The nightmare most people have when purchasing insurance is that of choosing a company that ends up closing their doors without notice. Not every company that offers you the best terms has the capability to live long enough to pay you. It is for this reason that you need to be hyper vigilant when deciding on the company to use. Below are some important questions you should ask an insurance company before committing.
How financially stable are you?
This is an obvious but very important question you need to ask. When purchasing a policy, you want to select a life insurer that is financially strong. You want to do business only with a company that will be around to pay your beneficiary regardless of whether you die 5 or 40 years from now. Make some time to look up the financial strength ratings of the company to see if it is stable. There are so many independent rating firms that issue grades for the insurance companies. These independent bodies include Standard & Poor’s Ratings Services, A.M. Best, Moody’s Investor Services and Fitch Ratings. Never judge the financial stability of an insurance company based on its size. There are so many large companies that fail.
What is their track record?
Another thing you want to find out is the track record of the life insurance company. You need to check with the insurance department to get a look at how the company serves its customers. Does it deliver on its promises? It is only with the insurance departments that you will be able to find more information about the investigated complaints that pertain to your insurance company of choice. Take note of the complaints that have been investigated. The higher the number of complaints, the more worried you should be. The National Association of Insurance Commissioners will also give you more information about the track record of an insurer.
Which products do they offer?
You will need to take a look at the insurance products that are being offered by the insurer. The fewer the products, the higher your chances of being forced into products. You have to go through the list of their products to make sure that what you need is available. For example, it the company doesn’t offer term life insurance, it means that you cannot use their services to save for your child’s college education. If you find innovative products, take some time to understand them before purchasing.
How do their rates compare?
The underwriting guidelines vary significantly from one insurance company to another. The last thing you want is to pay exorbitant premiums whereas you can get a cheaper option from another reliable insurer. Take some time to compare the insurance quotes prior to making any purchase.
The more you learn about an insurance company, the more confidence you will have in them. You should also note that some companies may have similar names. When doing your research, make sure you know the full name and office location of the company you are looking into.
Author Bio
Barbara Marquand is the lead writer of a personal finance website known as NerdWallet. She mostly covers topics on life insurance. For more information, you can follow her on twitter @barbaramarquand.
