Is Your Life Insurance Company Safe?

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Tim is a licensed life insurance agent with 23 years of experience helping people protect their families and businesses with term life insurance. He writes and creates stuff for QuickQuote and other insurance and financial websites. You can find him on Twitter.

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UPDATED: Feb 25, 2020

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“Is this life insurance company safe? Will they be around to pay my beneficiaries when I die?” Both of these valid questions have been asked of us countless times over the years. But lately, questions like these are being asked with greater frequency than ever before. Therefore, I’d like to offer some information to help calm the nerves of anxious life insurance consumers everywhere.

For starters, life insurance companies that are rated ‘A’ or better by major rating agencies such as AM Best and Standard & Poor’s are considered safe. And here at QuickQuote, we only recommend companies that are rated ‘A’ or better. That being said, rating agencies can change ratings on a life insurance company at any time, depending on the financial health of the company among other things. So that A+ rated company you purchased your policy from three years ago may be rated A- today.

Even if this has happened to you, we believe there is no real cause for concern. The primary reason is you are still insured by a company with an A rating (albeit, slightly lower than A+). The difference between an A+ rated company and an A- rated company is negligible. You are starting to split hairs at this point. Generally speaking, A-rated life insurance companies do not miss paying valid life insurance claims for financial reasons or otherwise.

“Recent turmoil in the US financial markets has put a financial strain on some life insurance companies due to reduced market returns and increased capital requirements. Media coverage of AIG’s troubles, for example, have prompted many consumers to question the solvency of all life insurance companies, and rightfully so,” says Tim Bain, President & CEO of QuickQuote. “However, there are measures in place to protect life insurance consumers.”

For example, life insurance is regulated at the state level. State regulators put reserve requirements in place for all life insurance companies to ensure adequate funds are available to meet claims payment demands. In the unlikely event, a life insurance company becomes insolvent; the state guarantee association will cover up to $300,000 of the death benefit and up to $500,000 in some states. You can view the limits of your state at the National Organization of Life & Health Insurance Guaranty Associations’ website.

Our advice to consumers with existing policies is to discuss your concerns with a licensed life insurance professional. For those looking to purchase new coverage, look for a policy from a reputable life insurance company with a rating of ‘A’ or better from AM Best or Standard & Poor’s rating agencies. Finally, make sure you enlist the help of a qualified and experienced broker in your search (such as QuickQuote!).

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