Rating A Life Insurance Provider
Reader’s Question:
How can I check a life insurance company’s financial standing? And if ever that my life insurance provider here in California goes bankrupt, what will happen to my policy?
Irene
Anaheim, CA
You brought up some very interesting questions there! For your first question, you can refer to many companies and rating agencies on the web to run a search on the financial strength of companies falling under a particular industry. We recommend the following: J.D Power, A.M Best Co., Moody’s Investor Services, Weiss Research, Standard & Poor and Duff & Phelps.
Each of the said agency/company will have it’s own way or scheme of rating a particular company so it is best to understand first how they rated (which is not going to be a problem since they will make sure that people will understand the criteria used for the ratings). You should be able to check the financial rating of the particular life insurance carrier that you are interested to in. You can also use life insurance portals like this website to run a life insurance quote to determine which providers are offering the cheapest life insurance rates.
If you had the bad luck of choosing an insurance company that goes out of business in the future (which is rare), other life insurance carriers that are based there in California would have the responsibility of bailing-out, or buying-out the failing company (This practice is also done in all other states). The state’s insurance regulators would do their best to make sure that the affected policyholders would not lose their money. But usually, a larger life insurance corporation would take over on it’s own initiative.
Getting Enough Life Insurance
Reader’s Question:
I’m worried that I don’t have enough life insurance coverage here in Illinois for my family, how do I know I have enough?
Christian
Chicago, IL
This is a good question, many people don’t realize that the amount of life insurance coverage they are carrying might not be enough. Life insurance is a long-term financial commitment so it is very important to understand how to know that you have enough coverage for your family there in Illinois. Here’s what you can do to make sure you have enough coverage.
Evaluate Current Financial Needs
On a yearly basis, how much money does the household need? How much are your expenses? Getting a good idea of how much money your family would need in order to have a decent lifestyle just in case something happens to you would be a great start in determining if your current life insurance coverage is enough. This would include any mortgage, debts, or loans you may be paying regularly, as well as bills and daily expenses.
Consider Your Family’s Future Needs
It would be very important to also have some foresight towards your family’s future needs. You know you are paying for enough coverage if your life insurance policy can cover future needs such as college tuition, health care needs, paying-off long-term financial obligations and other monetary responsibilities that you don’t want to leave and burden your family with.
If you feel confident that your life insurance has enough coverage for these needs to sustain the family for at least a few years then you know you have enough life insurance coverage.
Selling Your Life Insurance Policy
Reader’s Question:
What are the things that I need to consider before I sell my life insurance policy in Illinois?
Joshua,
Springfield, IL
Before you sell your life insurance policy in Illinois, you need to keep in mind the reason for purchasing the life insurance in the first place. If you think that selling your life insurance will make things better, there are things that you need to consider.
If the reason for selling your life insurance is to get immediate cash, you should check other alternatives where you don’t have to sell your life insurance policy. You can check with your current life insurance company they have accelerated death benefit to offer. Although there can be an additional fee for this, it is better to do business with the company you can trust. You also need to discuss your decision with your beneficiaries especially if they depend on the face amount to pay medical treatment and the additional costs. You should also consult an attorney or financial planner on other financial aspects that you may not be familiar with such as the impact on estate settlements and probate if the proceeds are tax-free. Don’t forget also to shop around for other companies the amount of payout differs from one company to another. Lastly, you need to ensure that the insurance companies or brokers are licensed.
Tips For Life Insurance Shopping
Reader’s Question:
This would be my first time to buy a life insurance policy and I would like to get some advice on what to do, and what not to do, when I look for a life insurance provider here in Pennsylvania.
Ortega
Erie, PA
Before setting out to get a life insurance policy there in Pennsylvania, it would be very important to identify your goals and requirements or your reasons as to why you would want to get coverage. Here are a few things to keep in mind while looking for a policy.
1. If employed, get a good idea if the company you work for includes group life insurance coverage as part of the coverage. If you see yourself working for that company for the next ten to fifteen years then it would be a good idea to find a life insurance package that would supplement your existing policy.
2. Life insurance policies are bundled packages, if you decide to get a policy with a death benefit of $240,000, why not bump it up to $250,000? You could actually get lower premiums if you buy higher.
3. Shop around. The Internet is a rich medium to get accurate and timely life insurance rates. By going through the quoting system of a few life insurance portals you would already get a good idea which companies offer the most competitive rates available.
4. If you have special circumstances regarding your health or medical condition, seek out a company that specializes on life insurance policies for those with diabetes, asthma or any other pre-existing illnesses. You could save up to half on premiums as compared to going with a general life insurance provider.
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