How do I pick a life insurance company?

How do I pick a life insurance company?

How do I pick a life insurance company?

About 1,000 life insurance companies sell life insurance in the US, but many of them are members of groups of companies and therefore do not necessarily compete with each other. A separate business allows the group to offer its products through separate distribution channels, to more effectively meet regulatory requirements in certain states, or to achieve other organizational goals. There are approximately three hundred business groups.

Additionally, not every group has a company licensed to operate in every state. As a general rule, you should buy from a company that is licensed in your state because you can count on your state insurance company to help you if you have a problem. And if an insurance company becomes insolvent, your state life insurance guarantee fund can only help policyholders of companies it licenses. To find out which companies are licensed in your state, contact your state’s Department of State Insurance.

There are several other points to keep in mind when choosing a life insurance company:

  • Product – Most, but not all, companies offer a wide range of policies and features, so choose a company that offers a product and features that meet your needs.
    Identity – Life insurance company names can be confusing and different companies can have similar names. Life insurance company names often use words that indicate financial strength (such as guarantee, reserve or surety), financial viability (such as bankers, financial or investor), maturity (such as first, pioneer or old), reliability (such as in Assurance, Reliable , Trust), adequacy (as in Beneficial, Equitable, or Peoples), scope of operations (as in Continental, National, or International), government (as in American, Capital, or Republic), or famous and respected Americans (as in Jefferson, Franklin, or Lincoln ). Make sure you know the full name, home office location and affiliation (if any) of any company you are considering (click here for example).
    Financial health – life insurance is a long-term contract. There are no guarantees for life insurance policyholders similar to those provided by the Federal Deposit Insurance Corporation (FDIC) for bank accounts. Choose a company that is likely to be financially sound over the years using ratings from independent credit rating agencies.
    Marketplace ethics – some life insurance companies adhere to the principles and codes of conduct of the Insurance Marketplace Standards Association, a non-profit organization promoting ethical behavior in life insurance marketing. Advice and service – for many people life insurance is a strange, complicated product, so it helps to deal with an agent you can deal with and who is attentive to your needs. This may be related to the choice of life insurance company, as some agents represent only one or a few life insurance companies. See How do I choose a life insurance agent?
    Complaints – you can check the national claims database to see what complaint information the company has available. The state insurance department will also be able to tell you if the insurance company you’re considering doing business with has more consumer complaints about its services relative to the number of policies it sells. Premiums and Costs – The premium is the amount you pay the company for a life insurance policy with all its benefits. Even for a given death benefit and type of policy (for example, whole life), premiums can vary between companies because some companies’ policies have features that others don’t, or because some charge more than others for the same coverage. So the first step when comparing policies is to make sure you are comparing similar insurance plans based on:
    Your age
    – Policy type and policy sections
    – The amount of insurance you purchased
    The premium for the policy is not the same as the cost of the protection part of the policy. One policy may have higher premiums but also offer more benefits (for example, it may pay policy dividends) than another. Or both may promise dividends, but in different amounts at different times. In any case, a higher premium policy may have a lower cost of protection. How do you know how much a policy costs? Companies must tell you the net payment cost index and the redemption fee index. If you are only considering keeping the insurance for a certain period of time, use the Surrender Cost Index; If you expect the policy to be maintained indefinitely, use the net cost index to pay. In general, the lower the cost index, the better.

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