Which Life Insurance Company is Best?
The truth is that for the life insurance industry it is a very difficult to choose a “best” company overall. Even independent review and comparison services like Consumer Reports don’t specifically endorse a particular company. The reason is due to the fact the life insurance industry is so tightly regulated by the state insurance commissioners, there is little room for problems to occur. In addition to being so highly regulated, life insurance policies themselves are contracts. It is very straight forward, you the policyholder will pay a premium and if you pass away as designated by the terms in the policy, the insurance company pays out the benefit to your beneficiaries. There is little room to confusion or ambiguity. Unlike auto or other type of insurances where the value is to be determined at a later date with life insurance the benefit is agreed upon upfront.
So which company should I choose?
There are so many insurance companies out there for you to choose from, picking the right one can be overwhelming. The rule of thumb that I personally use and advise to all my clients is to choose a company with at least an “A” (Excellent) rating or better by A.M Best. An “A+” (Superior) is even better with an “A++ (Superior) being the highest possible rating by A.M. Best. However, the A++ rated companies such as Northwestern Mutual Life Insurance and New York Life as often much more expensive than A+ companies such as Banner Life or Protective Life. Since all life insurance policies are contracts, it is ok to shop on price with life insurance since every company will pay out the benefit if one were to pass away. In fact, in the history of life insurance in America, no valid claim has ever been failed to pay out.
Companies and policies to avoid
With that being said there are a few companies that have received a lot of complaints so choosing another company may be a better alternative. Many of these companies have to do with “guaranteed acceptance life insurance” where you can’t be turned down if you have a health problem. I recommend that everyone looking for a policy in this market to be careful and to do your research thoroughly, as this seems to be the one segment of the life insurance industry that has the most complaints. Also, check with multiple sources beside just the Better Business Bureau (BBB). Even though some of these companies have numerous complaints they still somehow maintain an A+ rating, so do check with more than one source before handing over your hard earned money.
For more information on polices to avoid, check out 4 Life Insurance Policies to Avoid in 2013
The final word
With life insurance, there isn’t necessarily one “best” company to choose. Since life insurance policies are contracts, if you pass away as defined in the policy your beneficiary will receive the benefit. It is very straight forward. You do however want to make sure you are choosing a company that is financially strong with at least an “A” (Excellent) financial rating or better by the premier independent rating firm A.M Best.
Also, if you are in the market for a “guaranteed acceptance” life insurance policy make sure you get detailed reviews from multiple companies to ensure you don’t have any future problems.
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