There are companies out there, such as A.M. Best and Standard & Poor’s, which rate life insurance providers on various financial strengths in order to help consumers make more informed decisions (insurance company ratings).
Each state in our great nation also has a department of insurance that monitors the financial status of life insurance companies and regulates their practices.
If you’re in the market for life insurance, you should look for an organization that’s been around a while, with a proven ability to pay claims to your beneficiaries in the event of your death.
After all, it’s a lot more likely an insurer will pay your claim if they’re still in business…
It’s also not a bad idea to determine how much life insurance you need prior to beginning your search.
That said, here are the top 10 largest writers of life insurance in the United States, along with their AM Best rating as of 2007, per the III.
Top 10 Life Insurance Companies in the United States
1. MetLife – rated A+, Superior
2. Prudential Financial – rated A+, Superior
3. New York Life Insurance – rated A++, Superior
4. TIAA-CREF – rated A++ , Superior
5. Massachusetts Mutual Life Insurance – A++, Superior
6. Northwestern Mutual – rated A++, Superior
7. AFLAC – A+, Superior
8. Genworth Financial – A+, Superior
9. Principal Financial – A+, Superior
10. Lincoln National – A+, Superior
Some of the insurance companies listed above may offer a combination of life, property, casualty, and/or health insurance coverage.
Life insurance companies, much like other large corporations, don’t always specialize in just one thing, though they tend to stick to insurance and financial services.
Keep in mind that there are thousands of insurance companies out there to choose from; some focus on only one type of insurance or one specific region of the United States, while others offer a wide array of services to customers nationwide.
But it’s not necessary to purchase a life insurance policy from one of the companies listed above to ensure you receive adequate coverage or service.
Be sure to get insurance quotes online and/or contact an independent insurance agent to compare different plans, coverage, and rates.
This post was written on July 26, 2010
Most people cringe at the thought of purchasing insurance. Home, auto, health, life…Where does it end?
A better question is where should it end?
Insurance can be a valuable tool to protect our health, financial future, and property.
Many types of insurance policies are highly recommended, if not mandatory, and well worth the miniscule cost to protect our interests. Unfortunately, there are organizations out there playing into our fear of the unknown to sell us insurance coverage we may not need.
These insurance flops may not be necessary either because the odds are astronomical you’d suffer a loss from the event insured against, or there is another policy you may (or should) already have in place to cover you against the specified peril in question.
Let’s take a look at the top 10 insurance policies you could probably do without:
1. Rental Car Insurance
Also known a collision damage waiver, or CDW, this is not really insurance; rather, a promise from your rental car company stating they won’t make you pay for damage to a rented vehicle. This coverage is actually provided in most personal auto policies (check before you rent) under your liability limits. Additionally, many credit card companies will provide this coverage, up to a specified limit, when using their card for purchase.
2. Life Insurance for Your Children
This is typically sold under the guise that rates can be very low for a child and you may get to keep the low rates throughout their lifetime (and build value if you purchase a whole life policy). Think this one through. The reason the rates are so low is because the odds are slim your child will not grow up to be a healthy adult. The insurance companies make big money, because they don’t pay out many claims (that alone is an indicator it might not be a great value for you). It may be a better idea to start putting money away for a college fund or any other investment account.
3. Flood Insurance
Read this one carefully. You either REALLY need flood insurance or your REALLY don’t. Don’t take this article to say flood insurance doesn’t have its place in the legitimate insurance arena. However, if you do not live in a flood plain or near a waterway or coastline, this might not be necessary for you. You’ll probably know if you need flood insurance if your lender requires you to purchase it to get your mortgage approved. A flood certification is part of the loan process. Not sure? Call your lender.
4. Mortgage Life Insurance
You’ve probably received junk mail regarding this type of insurance if you own a home. This falls under the category, “either have or should have” as mentioned above. A good life insurance policy, whether term or whole, already incorporates the cost of your mortgage, in addition to many other bills you will likely leave behind. No need to double up on this one by adding the mortgage life policy. Click here to read more about how much life insurance you should purchase.
5. Private Mortgage Insurance – PMI
If you finance over 80% of the value of your home purchase in one loan, PMI is mandatory to protect the bank or lender against default. PMI can also be avoided by borrowing no more than 80% of the value of your home, or by taking out two concurrent loans, with the first capped at 80% and the second for any amount above that.
6. Credit Card Balance Insurance
Eerily similar to PMI, discussed above, this is insurance you can purchase for something you should avoid in the first place. Look; if you have to buy insurance, which costs you more money, to cover you against money you shouldn’t be spending, you might be making a mistake. Think twice!
7. Unemployment Insurance
Unemployment insurance is already offered by the state you reside in, but this type of coverage (sold as a separate policy) may be necessary for those who earn large salaries, not typically replaced by state provided unemployment benefits. Financial planners will probably suggest you start and maintain a rainy day fund to cover you in the event you lose your income rather than pay more money for insuring yourself against it. We are not trying to beat a dead horse here, but it may be better to save and plan for some negative events than purchase insurance against them.
