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Aside from buying a home, purchasing a life
insurance policy can be one of the most important financial decisions a person
will ever make. That's why the company from which you purchase
the policy is an essential factor. Consider for a moment what's
involved in the decision to purchase life
insurance. You're
making a smart and responsible plan to provide for family or
loved ones in the event of your untimely demise. These are
components of a smart and responsible life plan, so selecting
a company should also be performed in a smart and responsible
manner. One of the best indicators of the overall quality of
an insurer is its financial strength, which in turn, is an
indication of a company's ability to pay claims and benefits.
To help consumers understand an insurance company's financial
condition, several independent agencies assign ratings that
are updated regularly, evaluating financial strength.
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| Financial Strength - How Are Ratings Determined? |
Ratings are determined by multiple independent agencies including: A.M. Best, Weiss Ratings, Standard & Poor's (S&P), Moody's Investor Service, Fitch and Duff & Phelps (D&P). The ratings provided by these independent firms are determined by analyzing a wide variety of factors that could affect an insurer's long-term strength, such as a company's operating performance, asset quality, financial flexibility and capitalization.
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| What Do Ratings Mean? |
While independent rating firms vary slightly in their letter
rating systems, they provide descriptions of each rating.
For instance, A.M. Best, which has been providing life and
health insurance ratings longer than any other firm, describes
its second highest rating, 'A+' as 'Superior.'
In contrast, the same 'A+' score for S&P
is considered only as 'good' since 'AAA,' 'AA+,' 'AA' and 'AA-' are
all higher scores given out by this firm.
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Any company ranking in the 'good' or better range, as defined by the rating firm, is one that displays strong financial characteristics. These are companies that you can feel confident will be able to meet their financial obligations. Generally though, you may wish to scrutinize any company with a 'C' rating or lower. Companies with these ratings are considered to be 'vulnerable' - meaning that they're either facing financial difficulties, regulatory violations or some other challenge which may have a negative effect on their stability. Although these companies often offer extremely low premiums and attractive offers, it is crucial not to overlook ratings when you make a decision about your life insurance.
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| Finding the Right Company for You |
When selecting an insurance company, know their ratings. Once you have identified a list of reputable, financially stable companies, begin evaluating the types of insurance they offer and what kinds of premiums are typical (note: premium payments will vary from individual to individual, so try to use premiums as a guideline only. Your life insurance premium will be determined based on your individual health status, age and desired coverage amount).
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| Get Professional Help from
an Independent Life Insurance Agent |
Once you know a little about how companies are rated, it is a good idea to contact a company that represents multiple highly rated companies to compare coverage rates and options. Companies like Matrix
Direct can optimize a policy specific to your situation and profile then advise you on valuable options that can save you time and money. Be sure to ask the insurance professional with whom you speak to explain anything you find confusing. Remember, the more informed you are, the more likely you are to end up with an excellent highly rated company for your needed coverage. |
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