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Is your life insurance company solid? You don't need to worry.

If you have spent much time listening to insurance agents, you are sure to have heard someone say, "Banks are designed to protect banks; insurance companies are designed to protect people." With health insurance rates climbing annually, that may actually be hard to believe. However, with life insurance, it is absolutely true. request a free life ins. quote >>

Life insurance companies have to hold enough money in reserve so they could pay claims on virtually all of their policies at the same time. So when the agent tells you that a company has billions of dollars in assets, that doesn't mean the company is rolling in dough at the expense of the client. It means the company has the money to pay your claim at the very moment you need it.

A scan of company name changes over the past 30 years is proof enough the companies do change hands and get bought up. Is this because a company was going broke? It could be, or it could be that there was some economical advantage that the average person wouldn't know. In any case, all insurance companies have to participate in the "Guarantee Association." No agent ever tells you about that because his insurance license expressly forbids him from using membership in the Guarantee Association as a selling point. All insurance companies are members by Federal law.

The Guarantee Association is a large organization into which companies pay an annual membership fee. If any company in the Association gets into financial difficulty, money from the Association can be borrowed to provide solvency. It the difficulty is too deep, and bankruptcy is likely, the other companies take over the failing company's business, paying its claims and collecting premiums from the clients. Thus it is virtually impossible for your life insurance policy to fail due to a company's financial difficulties.

Even with this assurance, most folks like to feel like they are doing business with a company that has plenty of assets, pays its claims promptly, and has been in business for a long time. While an agent won't generally lie to you about such things, you can verify his information for yourself. You can use the internet to perform research on a company, locating ones that are nationally known and financially solid. The best rating for a company is A, A+ or AA. However, the letter designations can be a little misleading. If a company is part of a major conglomerate—such as Conseco, for example—it is possible for the parent corporation to have experienced problems that would give it a lower rating while the component companies are perfectly solvent. Therefore, you should never rely on the rating alone. Also look at statistics such as assets, timely payment of claims, number of policies available, conversion options, and so forth.

An unbiased report and ratings on any company can be obtained from any of the five major insurance rating companies.

The following companies (in no particular order) are examples of nationally known, financially solid companies that have a wide variety of products designed to meet your needs.

    • Metropolitan
    • United Wisconsin Life
    • Bankers Life & Casualty
    • Fidelity and Guarantee Life
    • American General Life
    • New York Life

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