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How To Evaluate Life Insurance Companies Ratings

Life Insurance Company Ratings

When it comes to buying life insurance, most people consider only the cost and the type of the policy. These factors are important, but not the only ones.  For example, you don’t want to purchase a policy from a company that has low ratings, even if the cost is competitive. Overall, you must include factors such as the strength of an insurance company into your decision. 

There are five main rating organizations that issue financial strength ratings to all the licensed insurance firms. These are some of the most respected rating organizations in the world and include Standard & Poor’s, Moody’s Investors Service, Fitch Ratings, TheStreet.com Ratings and A.M. Best. Every rating organization has a different grading system, which means there can be some variation in the grading levels among them.

The rating of an insurance company is based in part on its ability to clear off claims. When you chose a higher rating company, it is an indication that it has sufficient amount of reserves and assets for paying claims.

Because life insurance claims are usually made several years after buying the policy, it is essential to keep checking the financial strength of your insurer from time to time. The ratings can be affected by many factors. For example, if the management of the company takes certain bad financial decisions and starts losing money, their ratings could start dropping. Ratings can also be affected by company changes, such as mergers.

Many online sites and tools help insurance customers learn about the ratings of life insurance companies. When buying a policy, make sure that the insurer is a member of the Insurance Marketplace Standards Association or IMSA. The IMSA was launched by the industry organizations after the industry suffered many setbacks so as to maintain a uniform and high standard.

If an insurance company must become a member of the IMSA, they have to undergo careful scrutiny by qualified and independent evaluators. When you come across a member-IMSA insurance company, it is a sign that they maintain the highest standards, especially in customer service, sales and marketing.

An insurer must also offer good customer service.  Because the industry is regulated at state level, all the complaints are compiled by states on an annual basis. These reports provide you with information like the number of complaints for each company against their market share. Get these reports from your state to keep a check on your insurer.

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