Will You Outlive Your Life Insurance Company?

In today’s volatile economic climate, with once-blue chip giants across all industries tanking, it’s reasonable to question the financial health and potential longevity of any company before you sign on the dotted line. When the contract in question is a life insurance policy, something you’re buying to protect your loved ones, you want to be as certain as possible that the life insurance company will be around after you’re gone. Here are some tips and caveats.

There are many agencies that rate and rank life insurance companies. These include Standard & Poor, Moody’s, A.M. Best and Fitch. J.D. Power does not rate life insurance companies.

You can usually obtain the life insurance company rating information for free online, although if you want a detailed report from A.M. Best it will cost you $75 per request. You can get some basic free information about life insurance company ratings in Best’s Consumer Center. Best also publishes an annual list of the Top 10 Life Insurance Companies by Revenue and Financial Strength, which is widely distributed at different websites, including the Insurance Information Institute. Most agencies use an A rating system: one A is acceptable, AAA indicates excellent financial stability. (Some rating agencies, like A.M. Best, use slightly different, but easily understood letter grades.) If you’re currently shopping for a top rated life insurance company, look for AAA. If you already own a life insurance policy, it’s a good idea to monitor your provider periodically, especially given the current economy.

Don’t automatically assume that a large, well-known (meaning well-advertised) life insurance company is more financially stable than a smaller, lesser-known company. The Best list routinely includes one or two life insurance companies that probably aren’t on the average guy’s radar.

While you won’t get quantitative data, online consumer opinion sites can provide some valuable insights about the top rated life insurance companies you’re considering. Don’t be swayed by one or two comments, but if you see a pattern of negative or positive opinion, it’s a good time to dig a little deeper in your research before you buy a life insurance policy.

Finally, choosing one of the top rated life insurance company means you’re getting your life insurance policy from a firm with a solid financial record. It doesn’t mean you’re getting the best price or the best plan for your particular needs.
Insurance companies are not as bad as they are made out to seem.