How do I Decide What Life Insurance Company to Buy From? (Part 2 - Price)

Just buy your life insurance from Garden State Life Insurance of course. End of article.

Just kidding.

I realize this is a weird article coming from a blog sponsored by a life insurance company, but try and hear me out. This is part two in a series of articles that has a few points to consider when reviewing your options whether you are interested in buying insurance from Garden State Life or not.

Price

While price may be the most important or only factor for most people, I purposefully did not talk about price in part one of this series. I wanted you consider other factors before you tune me out. Just because a company is offering the cheapest product you can find there are other factors to consider.

For the most part, this is going to come down to how much work you want to put into finding the lowest price. There is not a source or company that is always going to provide the lowest price for everyone. For example, some companies have more favorable rates for people who smoke and some may place more emphasis on a prior medical condition you had and charge higher rates. Just because you use a quote website or an agent that can quote multiple companies does not mean that you are getting the best deal. Most agents can only sell products for the companies that they have licenses to represent so you may have to talk to multiple agents or visit multiple sites before you find the best deal.

Also, when you are comparing rate quotes you need to make sure that you will actually qualify for the product. Many quote services will quote you the super preferred class of rates, but in the end you may only qualify for the standard class based on your personal or health history, which will have much higher rates than what they quoted you originally.

Also, be sure to only compare prices between similar products. A whole life product or a simplified issue product may have a higher price than a fully underwritten term life insurance product, but they both offer additional features for that price in return (e.g. whole life insurance has cash value and simplified issue life insurance is more convenient and does not require a medical exam.) Find the type of life insurance product with the features that you want and then search for the company that has that product at the price you want to pay.

How do I Decide What Life Insurance Company to Buy From? (Part 1 - Ratings)

Garden State Life Video Contest Video of the Week #2

Garden State Life's first video contest has about one month to go and the best video of the week is getting harder and harder to choose. A big thanks goes out to all of you who have already entered a video or registered to vote. Good luck.

Here is a link to my favorite video this past week:

http://memelabs.com/gardenstate/index.php?play=2203

The dad and all three kids did a great job!

Past weeks:
Week #1 Video of the Week

How do I Decide What Life Insurance Company to Buy From? (Part 1 - Ratings)

Just buy your life insurance from Garden State Life Insurance of course. End of article.

Just kidding.

I realize this is a weird article coming from a blog sponsored by a life insurance company, but try and hear me out. My next series of articles has a few points to consider when reviewing your options whether you are interested in buying insurance from Garden State Life or not.

Ratings

One thing you definitely want to know about a company before you buy from them is their ratings. Every life insurance company is reviewed on a regular basis by multiple ratings agencies. Their job is to look at the financial strength of the companies and give investors an idea as to whether it would be wise to conduct business with a particular company. This is especially important for one considering the purchase of life insurance, as you may need the company to pay benefits well into the future. You definitely want to know that they are going to be there when you need them. Also, if your life insurance company goes out of business and your health has deteriorated, then you may have to pay a substantially higher premium or may not qualify for life insurance at all. This becomes even more important if you have any type of product with cash value. Unlike banks that have FDIC insured balances, the U.S. government does not guarantee insurance company deposits.

An example of a common ratings agency used for insurance companies is A.M. Best. A.M. Best ratings are similar to the letter grades that you get in school. They go from A++ to F (for more details see http://www.ambest.com/ratings/guide.asp). I would advise that you purchase with a company that has an “A-“ rating or higher. This does not guarantee that the life insurance company will not become insolvent, as even an “A++” company can deteriorate over time, but your life insurance premiums should be about as safe as they can get.

Most life insurance companies with an “A” in their A.M. Best rating publish the rating on their sales materials and use it as a selling feature so you probably will not have to go through too much effort to find the rating of a highly rated company. If the A.M. Best rating does not appear in the sales material, you should be able to get the rating off of the insurance company’s website or from the agent or quote service trying to sell you the policy. You can also look the life insurance company up directly on A.M. Best's website to find their current rating.