How to Choose a Life Insurance Company

Quick Answer

You can find the best life insurance companies by:

  • Searching for providers through an existing insurer, referrals or your state’s insurance website
  • Checking financial stability and customer satisfaction ratings
  • Reviewing a company’s life insurance products
  • Shopping around with multiple insurers to find the best policy at the most reasonable price

A couple are meeting with an agent with glasses and curly hair who is pointing at a laptop screen.

Most people understand the importance of getting life insurance and how it provides a financial safety net for your loved ones when you die. But how do you start your search for a life insurance company if you have no idea what kind of companies are out there?

Let's take a closer look at the steps you can take to pick a life insurance company with excellent financial stability, customer satisfaction and affordable pricing. This way, you'll be better equipped to pick a reputable life insurance company that'll be there to help your family when they need it most.

1. Begin Your Search for a Reputable Life Insurance Company

As you begin your search for a respectable life insurance company, consider these starting points:

  • Look for recommendations or online reviews. Getting recommendations from friends, family, financial advisors or online reviews can be a great starting point. They may also provide some insight into the level of service others experience with a particular insurer.
  • Contact your state's department of insurance. Your state's department of insurance—or similar governing body—may have an online database of licensed agents where you live. The Insurance Information Institute provides a useful directory of state insurance departments for all 50 states and U.S. territories.
  • Check for bundling discounts. If you have auto or home insurance, check if your insurer offers a multi-policy discount. You may be able to save money by bundling your current coverage with a new life insurance policy.

2. Determine Whether the Company Is Financially Stable

Life insurance is a long-term investment that covers you for up to 30 years for term life or for the rest of your life (or up to age 99) for permanent life coverage. Be sure to choose a life insurance company you feel is financially strong enough to still be around to pay your beneficiaries if you wind up living a long life.

Fortunately, it doesn't take long to check the financial stability ratings from independent agencies like A.M. Best, Fitch Ratings, Moody's Investor Services and Standard & Poor's (S&P) Insurance Rating Services.

Each of these firms has its own ratings methodology and scoring systems it uses to grade life insurance companies. Generally, a higher grade indicates the company is financially strong and more likely to meet its obligations to its policyholders.

3. Review a Life Insurance Company's Customer Satisfaction Record

Just because a company has good online ratings and demonstrates financial stability doesn't necessarily mean they have an outstanding record of honoring their promises to customers. That's why it's also good to check independent customer experience ratings to get an idea of how well a company serves its policyholders.

Take a moment to review the ratings from organizations like the National Association of Insurance Commissioners (NAIC) and J.D. Power. These agencies conduct customer satisfaction surveys and issue ratings based on the information they gather.

For example, J.D. Power issues an individual life insurance study each year that ranks insurers according to customer satisfaction performance in five categories: communication, interaction, price, product offerings and statements.

You can also search the NAIC database to compare a life insurer's customer satisfaction performance against its competition. NAIC assigns each company a Company Complaint Index score, and the median score is 1. Any score above 1 indicates a company receives a higher number of complaints on average, while a score below 1 means a company receives fewer complaints.

4. Review the Company's Products

As you're shopping for different life insurance companies, be sure to check each company's product offerings. Make sure they offer a comprehensive selection of life insurance policies, including term life and permanent life insurance, including whole life and universal life. It's important to understand how these different types of life insurance work and which policy type might suit you best.

By choosing an insurer that offers a broad spectrum of life insurance policies, you'll be in a better position if your needs change in the future. For example, if you have a convertible term life insurance policy, you can convert it to a permanent life policy without taking a medical exam or submitting additional evidence you qualify for insurance. This is a valuable option if your health suddenly declines.

5. Compare Costs From Multiple Life Insurance Companies

Some insurers may charge you more or even deny coverage based on your health, age or other factors. But remember, guidelines for setting premium rates vary by insurer. If an insurer denies you coverage or gives you an expensive policy quote, don't be afraid to try your luck with a different life insurance company.

Shopping and comparing premium rates from several life insurance companies can help you find coverage at the best possible price. Thankfully, many insurers make the process easy by providing free quotes online. An independent insurance agent working with numerous insurance companies can help you find the best coverage options and prices.

Choosing the Best Life Insurance Company for You

If the process of finding the right life insurance company sounds daunting, consider enlisting the help of an independent insurance broker. A broker working with numerous insurance companies might help you flesh out your policy needs and extend a wide range of coverage options and premiums to you.

Check with your state's insurance department or ask your broker if carriers in your area can factor in your credit when setting your premiums. If so, and if you have good credit, you may receive a lower premium rate. Check your credit score for free before selecting a life insurance company with the best coverage options for you.

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