How do I pick a life insurance company?

In the United States, around 1,000 life insurance businesses sell life insurance, however many are part of larger organizations and so aren’t direct rivals. Having different firms allows a group to distribute its products through distinct distribution channels, satisfy the regulatory requirements of specific states more effectively, or achieve other organizational goals. There are over 300 business groupings.

Furthermore, not every organization has a corporation that is licensed to operate in every state. As a general rule, you should buy from a firm that is licensed in your state since you will be able to rely on your state insurance authority for assistance if there is a problem. If the insurance business goes bankrupt, your state’s life insurance guarantee fund will only assist policyholders of firms that it has licensed. To find out whether firms are licensed in a particular state, contact the state insurance agency.


There are some more considerations to weigh when choosing a life insurance company:

Product – most, but not all, firms provide a wide selection of policies and features, so choose a company that provides the product and features you require.


Identity – The names of life insurance firms can be confusing, and various businesses may have names that seem similar. Life insurance company names frequently include words implying financial strength (such as Guaranty, Reserve, or Security), financial sophistication (such as Bankers, Financial, or Investors), maturity (such as First, Pioneer, or Old), dependability (such as Assurance, Reliable, Trust), fairness (such as Beneficial, Equitable, or Peoples), breadth of operations (such as Continental, National, or International), government (such as American, Capital, or Republic), or well-knownness. Make sure you understand the complete name, address, and affiliation (if any) of any firm you are considering (for an example, click here).


Financial Stability – Life insurance is a long-term investment. There is no Federal Deposit Insurance Corporation (FDIC) guarantee for life insurance policyholders, as there is for bank accounts. Using ratings from independent rating organizations, choose a firm that is expected to be financially solid for many years.

Market ethics – Some life insurance businesses belong to the Insurance Marketplace Standards Association’s principles and standards of conduct, a nonprofit organization that encourages ethical behavior in life insurance marketing.


Advice and service – Because life insurance is a weird, confusing product for many people, dealing with a representative who you can talk with and who is sensitive to your needs is beneficial. This might be related to the choice of a life insurance provider because some agents only represent one or a few life insurance firms. SeeHow do I go about choosing a life insurance agent?

Claims – You should examine a national claims database to determine if it has any complaint record on a firm. In addition, your state insurance authority will be able to inform you whether the insurance company you are thinking about doing business with has had a high number of customer complaints about its service in comparison to the number of policies it has sold.

The premium is the amount you pay the firm for the life insurance policy with all of its advantages. Even for the same death benefit and kind of insurance (e.g., term life), premiums can vary greatly between firms, either because some plans include benefits that others do not, or because some charge more for the same coverage. So, the first step in comparing policies is to ensure that you compare similar insurance plans based on the following criteria: – Your age – The type of policy and policy features – The quantity of insurance you are purchasing

The premium for the insurance is not the same as the cost of the policy’s protection. One insurance may have a greater premium yet provide more advantages (for example, policy dividends) than another. Or both may offer dividends, but at different times and in different amounts. In each scenario, the higher-premium insurance may provide better protection at a lesser cost. How can you determine the cost of a policy? Companies should provide you with the Net Payment Cost Index and the Surrender Cost Index of a policy. If you only want to maintain the insurance for a limited time, use the Surrender Cost Index; if you intend to keep the policy continuously, use the Net Payment Cost Index. The lower the cost index, in general, the better.