You’re ready to purchase life insurance, but you just realized that you know next to nothing about the financial strength of the companies you’re about to buy from. That’s a problem. Sure, there are state guaranty associations, but these state-run insurance funds only cover a fraction of your policy, up to $100,000, or in some cases up to $300,000. You want to be certain you’re making the right decision. Here’s how to do that.
The Rating Agencies
Typical rating agencies include A.M. Best, Moody’s, Fitch, and Standard and Poor’s. While these rating agencies do provide ratings for pretty much every financial institution, there’s a problem with the way the ratings are done. First of all, the rating agencies can be influenced by insurers. That’s right, insurance companies can pay rating agencies to rate them.
When you’re looking for a life insurance company to provide you and your family with a lifetime of insurance benefits, the last thing you want is the rating to be tainted by paid ratings. Even if you give insurers the benefit of the doubt, there’s little reason, other than manipulation, to pay for a rating. If the company is solid, a rating agency will rate the insurer as such. Read More