UPDATED: Mar 26, 2020
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During difficult financial times such as these, consumers are more careful and suspicious when choosing a life insurance company to purchase a term life insurance policy from. Company histories are compared, the web is scoured for good or bad information and some consumers even separate their policies between two companies just to be sure.
One of the more common worries we hear from our customers during an economic slump is regarding the stability of life insurance companies. Customers are concerned their company will file for bankruptcy, cancel their policy or take their money and run for the hills! We don’t blame you for being suspicious, after all of the Wall Street scandals we’ve seen in the past decade.
So how can you feel safe with the life insurance company you choose? Below is information to help ease your anxiety when it comes time to make a choice.
Check Financial Ratings
First of all, you can ease your mind by checking your prospective life insurance company’s financial ratings. Our website automatically lists the Standard & Poor and AM Best ratings of each company quoted, and you can also find a description of what these ratings mean.
Most life insurance companies also list their Moody’s and Fitch ratings, which you can usually find directly on the company’s website. Some life insurance companies list their financial documents as well; although this information may be more useful to investors than prospective term life insurance consumers.
Life Insurance Company Take-Overs
To ease your worries, it may help you to know it is fairly common for troubled life insurance companies to merge with or be acquired by another life insurance company. For example, just within the past ten years or so, we’ve seen Protective Life acquire Empire General, Zurich and Chase life insurance companies. When such an event occurs, the company that buys another company also assumes responsibility for existing policies, to include maintaining them and paying any death benefit claims made.
State Guaranty Associations
Each state has a Guaranty Association that is meant to protect policyholders from insolvent life insurance companies. All licensed life insurance companies must be members of their state’s Guaranty Association. If a company is found by the association to be insolvent, they will be liquidated, and their policies will be transferred to a solvent life insurance company. The Guaranty Association provides limited coverage to the policyholders of the company in question, according to the specific laws of each state. You can see how much coverage the Guaranty Association in your state allows.
Talk With a Licensed Life Term Insurance Professional
You can learn a lot from the Interweb, but misinformation and biased opinions can make it difficult to sort out the useful tidbits from the nonsense. Sometimes it’s better to seek out the views of an industry professional. Talk with an experienced term life insurance agent or call the life insurance company you are considering to gain insight. Don’t be afraid to ask the same questions to multiple professionals to make sure every aspect of your question is answered.
When you are powered with knowledge, finding a competent and stable life insurance company is no longer an intimidating task!