If you’ve been looking at Life Insurance coverage and you know what coverage amount you want and the policy type that best fits your needs, the next step would be to figure out which carrier you’re going to do business with. Now, I have no quarrels with the big, exclusive companies that only sell their own product – truth is, I used to work for one. However, now that I am on the broker side of the fence, I do see the benefit of having choices, because not all carriers are created equally. Here are the aspects of weighing out carriers that I typically cover with my clients: conversion options, riders (additional options), financial strength of the carrier (stable financial outlook), and cost vs. benefit. I will go into detail about a few of these below.
Conversion options allow you to take your Term policy and convert it to a Permanent policy. Though it is difficult to see 20-30 years into the future, you probably have an idea about how your family spends down debt. If you are someone who adds extra to their mortgage payment because you want to pay the mortgage off early, you will likely have less debt 20-30 years from now. If you are someone who ritually refinances every 5-10 years, then you might possibly have more or equal amounts of debt than you have now. The reason your debt repayment habits come into play is that if you will have a financial need for life insurance in the future, you’ll need to prepare for it early. Having this conversion privilege in the future will give you the freedom of continuing your coverage (converting into the permanent form), regardless of how your health has changed since your original policy. I have heard this described as “holding your place in line,” –in respect to health ratings.
The financial strength of a carrier is another important factor to look at when choosing which company to give your business to. Most companies will have their financial standings on their website, as well as figures on their accumulated reserve assets. Alternatively, you can also perform a search on each carrier through financial rating companies such as Standard & Poor’s (S&P), Moody’s, and AM Best. These companies all have websites – however, some may require a membership, or a log-in to perform a search. Each of the companies use different characters and symbols, so remember that the highest rating may be displayed as “A” with one company, and an “AAA” with another. It is common advice not to seek coverage from poorly rated carriers, nor carriers with excessively small reserve assets.
In the end, you will have to understand what coverage goals you have for your future. If you know what is important to you, your agent can help you sift through the options to help you land on a carrier that has what you’re looking for.
If you need help determining your coverage needs, please contact me to set up an appointment and I will be happy to help you out.