When you get quotes for life insurance from your local agent or from a life insurance quote website, how do you know which life insurance company to choose? On the LifeInsure.com website, for instance, you might see quotes from 6-10 life insurance companies on the quote page. Should you select the least expensive quote or one from a company name you are familiar with?
We always recommend selecting the least expensive quote from an A-Rated (or higher) life insurance company. All term life insurance policies are quite similar, so the benefits are all going to be basically the same. Term insurance is very simple – you pay your (level) premiums for a specified period of time (the term) and if you should die during that time period, your beneficiaries will receive the death benefit of the policy. One rarely compares the features of a term policy, so it always boils down to price and company rating.
I often speak to people who like to choose a company they have heard of. I can’t fault someone for having that consideration. If having the name of a company you are familiar with printed on your policy makes you feel more comfortable, I totally understand. However, if the premium is significantly higher than the same policy from another company, especially one that has higher financial rankings, I will point that out to my clients. As we don’t work with any companies with a lower A.M. Best rating of A, you really can’t go wrong with any of the companies we represent.
What do I mean by a highly-rated company? There are basically five independent ratings agencies that rate companies’ financial strength – AM. Best, Standard and Poors (S&P), Moodys, Fitch and Weiss. A Comdex score is a percentile assigned to the company, based on how they rate with the other companies. A Comdex score of 95, for example, means that it ranks better than 95% of the other companies in its category.
On LifeInsure.com, you will find the ratings for all the companies we represent. When you look at your quotes, the A.M. Best score is shown on the main quotes page. If you want to look at how the other ratings agencies rate a specific company, just click the logo of the company you are inquiring about. A company information page, complete with company ratings will pop up.
Some people believe that a company rated higher than others will automatically be priced higher than a lower rated company. This isn’t necessarily true and you will sometimes find a company with the best ratings having the lowest premium. When that happens, and it’s a company name your know, it makes the decision a no-brainer.