When evaluating a life insurance company and whether it would be a good one to select you need to look at more than the premium. Has the company been collecting enough premium over the past few years and do they have enough money in reserves to meet their obligations? Has the company taken a hit over the last year or two with the economic downturn? Did the company invest a lot of money in mortgage backed securities and get effected when the mortgage world went upside down? Is the company accepting bailout money and/or do they need bailout money? What is the Companies ratings currently and have they been downgraded recently? Are they headed towards a downgrade?
The cost of the policy is obviously important, but the ability to pay out on the insurance in the short term and long term is the most important thing. Many of the clients we speak with are just focused on the premium cost and they lose sight of the importance of a strong financial company. I would say that more clients are looking at the financial ratings of the companies and willing to pay a little extra. On top of just the company ratings, the premium is based on your underwriting circumstances. An insurance quote is simply a guestimate. It doesn’t mean that you will get that price for your policy. Everything is pending underwriting. The main advice I would give someone is to look at the various options and make sure that the company you are selecting is financially sound. Also, don’t get caught up and assuming you will get a certain rating. The premium is not the premium until you get approved by the company at that specific underwriting rating.