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Comparing life insurance plans goes well beyond just price comparisons. While it is important to find a policy that you feel is competitively priced, it is more important to find an appropriate plan that of offered by a licensed life insurance carrier that you can trust will stay in business for as long as you need coverage.
Consumers should never just jump at the first opportunity to buy coverage without first researching the insurer and pricing for the type of plan that they would like to purchase.
If you are being offered a great premium for a large amount of coverage, having peace of mind that the policy offers quality coverage and that the insurer is not a fly by day type of carrier is key.
If you are not sure how to start comparing life insurance plans and pricing, here is your consumer guide to qualifying the insurer first and the quote second.
Be sure to use the FREE quote comparison tool above to start your search instantly.
Selecting the Right Insurer to Buy Coverage From
If one thing is true about the insurance industry, it is the fact that not all carriers are created equal. This is true for all carriers offering any line of insurance, especially life insurance where the marketplace is very unique and making the right investments is crucial for carriers to stay afloat.
One risky investment mistake could result in insolvency and leave you looking for coverage from another insurer well after your health has declined.
In order to select the right insurance that will make the smartest investments and diversify the risk of the invested dollars, you will need to do your homework.
You cannot focus on comparing any life insurance plan or quotes for coverage until you have focused on qualifying the insurer that will be providing your family with financial protection.
After all, you will not be around to deal with the insurer if your beneficiaries ever need to file a claim and this is why it is important to choose an insurer that will be around to provide excellent service when the time comes.
Here are the questions you must ask as you narrow down your list of options:
How long has the carrier been in business and is it financially stable?
If you take a look at the top writers of life insurance, you will find that most of these carriers have been in business for decades or even a century. These companies have had experience with writing rates and lowering investment risk so that they can hold onto consistent profits.
This is why it is critical to review the financial strength of the insurer before you give them your business.
It is best to focus on financially secure companies that have had years of marketplace experience so that the financial ranking is not likely to change suddenly.
Financial strength ratings are public record and you can access the financial statements of companies directly or you can choose to refer to the grades given by third-party agencies that professionally rate finance companies based on their financial statements.
Never trust what a company says about their ratings because their statements are biased. If you use the grades from agencies like AM Best and Moody’s, you will have peace of mind in knowing that their will not be major variations in stability and the actual standing of the insurer.
Is the company ethical?
Marketplace ethics are extremely important. This is why there is the Compliance and Ethics Forum for Life Insurers.
It is not a requirement to be a member of this forum, but taking the time to join will show you that a company is committed to being ethical and complying the codes of conduct of the Insurance Marketplace Standards Association.
What type of products are offered?
Some carriers offer one specific line of specialty life insurance that they have developed their rates for.
There are other carriers that offer multiple lines of insurance because they have taken the time to set rates and to diversify their investment portfolios so that they can succeed in selling term, permanent, specialty, variable and annuity products.
You must decide which company will offer you the products you have a need for after you compare the plan features, benefits and drawbacks.
Does the company offer quality claims and customer service?
When you buy life insurance, you are buying a product that you do not necessarily want to use in the near future. You are buying more of a service than an actual tangible good.
Because of this, it is important to find an insurer who offers you quality customer service, great advice, and quick claims processing without the hassle.
You can check the complaint index of each insurer to see just what types of complaints have been reported to the National Association of Insurance Commissioners.
By accessing the Consumer Information Source, you can find out if there are trends the could be a good warning sign. The source shows all of the official claims, the closed cases, and what the resolution was for closed cases as well.
All companies have complaints, but the ones with large quantities are the companies to avoid.
Selecting the Right Plan For Your Needs
Now that you know how to choose the insurer, you can then proceed to comparing the types of plans that are available to you. All consumers have a basic need for coverage, but not everybody has the need for the same type of policy.
You will need to really sit down and start the financial planning process to select the right type of plan.
Some consumers have a need for a term insurance plan that is temporary and others have a need for a permanent insurance that will stay in effect for an entire lifetime.
You will need to know the features of each type of insurance before you can really feel confident that you have selected the best insurance for you.
Here is a breakdown of each type of insurance and when term insurance may be better than permanent and vice versa:
What Term Insurance Is and When to Buy It
Term insurance is life insurance that will last a specified period of time. It offers you a pure life insurance benefit, that generally stay level but can decrease over time if you buy a special plan. Most policies offer you a guaranteed level premium that is locked in at your age at the time of application.
These premiums will stay level for as long as the policy is valid. When you renew your policy, you are subject to premium increases.
Because term insurance offers pure life coverage only, it is the most affordable option.
Shorter terms often offer the lowest premiums because the premiums are only locked in for a short period of time like 1 to 5 years. Longer terms still offer affordable premiums but may have some more underwriting restrictions than the shorter term plans.
Term insurance is the most common type of insurance purchased today because it is so affordable.
A majority of consumers who buy term life insurance buy this type of coverage because they want to protect their family from financial obligations that will go away over a period of time.
Your mortgage, your car payment, credit card balances and even child care costs will eventually no longer be a burden. If these are the burdens you do not want your family to bare but you do not want to pay an arm and a leg for cover, a term plan is the best choice.
What Permanent Insurance Is and When to Buy It
Permanent insurance is just that–permanent. When you qualify for a permanent cash value plan, the plan will stay in effect for the rest of your life. Some policies will automatically pay out once you reach the age 100.
The major difference between term and permanent insurance is that a permanent plan will earn cash values.
It has an investment component built into the policy where a portion of the money that you pay goes to pure life insurance and the other portion goes to expenses and investments.
As the cash account earns interest, the death benefit will increase. This money can be accessed when you are living in the form of a loan or withdrawal.
If you are looking for coverage that is never at-risk of cancelling, permanent plans are ideal.
It is also best for people using life cover to pay for estate taxes to buy permanent insurance instead of putting the value of the estate in the hands of the government.
Only after you compare the companies in the industry and the product lines available to you can you really select a plan. If you have a short list of top-rated insurers, use an online rate comparison tool and compare pricing.
By entering your information just once, you can see the quotes instantly from several companies and make an educated decision. Be sure to use the FREE tool below to get started!