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Newport Beach, CA (PRWEB) September 15, 2011
Any time choosing a life insurance coverage, many individuals consider premium cost to be the most important aspect. However, as per web-based financial website, CREDITQ.com, yet another important-and frequently overlooked-consideration is the insurer’s capability to pay its claims, because this component is directly linked to the general financial health and stability of the insurance provider, and could affect your future claim.
It is quite easy to concentrate mainly on the premium-or cost of the insurance-especially if it's a term, or temporary, coverage. Moreover, there's usually not a broad difference in the premiums of equivalent temporary insurance plans. For instance, a 38-year old man living in California with a preferred overall health rating could expect the premium on a $500,000 20-year temporary insurance plan to be within a well-defined range of costs across term life insurance providers.
Therefore, if the premium costs are very similar between term life insurance providers, how should you decide which life insurance provider go with? Essentially, the main factor in this decision, regardless of premium cost, will be the estimated ability of the insurance provider to pay for its claims in the future.
A large amount of life insurance coverage is bought to reduce the risk that an early death may cause financial difficulty for individuals who depend financially, on the deceased. If this type of sad situation does happen, saving a few dollars each month on premiums won't appear to be a benefit, if your life insurance provider is not able to pay the required death benefit.
What would happen to a policy-holder making a claim on an insurance provider that collapsed?
In case of a failure, claims on these insurance policies would be paid out by a state guaranty association - if they are paid out at all. Even though there are a few national standards, insurance coverage is set on a state-by-state basis. Typically, state insurance guaranty associations cover up to $300,000 in death benefits. In case your policy’s death benefit is over $300,000, you're probably going to be out-of-luck for the amount over $300,000. You'll find the coverage limits of any guaranty association at nolhga.com.
Even though state insurance guaranty associations provide some protections against insurance provider failure, you'd clearly be better-off being covered by a company which doesn’t fail. How will you find a life insurance provider which is guaranteed to not collapse? As the 2008 collapse of AIG, one of the biggest insurance providers in the world, proves: you can not guarantee that the insurance company will always be there. However this does not suggest you cannot do your own research in identifying the relative financial strength of insurance providers.
One place to examine the financial wellness of your insurance company should be the different insurance ratings companies, for example A.M. Best Co., Moody’s and Standard & Poors. All these ratings agencies have their own rating method. Therefore, sadly, an A+ rating from A.M. Best Co. isn't automatically the same as an A+ rating from Moody’s. Those evaluations are all on the insurance company’s web pages, but it's probably the quickest to ask for the rating and company summary from the insurance broker.
In addition to information on insurance, CreditQ.com also features information on credit cards, credit reports and scores, loans, mortgages, insurance policies, auto insurance, business credit, retirement advice, investment options and bank rates, all organized in such a way to inform and educate consumers.
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