Life Insurance

Life Insurance

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Your Life Insurance Company: How Good Is It?

Just like your insurance company keeps tabs on you, it is important that you, in turn, keep tabs on it. If you see your insurance company in the news, be sure to read up on why they were in there. It's important not only to concentrate on the policy you have, but also with which company you have it through. The strength and stability of the company are important factors to concentrate on. To do this, you can use different tools offered by financial rating firms, industry associations-like Insurance Marketplace Standards Association (IMSA), or even your own state's insurance department to find out how good they really are.

What to look for
It is important to pay attention to few different key points when you are evaluating your life insurance company:

1. Review then decide which life insurance company to pick from

Review your life insurance company's financial strength and stability
Realize that not all life insurance companies choose to be rated by every service available
Check with the state insurance company to see if your life insurance company is licensed in the state you are in

2. The insurance rating scale
There are five different ratings firms that issue financial strength ratings for insurance companies. They are Standard & Poor's, Fitch Ratings, A.M. Best, Moody's Investors Service, and Weiss Ratings.

When a life insurance company is rated, the rating gauges its ability to pay a claim. For example, if it receives a low rating, it generally means the company doesn't have many assets and/or reserves available to pay off claims. It is a good idea to keep an eye on your life insurance company's ratings, because they can fluctuate at any time due to any number of circumstances. The typical fluctuations occur from bad financial decisions and investments, the loss of money, mergers and even the news of a possible merger.

3. How your state rates your life insurance company
Each state has a different way of dealing with insurance companies and how many complaints consumers file against them. Many compile a complaint report every year by tallying the total number of complaints and ranking them in relation to their market share. If you notice that many policyholders faced a complaint against a certain life insurance company, you can check with your state insurance department to see what the complaints were about. Mind you, complaints can range anywhere from a bad experience with an agent, to something more serious, like misrepresentation of a policy or troubles with a claim.

4. "Seal of Approval"
Throughout the 1990's, life insurance industry officials made many poor choices, bad ethical decisions and received great scrutiny from the press. As a way of regaining public trust and support after those years, a seal of approval called the Insurance Marketplace Standards Association (IMSA) designation was put into effect.

The IMSA designation shows that a company maintains high standards, mainly in marketing, sales and customer service. To gain membership, independent, qualified evaluators rate the life insurance company as it undergoes rigorous scrutiny. If the membership is granted, it is valid for three years, and after those three years, it may either be renewed or dropped, depending on the rating it is given at that time. It should be noted that being a member of IMSA is just a plus, it doesn't mean that outside factors should be overlooked when considering what company to purchase insurance though.

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