Family Matters. Secure their Future with Life Insurance.
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Choosing a Competent Provider

According to the Insurance Information Institute, about 1,000 companies currently sell life insurance in the United States. While some of these providers sell on a nationwide basis, many of them do not have licenses to offer coverage in every state. As a general rule, you should purchase coverage from an insurer licensed to operate in your state because you will then have the insurance department of your state to turn to if a problem arises. But that lone criterion doesn't exactly narrow the field much, so what else should you look for in an insurer? Here are the considerations every prospective policyholder should make in selecting a carrier:

  • Coverage selection - most insurers offer the full spectrum of policy types, but some specialize in only one form of coverage. Select your carrier based on which company offers the particular policy and features you want.
  • Financial stability - you will be with your insurer for a long time, so you want to pick a carrier that will still be around in 10-20 years. Remember that the death benefit on your policy is not backed by the federal government as bank accounts are. That means if your insurer goes out of business before you die, you're out of luck. Judge prospective insurers' financial health using independent rating companies, such as A.M. Best or Standard and Poor's.
  • Ethical standards - reputation plays a role here, but the industry actually has a centralized code of ethics promulgated by the Insurance Marketplace Standards Association (IMSA) that individual carriers can choose to adopt. The IMSA is a nonprofit organization dedicated to promoting ethical behavior in the industry.
  • Company identity - life insurers usually select their names to reflect their differentiation strategy. For example, companies' names might suggest financial stability (Guaranty, Security); reliability (Assurance, Trust, Reliable); experience (First, Old, Pioneer); or geographic scope (National, International, Continental). Other companies simply adopt the name of a revered American figure, such as Lincoln or Franklin. Before you commit to a carrier, make sure you know the company's full title, the location of its headquarters, and any affiliation it has to a parent company.
  • Policyholder satisfaction/customer service - it helps to have someone knowledgeable and trustworthy guide you through the confusing life insurance labyrinth. The carrier you choose should have a broad network of agents or representatives available when you need them. Remember that agents typically only represent one provider; brokers generally represent several.
  • Complaint history - if a life insurer on your short list turns out to have a substantial claims history, don't waste your time. Investigate all prospective insurers' histories by looking at a national claims database and/or information available from your state insurance department on consumer complaints against the carrier. Your insurance department will be able to give you the number of complaints it received per number of policies sold for every provider licensed in your state.
  • Price - even premiums for the same type of policy can vary widely between different companies, so do a price comparison before you make your final decision. Be sure to compare apples to apples-compare policies with the same amount of coverage and equivalent features for more accurate results.