8. Personal Injury Protection – PIP
Many in the insurance world share the opinion that this coverage is not necessary for those who are already covered by an existing health insurance plan. The case can be made that PIP is nothing more than health insurance for you while in your car. Speak with your independent insurance agent before cancelling or deciding not to purchase this type of coverage.
9. Accidental Death
Also commonly offered on as additional coverage on an auto insurance policy, accidental death insurance is another example of insurance you “either have or should have,” in the form of a life insurance policy. Many life insurance policies already contain language that provides additional benefits if your death is the result of an accident.
10. Auto Physical Damage Coverage
This coverage is typically mandatory if you lease or take out a loan for your vehicle. Your lender requires it to protect their financial interest in your car. However, if you own your car outright and it’s not very valuable, you might consider dropping this coverage from your auto policy to save some money. It doesn’t make sense to pay for insurance in the event your car is damaged or totaled if you would just purchase a new car rather than fix your existing one.
In summary, insurance can protect your health and financial future, but certain types, discussed above, may slowly eat away at it as well.
It’s important to speak with an insurance agent prior to reducing or removing coverage from an existing policy.
One of the main points of this article should be that it’s important to be informed prior to making insurance decisions. You might find that having good health, life, homeowner’s/renters and auto insurance will cover your needs if you are the “average Joe.”
Get online quotes or speak to an independent agent if you have any questions about your insurance coverage or premium.
This post was written on July 15, 2010
Insurance is a numbers game…bottom line. There is a simple answer to every insurance question that begins with, “why is insurance so expensive for X?”
The short answer is because the group in question causes, and/or is involved in more auto accidents and receives more tickets than the average driver. Period.
The same goes for why car insurance is so expensive for teenagers.
You may ask what tickets have to do with it? Same deal; drivers with more tickets are more likely to get into accidents.
But in order to completely understand it all, you need to know how insurance rates are determined.
Let’s focus on one particular piece of the equation to demonstrate why rates are higher for people less than 25 years of age.
Insurance companies keep track of every claim they have to pay for (because it is money they actually lose).
Additionally, there is an organization, known as Insurance Services Organization (ISO) that allows insurance companies to access their compiled data about claims from other companies.
What do they do with this information?
The next step in the process, simplified for the purpose of this article, is to plot the data on a graph and look for certain trends that stand out from “the norm.”
When the information is plotted, it becomes obvious who has more accidents. Naturally, insurers charge those individuals higher insurance premiums.
For example, newly licensed individuals, people under 25 years of age, and those who aren’t married.
Conversely, those with historically fewer auto accidents are charged lower premiums for coverage.
This is also the reason insurance companies review your MVR, C.L.U.E. report and even vehicle history records to determine exactly what type of driver, or “risk,” you represent in terms of filing a claim.
It is worth noting that insurance companies are not allowed to evaluate us based on attributes that can be considered discriminatory, such as race or religion.
What is this information leading to?
Nowadays, insurers are attempting to segment their potential insured into as many different identifiable attributes as possible. This will ensure that those who deserve cheap car insurance get it, and those who are likely to file a claim will pay more. It’s really a way to make it more equitable for everybody.
This pricing model gave rise to the new craze of providing discounts to drivers (good student discount, good driver discount).
For example, if you’re part of a group that normally pays higher car insurance premiums, you may still be able to achieve a lower overall premium for having a good insurance score, maintaining continuous coverage, or being accident free for a specified period of time, perhaps three to five years (how can I lower my car insurance rate?).
Get online insurance quotes or visit your local independent insurance agent to obtain quotes from multiple insurers. The premium you pay may be greatly reduced by seeking coverage from the type of insurer who has an appetite for your particular “risk group.”
The good news is that when it comes to life and health insurance, the younger you are, the more likely you are to pay a lower premium for coverage…so you’ve got that going for you!
(photo: cappellmeister)
This post was written on July 13, 2010
If you’ve ever been in a car accident, you know it can be a lot of drama. Aside from any health-related issues, you’ll probably also have to deal with damage to your vehicle.
Whether the accident was your fault or caused by another party, you’ll want your car repaired or replaced as soon as possible.
This is where things can get messy. In the unfortunate event your car is totaled, you are typically at the mercy of the insurance company’s adjuster, who ultimately determines the value of your car.
Which companies are used to determine a car’s value?
This isn’t really an industry secret. There are three companies an insurance adjuster typically relies on to determine a vehicle’s value:
1.Kelly Blue Book
2.Edmunds
3.Nada
Loss Valuation Methods
However, each company uses a slightly different valuation technique. Who is the best? It’s hard to say. But whichever company determines your car’s value to be the highest is likely the company you would agree with.
Often times, your opinion will differ from that of your insurer, and how much money you receive for the totaled vehicle will depend on your policy language. Specifically, the valuation method you agreed to; either replacement cost or actual cash value.
