Is your life insurance
company solid? You don't need to worry.
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
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
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
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.
- , 908.439.2200
- , 212.438.2000
- , 312.368.3198
- , 800.811.6980
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.
- United Wisconsin
- Bankers Life &
- Fidelity and Guarantee
- American General
- New York Life
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