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Factors to Consider When Purchasing a Life Insurance Policy

  • May-06-2011
  • Richard Reich

Insurance Company Financial Strength

Whether you are purchasing term insurance, return of premium life insurance, whole life, AM Best ratings are an indicator of insurance company strengthuniversal life or survivorship life insurance, one of the most important issues to consider is the financial strength of the  company that’s providing  the life insurance policy. After all, you want to make sure the company will still be in business when your beneficiaries need to receive the insurance benefit. To check the financial health of an insurance company, you should turn to one or more of the companies that make a business of analyzing companies in the insurance industry. The best known rating services include Standard and Poor’s, A.M. Best, Moody’s and Fitch.  Learn about life insurance company financial ratings, here.

Each of these services grades the insurance companies 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 Best uses A++.

Insurance Company Rating Categories indicates the rating service’s opinion of an insurance company’s ability to meet its obligations to policyholders,based on that company’s reported financial performance over several years.

Along with financial health, you want to choose a 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.

Availability of Life Insurance Policy Riders

Another factor that can influence which life insurance policy to choose is the availability of riders (rider = extra benefit added to a policy) that you want to purchase. One rider that is important is waiver of premium where if you’re disabled, premium payments are made by the insurance company.

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.

Cash Value for Permanent Policies

When deciding among permanent life 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. We can help you with those kinds of policies. Contact Us re: whole life.

For whole life policies, your LifeInsure.com representative will get you a number of competitive illustrations showing how the cash value might grow, based on interest and dividend assumptions.

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    • Intramark Insurance Services, Inc., Insurance Services, Glendale, CA

    • Intramark Insurance Services, Inc.