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Life Insurance Companies - Does Yours Make the Grade?

Life insurance companies perform extensive checks into your personal history when you are applying for a policy. That is certainly no secret, the companies want to know about your family, your job, your health, your hobbies, the list goes on and on. Since insurance companies do this, why don't consumers do this to their insurance companies? Knowing a lot about the company you do business with or, if you're searching for a company to become insured with, the company that you're considering doing business with, is very important. You have to look beyond the details of the policy and beyond the information that you read directly from the company itself.

Do your own research!

A life insurance policy is very important to you and your family, so it's a good idea to look up other customer experiences, past lawsuits or problems the company has faced, etc. Judging only by the website or company brochure is not the most effective route to take. The company is not going to list anything negative whatsoever on any of their public information, simply because they are trying to draw you, the customer, in to doing business with them. A simple online search can provide a wealth of information to your fingertips. You will most likely find news articles, customer complaints, and rants on a blog or forum. While you can't make your judgment call solely on this information, it may help influence your decision. Chances are there is another person in your exact situation that went to the company you're interested in for a life insurance policy, and you can gauge their experience and determine if you feel yours might result in a similar situation.

Check with your state!

One thing you will definitely want to know is if the prospective company is legally licensed to provide insurance coverage in the state in which you reside. A lot of states will take company complaint information throughout the year and create a report that lists the insurance companies offered in the states and the number of complaints filed against them during that time period. Now, these complaints may be different from what you read about in an online search. The complaints you read about through the state can be anything from an insurance agent being rude, all the way to a major problem with a claim. While sifting through this information, keep in mind that you will need to differentiate an unhappy customer and a bad decision or mistake by the insurance company.

Insurance companies are rated on their financial strength and how stable they are as a company.

These ratings will help you determine if the company you are with or the company you might be opening a policy with is doing well in terms of assets and how much money they are operating with. In total, there are five companies that provide this particular type of ratings based on financial strength. They are: Moody's Investors Service, Standard & Poor's, A.M. Best, Fitch Ratings, and TheStreet.com Ratings, which used to be known as Weiss Ratings. The ratings these firms provide give the consumer (and the industry itself) insight into the possible future performances of the insurance companies. If the rating is high, the company has plenty of assets and money to continue doing strong business, and on the flip side, if the rating is low, the company may be closing or be sold in the future. A low rating may also mean the company has trouble paying claims, which is something I think everyone would want to stray away from. The ratings change throughout time and can sometimes fluctuate with bad decisions financially or news of company mergers or potential mergers, and also loss of money, for example if quarterly profits are significantly down.

Does your company have the industry "seal of approval?"

It is very important for your life insurance company to have the Insurance Marketplace Standards Association, or IMSA, designation. An insurance company that has this accreditation has proven itself by passing a critical review of the company ethics and business procedures. The IMSA review has a primary focus on customer service, sales, and marketing tactics. Companies have to apply for, or renew, their IMSA membership every three years in order to actually have the seal of approval. However, don't look for this designation only during your search for a company; if you see this on your company information and stop looking right then and there, you may miss out on important information that you would probably like to know about before putting your trust in their hands.

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