Do all life insurance companies look at you the same? When you are looking for life insurance, you might think that all insurance companies are similar but you’d be wrong. Shoppers need to know how to compare life insurance companies in order to get the best deal possible.
They can differ in many ways including their insurance policies, options and customer service. Each insurance company has their own underwriting guidelines which can differ in the price you will end up paying on your premium. This is why it’s very important that you comparison shop before making a decision.
Do all life insurance companies look at you the same?
Not all life insurance companies work the same way when they take certain things into consideration- including your health and lifestyle.
Look at it this way, you might find a cheap term life insurance policy with a certain company that is a perfect fit for your wife but will not work for you. In order to remain competitive, insurance companies have a tendency of marketing to a specific group of people. For instance, a carrier might offer a better price to people who have certain health conditions while another one will charge more.
As an example, if you were a cigar smoker or chewed tobacco and quit, one company might lower your rate but the other will not.
You need to understand the cost of life insurance and why cheaper isn’t always better
If you have 2 policies that seem the same, why should you pay more for one over the other. In other words, if policy A & policy B have the same benefits – wouldn’t you buy the one that’s cheaper? Of course you would!
If you’ve done your homework, you know that life insurance premiums vary enormously from one company to another even when offering the same coverage. But you need to ask which company will provide the protection you want for your family.
First off, you need to understand how a life insurance company determines your premium payments.
Premiums are decided by the underwriters of the company. They look at different factors including your age, health, and your family medical history then determine the risk factors.
The methods a company uses are pretty much the same but can vary. This variation will affect the amount a company is willing to cover you for and will dictate the price for your coverage.
Your Age Affects Rates
Life insurance rates by age – By rule of thumb, the younger you are, and if you are in good health, the less you will probably pay. But there are other factors as well. How strict their underwriting rules are, the flexibility of their products, and other factors that may increase or decrease the price of your policy. Once you understand all these factors, you will be better equipped to make a good decision.
Choosing the right life insurance company for your needs
In the United States, there is a huge range in life insurance companies. From the leading giants with millions of active life insurance policies to smaller companies that only have a hundred policies. So, once you have decided it’s time to purchase life insurance, do you know how to choose the right one?
Here are some suggestions to help get through the entire process.
As a general rule, life insurance companies are financially very well off. That said, you want to be ensured that you can rely on the company you choose. By law, they must maintain large reserves to guarantee they can meet all future obligations to their customers. Being well-informed is always a smart decision before choosing a company.
Always research life insurance company ratings
You need to know the financial health of a life insurance company and the best way to do that is by checking their ratings.
There are several private companies or agencies that perform financial analyses on insurance companies and then put their reports online for you to view. You can simply use the internet to find out an insurance company’s latest financial rating. Some of these companies will provide the information for free while others might charge a small fee.
That said, not all of these agencies use the same rating system. As an example, A.M. Best is one of the top agencies that reports financial strength. Their top rating is A++, but the S&P uses AA+ as their top rating. You still have to be careful about the information you get from different agencies. There are several other factors you need to look into before making a purchase.
If you are comparison shopping between two policies and one is underwritten by a company that has a B+ rating and other has an A, don’t just immediately assume that you need to go with the company with the higher rating.
Does the size of the company make a difference?
It might but might not. Many of the largest insurance companies have been in business for a very long time, dating back to the 1800s.
If a company has been around that long, it’s fairly safe to assume they understand the complexities of insurance policies, how to manage risks, and grow assets. They also know how to meet long-term financial obligations. That said, it doesn’t mean you shouldn’t consider a smaller insurance company.
There are literally hundreds of small and medium-sized insurance companies that have been around for the same amount of time and have been meeting their financial obligations in the same way as the larger companies.
Another avenue you should look into is finding out complaints that have been brought against an insurance company. All insurance companies are regulated by the state department of insurance which track complaints filed by consumers.
The quality or kind of complaint will also vary from state to state but it’s advisable you look into these complaints. To view complaints placed against a company, visit the National Association of Insurance Commissioners’ searchable database.
It’s not difficult to find the best life insurance policy for your needs
At Life Insurance Blog, we use only experienced licensed agents with an in-house underwriting team who will go over your application and make sure you are matched up with the best insurance company for your needs.
If we find a company that will approve you at a lower price, we will let you know. Keep in mind, you make the final decision about who you want to go with, we just want to be sure you know all your options first.
Related post: Life Insurance 101
Get help from life insurance professionals
Most people will get life insurance through an agent or broker and for several good reasons. They will help you decide how much and what kind of insurance you should buy. This is probably the most important decision you will make and is also one of the most confusing.
A professional, qualified agent or broker will perform a thorough needs analysis and give you their policy recommendations. These recommendations are not just based on the company’s ratings but also their personal dealings with a company.