Evaluating a Life Insurance Company

Life insurance companies provide a multitude of product options and premium discounts to attract your business. Consider the following tips to decide which life insurance company is worthy of your business:

Think Long Term
Many forms of life insurance are coupled with investment products and/or cash value that grow over time. A long-term investment will maximize the policy’s value.

Some life insurance companies offer “renewable” or “guaranteed renewable” policies that are advantageous to buyers hoping to grow value in their policy and not have to re-apply for coverage at an older age. If you plan to keep your life insurance coverage for a long time (most buyers do), strongly consider a company that offers a renewable option.

What Do You Want Your Life Insurance To Do?
Think about that question and write your answers down. Then compare that list against the life insurance companies you are considering before making your decision.

For instance, some buyers want a larger death benefit. Others see life insurance as an investment tool. “Term Life” coverage is the simplest form of life insurance (i.e., you pay premiums and your beneficiaries receive a payout if you die before the end of the term). “Whole Life” products such as “Variable” or “Universal Life” insurance are more complex, requiring more options and more attention. The personal touch is extremely important to some people. If that’s what you want be sure to choose a life insurance company or agent that you feel comfortable speaking with, asking questions and reviewing options.

Some buyers start with a term life policy because it is the only policy they can afford at that time in their lives. These buyers may choose to convert the term policy to a whole life product in the future. If this is a consideration for you, make sure the company that you buy your policy from offers “convertible” term—meaning the policy can be converted to a whole life policy without additional evidence of insurability.

Buy Life Insurance, Not Snake Oil
Before buying a policy ask your agent or state insurance department about the issuing life insurance company’s financial strength. The company’s financial rating will give you an idea of how quickly and efficiently the company pays claims—something you would like to know before a claim occurs. Avoid companies with bad ratings or a poor claims-paying track record.

The Comfort Factor
Most life insurance companies have excellent resources available for their policyholders to learn about, manage and make decisions regarding their coverage. If ready access to your policy is important to you, do not purchase a policy from a company without first visiting its Web site. If you are doing business through an independent life insurance agent make sure your agent is easily accessible and able to assist you when you need his or her help.

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