How do I Pick a Life Insurance Company?

Approximately 1,000 life insurance providers sell life insurance in the United States, but many are not direct competitors but rather members of teams of businesses that are more similar to each other. Having separate companies enables a group to offer its different products by way of separate distribution channels, to more efficiently meet the regulatory requirements of individual states, or to achieve other organizational goals.

Most groups do not operate in every state, so it's recommended that you buy from a seller that's licensed in your state. As a general rule, you should do business with a company licensed in the state, because then your state's insurance department can help if there's a problem. If you are covered in a state in which the life insurance companies of the agent became insolvent, your life insurance policy will be available only from respected companies licensed in the state. Find out which insurance companies are licensed in your state.

Besides the aforementioned tips, there are also other considerations to keep in mind when choosing a life insurance company.

Product - A majority of, but not all, companies offer a broad range of services and features, so choose a provider that meets your needs.

Identity - Life insurance company names are often confusing, and similar companies may use similar names. Life insurance companies often use words that suggest financial strength (such as Guaranty, Reserve, or Security), financial sophistication. (such as Bankers, financiers, or investors), age (such as First, pioneer, or old), dependability (such as Assurance, reliable, or trust), fairness (such as Beneficial, equitable, or peoples), extent of operations (such as Continental, national, or international), government (such as American, capital, or republic), or well established and respected US citizens Note that partial names of renowned Americans such as Thomas Jefferson, Benjamin Franklin, or Abraham Lincoln are different from the full names. Be aware that any firm you are considering may have a different home office, place of business, and business affiliation (if any) from that of the full name of the company.

Financial Solidty - Life insurance normally lasts for many years to come. Life insurance policyholders are not protected by the same guarantees as banks by the Federal Deposit Insurance Corporation (FDIC). Ensure you're doing business with a reliable company by using ratings from independent rating agencies.

Market Ethics - Some life insurers follow the principles of the Insurance Marketplace Standards Association, a nonprofit that aims to ensure ethical practices in life insurance marketing.

advice and Service - For those individuals, life insurance is a challenging, complicated product, so it helps to work with a representative who displays comprehension of your needs and is receptive to your vision. This might be related to the choice of a life insurance company because some agents represent one or a few life insurance companies.

Claims - You might want to visit a national database to find out what official info it has about a company. Also, your state insurance department can advise you if the insurance carrier you are considering to do business with had many complaints against selling its policies in proportion to the number issued.

Premium and Cost - The premium is the amount you pay for the company's life insurance contract with all of its included benefits. Regardless of a death benefit and kind of insurance (e.g., term life insurance), the premium can vary among different insurance companies, either because different companies have different policies, or because some charge more than others for the same insurance plan. The next logical step in comparing policies is to make sure that you compare similar plans:

- The type of features and policies covered 

- Along with your age 

- Affects the type of insurance and policy you are buying.

The premium for the policy is not the same as the value for protection part of the policy. One policy could have a higher premium but also provide more benefits (for instance, it might pay policy dividends) than another. Or both may promise dividends, but in differing amounts at different points in time. In all cases, the higher the premium, the lower the policy's total cost. Find out what a non-standard insurance policy costs by multiplying the net payment cost index by its surrender cost index. Use the surrender cost index if you only wish to hold the insurance policy for a short time: Use the Net Price Index if you prefer to keep the policy indefinitely. Lower the cost index generally means a lower premium. I hope you enjoyed this session on everything you need to know about How do I Pick a Life Insurance Company?. So always be sure to contact a professional before making any financial decisions.