Replacement Cost
Unlike homeowner’s insurance, replacement cost is not an option for every car on an auto policy. On the typical policy, replacement cost is only offered on newer vehicles.
Usually your car can’t be more than two years old, or in some cases, three years old (the latter being rare).
This is basically because a car’s value depreciates quickly. Insurance companies would lose quite a bit of money if they were to agree to replace a three or four year old car with a new one. If this were common practice, we would all be paying much higher insurance premiums than we do now.
Actual Cash Value (ACV)
Actual Cash Value is determined by taking a vehicle’s replacement cost minus depreciation. This is the most common valuation method employed by auto insurance companies.
For example, say you purchased a $20,000 car in 2007. In 2010, your car is totaled and needs to be replaced. Since cars lose most of their value in the first couple years, your $20,000 car is now only worth $14,000…no matter what you still owe on it, which would likely be in the $15,000-$17,000 range after three years, depending on down payment.
That could put you in a precarious position. A check from your insurance company for $14,000 would leave you with as much as a $3,000 auto loan or lease balance deficit.
This is where gap coverage, also known as loan or lease coverage, would come into play. If you have a newer vehicle, less than two years old, it might be a good idea for you. For an additional premium, your insurer will pay the difference between what your car is worth and the outstanding balance on your current loan.
Stated Value:
Finally, there is stated value physical damage coverage, which is normally reserved for classic cars or any other vehicle whose value may be hard to determine. Ultimately, you and your insurer agree on the vehicle’s value prior to policy inception. You will likely have to produce an appraisal from a reputable source to back up your proposed value.
Tip: Keep in mind that if the accident is your fault, you would need to have physical damage coverage in place to ensure your car is repaired or replaced by the insurance company. That includes both collision and comprehensive coverage, assuming the accident was the result of anything other than a collision.
This post was written on July 12, 2010
Anyone who has ever shopped for or purchased insurance has surely asked this question.
Many of us feel like we don’t really need insurance, and only purchase it because it is mandatory to operate a motor vehicle or necessary if we carry a mortgage.
Insurance agents regularly hear the complaint from clients who have paid for insurance for “X” amount of years without ever having an accident or filing a single claim.
Insurance is a Cheap Risk Management Tool
The reality of the situation is insurance is an extremely cheap tool for transferring risk. For every one of us who hasn’t had an accident, we know of someone who totaled a brand new car, had a tree fall on the roof of their house, had something stolen out of their car, or worse, caused a car accident where someone was injured and needed expensive medical attention.
All of the above are “risks” we take every day by operating a car or owning property. That said, where would those who suffered one of these losses be had they not had an insurance policy to cover their liability or property damage?
Depending on the severity of the loss, the answer is likely bankrupt! Better yet; ask the individual who suffered the loss and was reimbursed, how they feel about it. Their point of view has probably changed drastically regarding the matter.
Insurance Costs Are Spread Among a Group
It is important to understand how insurance rates are determined to fully grasp why the costs are what they are. Insurance is a social tool. This means that everyone in the group “pitches in,” or pays a small premium to benefit the group as a whole.
In exchange for the small premium, the insurer might pay out a vast sum of money at any given time as a result of your negligence or to replace your property if it is stolen or otherwise damaged. The amount the insurer pays out would likely be much more than the average individual could afford at any given time, which is exactly what makes insurance so important.
Some people pay into the “pool” and don’t get benefits (file claims) while others do. The problem is you never know when your time to “get something out” will be, therefore, we must continually pay into the “pool” to ensure we get the benefits when they become necessary.
Cost of Insurance Varies Based on Individual Characteristics
The cost of insurance depends greatly on individual characteristics, some of which are under our control, and others that aren’t.
For example, you cannot help what age you are at any given time (such as a teenager), but you can certainly control how fast you drive, or how expensive of a home or car you purchase or how you manage your personal finances (insurance score).
There are also several discounts available to us (good drivers discount, good student discount) as insured that we can take advantage of when trying to snag a cheap rate.
It Pays to Shop Around
Independent insurance agents know one of the biggest reasons a person pays too much for insurance is their loyalty to a particular insurance company, which stops them from shopping their rate every few years.
Often times, insured will mistakenly believe that one particular insurance company is more dependable than another, based on limited knowledge of the industry, or simply by believing in a television ad campaign.
Tip: This leads to blindly accepting higher rates each year from your insurance company. Many of the largest insurance companies in the U.S. also have the highest insurance rates!
While there are less-than-reputable insurers in the U.S., they are few and far between. Each State Department of Insurance aggressively regulates insurance companies who conduct business within their borders.
Insurers must meet strict financial guidelines to ensure they can pay claims and answer to any consumer complaints filed against them. Additionally, a reputable insurance agent will not sell insurance for a company that has a history of poor customer service. It’s bad for their business!
Get online insurance quotes or contact your local independent insurance agent if you feel like you’re paying too much for your insurance. It’s the best way to ensure you get the coverage you need at the price you want.
This post was written on July 7, 2010
