By T. Coffin
There are many things to consider before you purchase life insurance such as what your needs are, what is your budget for life insurance and what is the right policy type for your personal situation. Another very important thing to consider is the rating of the company that you purchase your policy from. The past few months have shown many of us that there are a few companies out there that have mishandled their finances and possibly put some of their policy holders at risk over the long term meaning that should the company go bankrupt or insolvent what are the possibilities of benefits being paid out in the future. It is something we all need to take a look at going forward. While these ratings do not offer a crystal ball look into the future they do help a person make sound decisions based on current and historical information available, which is the best any of us can do to manage risk.
The companies that come up with these ratings, (A.M. Best, Standard & Poor’s, Moody’s and Fitch being some of the top names), are independent firms who look at an insurance companies financial strength to come up with their rating of that company. Basically these companies pay financial analyst to determine the strength of the company’s balance sheet in an attempt to come up with a strength rating that a consumer can more easily identify with.
There are multiple rating companies out in the market, each with a slightly different rating scale but the general idea is somewhat like a grading scale you would expect to see in school, A++ or AAA being the best on down to the lows. It is the middle and low of these scales that differ slightly with each rating system. The different scales and their definitions are available on the web if you want to take a look. In this article we will assume that you will be looking at high ratings for your life insurance needs which means that anything less than an A rating will not do.
After deciding on the other factors that surround the purchase of Life Insurance, deciding on a company that offers the best financial strength should be a strong consideration in deciding what company to purchase your Life Insurance Product from. The good news is that many of the Life Insurance quote services have adopted this into their quotes, which makes it more efficient for the consumer. I would offer this as a last step though, with things changing quickly these days we owe it to ourselves to dig a little before making any purchases. Once you settle in on a company do a search of that company or product and see if there is any recent news on it weather it be positive or negative news, you will have as much or the current information possible to make a well informed decision.