How to know if your insurer can keep its promise to your family
(ARA) - When you buy life insurance, you aren't just making a simple purchase like a cell phone or other retail item. Instead, you are buying into a promise. You are paying premiums to an insurance company in return for the promise by that insurance company that it will pay a death benefit to your beneficiary in the event something were to happen to you. Sometimes the coverage you purchase can last 30 years or longer.
Life insurance is confusing, and there are so many different options available, it may be difficult to narrow down the best plan for your family. For a helpful guide to understanding the basics of life insurance, visit www.sbli.com/jpond_guides.
So how do you judge if the insurance company you choose will be able to fulfill its promise to your family? There is a lot of money involved, so this is a very important question you need to ask as you choose a policy for your family.
Consumers can find indications of how financially strong different insurance companies are through respected rating agencies like A.M. Best (www.ambest.com). These ratings can help you choose a company that is more likely to provide your family the benefit you are paying premiums for.
How insurance company ratings are determined
By annually reviewing each insurance company's financial balance sheets, business profiles and operating performance, rating companies can make a conservative prediction about the long-term financial strength of each insurance company. Their goal is to determine, to the best of their ability, whether an insurer's financial situation and future outlook is secure or vulnerable.
If it is secure, then the company will be more likely to meet the demand for payment of death benefits. If it is vulnerable, then the chances are higher that the insurance company could default on its obligations to policyholders. For more details and to find the ratings on many insurance companies, visit www.ambest.com. It is important to remember that while insurance company ratings are great tools for consumers to use when evaluating various insurers, they are not guarantees.
Understanding insurance company ratings
Insurance company ratings by A.M. Best use the same rating system that schools use when grading papers. A.M. Best's rating of "B+" or better is good or, "secure." Anything below "B+" is technically on the "vulnerable" side of the ratings equation. An insurance company rating of "U" means that it is currently under review and may change within the next six months. One interesting rating from A.M. Best is "PD." A "PD" rating means that the insurer did not wish to participate in A.M. Best's rating program. This is not always an indication of a vulnerable financial state but could be a warning sign.
A good example of a highly-rated life insurance company is The Savings Bank Life Insurance Company of Massachusetts. SBLI has been rated "A+ (Superior)" for financial quality by A.M. Best for 17 straight years. Additionally, SBLI has been serving families for over 100 years with affordable coverage. For more information on different kinds of life insurance call 888-GET-SBLI or visit www.sbli.com.
SBLI and The No Nonsense Life Insurance Company are registered trademarks of The Savings Bank Life Insurance Company of Massachusetts, which is no way affiliated with SBLI USA Mutual Life Insurance Company, Inc. SBLI products may not be available in all states.
Courtesy of ARAcontent