Factors to Consider When Comparing Policies and Companies for Life Insurance

When you decide to purchase term life insurance one of the most important issues for you to consider when comparing policies is the financial health of your life insurance company.

You want to make sure the life insurance company will still be around and be able to pay the proceeds of your life insurance policy to your beneficiary if you die.

You want to check with one of the companies that analyze financial strength of insurers. These companies include A.M. Best, Moody’s and Standard and Poor’s.

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Each of these financial analyst services provides a financial strength grade to life insurance companies. These grades indicate the current financial strength of the insurer and their ability to meet their financial obligations – to pay their claims to policyholders.

These services analyze the reported financial performance of insurance companies over several years to determine the financial strength grade they give an insurer.

In addition to financial health, you want to consider the customer service provided by the insurance company. How responsive are they to their policyholders?

How do you find this out? You can check with your state’s insurance regulatory body – The Department of Insurance for your state. You can call them and ask about any policyholder complaints against any life insurance company you are considering.

Another factor you may want to consider before you buy is whether the insurer offers "Riders" for your policy. If you buy a term insurance policy you might want to make sure the policy is guaranteed renewable, so you can continue coverage after your current policy expires. This guarantees you will get another policy even if you health is bad or other insurers might consider you un-insurable.

Or, you may want to have a policy rider that offers you "coversion privileges". A convertible policy allows you to convert your policy from term insurance to whole life insurance without any questions asked. You are not required to qualify for coverage or take a medical exam. This is another way to guarantee you can purchase life insurance even if your health declines.

Finally, always understand the exclusions of your policy. It’s important to answer all life insurance application questions honestly. Life insurance companies do dispute death benefit payments due to suicide within the contestable period (usually two years), material misrepresentation – lying on the application, or no proof of death, among other reasons.

If you have questions about your policy you can ask the insurance company for a copy, review it and ask for a written response to your questions.

If you have questions about the life insurance company you can contact the Department of Insurance for your state and ask about serious complaints or any specific information they may have regarding the life insurance company you are considering.

A term life insurance policy is a written contract. You have responsibilities and rights regarding that contract.


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