many states gather complaints against insurers and make this information available to the public.
Keep tabs on any companies you are interested in by following them in the news. Bad news about them may indicate warning signs ahead. Continued good news can indicate good financial health.
The importance of ratings
Also look at ratings. Many insurance companies pay to be rated by various ratings services, such as Moody’s Investors Service, Standard & Poor’s, and Fitch, among others.
Ratings vary somewhat, but the closer to AAA or AA they are, the more financially sound they are. Ratings are an indicator of an insurer’s ability to pay claims. High ratings mean that the company has enough assets and reserve money to continue paying claims. Keep in mind that you will make claims many years after you first buy a policy, so it’s important to know that the company will stay in good health for decades to come.
Your state keeps tabs on insurers
Insurance companies are regulated at the state level; there is a state commissioner of insurance for this purpose. Many states gather complaints against insurers and compare them to the industry overall; they make this information available to the public. Complaint statistics can be helpful in gauging the quality of an insurer, because they say something about the policies themselves as well as getting claims paid.
IMSA
The Insurance Marketplace Standards Association is a membership organization for life insurers, created and run by the insurance industry. Its members must undergo evaluation and maintain high standards for sales and service in order to become members. If an insurer loses the endorsement of IMSA, that could be a warning sign of poor management.