Term Life Insurance Companies, Their Ratings, and More

There are countless term life insurance companies. As someone who has been a life insurance professional for over 20 years, I can honestly say that the best term life insurance companies, top rated term life insurance companies, and term life insurance companies best rated are very similar. Not to say that they are all exactly the same, but they are generally similar. Comparing term life insurance companies is really a matter of what is important to the prospective insurance customer.

your priority

My experience has been that what most people worry about when it comes to term insurance is what it will cost them.

Clearly, some term life insurance companies are rated higher than companies like AM Best, Moody’s, and Standard & Poor’s.

Some of the factors that determine a company’s rating are:

• financial strength

• financial stability

• Claims payment capacity

• Opportunity to pay claims

If any of these factors, among the others used, are important to you when comparing term life insurance companies, how important are these factors to you compared to price?

What if a company is considered one of the best term life insurance companies in the industry but the premium cost is double that for the same amount of coverage by one that is not considered one of the best term life insurance companies? rated term life?

What is your priority?

Ratings

Similar to being in school, term life insurance companies and all insurance companies are rated on an AF basis.

Seems easy to understand, right?

Did you know that an “A” rated company can be rated from A++ to A-?

Did you know that different rating companies, including the ones mentioned above, use different criteria to determine ratings?

Did you know that an insurance company can be rated differently by different rating companies?

If an insurer receives a favorable rating from one rating company and a less favorable rating from another rating company, which one do you think they will make sure they know about?

subscription

Insurance companies use the term underwriting to determine who pays how much for what. Different companies have different underwriting guidelines. Its name literally means that someone in the company places a signature on the policy saying that a particular person meets the company’s underwriting guidelines.

There are three main methods used to underwrite life insurance policies:

• Fully supported, most commonly, may include a medical examination (blood/urine sample/statement from attending physician).

• Simplified problem, less common, no medical examination, usually quick problem decision

• Guaranteed Issue – Anyone who applies and meets certain conditions is guaranteed a policy will be issued (includes accidental death insurance and tiered death benefit policies)

There are also different subscription classifications. The most common:

• Best preferred rates

• Standard-most common

• Sub-standard, also known as nominal or table

Some companies subdivide the classifications. For example:

• super preferred

• ultra preferred

• standard plus

The table can be in the form of a number (usually 1-6) or a letter (usually AG) – the higher the number or letter, the higher the premium.

Convertible

Some companies allow conversion from a term policy to a permanent policy at a later date without proving insurability.

Other companies allow conversion but require proof of insurability.

Some companies do not offer convertibility at all.

If convertibility is offered, it is often within certain time limits.

If you are sure that you want a term and nothing else, then this is not something you should consider.

Price

The main factors affecting the price:

1. Health

2.Age

3. Lifestyle

They are listed this way because that is generally the order of priority that companies use to rank potential customers.

Ill health can and will rule someone out regardless of age and lifestyle and no amount of money will buy insurance. On the other hand, excellent health can go a long way toward lowering your premiums.

The age of a person is the next factor. Age is compared with mortality rates. Different companies have different charts for death rates.

Another way to describe the death rate is how many years it takes someone your age to die.

Statistically speaking, insurance companies know pretty precisely how many people of a certain age will die before their next birthday.

Lifestyle is the third factor. The most common consideration is whether someone smokes, but there are others as well, such as what someone does for a living. Some professions are more dangerous than others.

A person’s hobbies also have an effect. Skydiving and drag racing are often frowned upon and may not result in denial of coverage, but could result in higher premiums.

Regardless of all factors, women’s rates are almost always lower than men’s.

Fully subscribed vs. simplified problem vs. guaranteed issue

Other things being equal, the full subscription will result in the premium with the best price. However, many times all things are not created equal.

Are you sure that your health is as good as you think or is it possible that a blood/urine sample, saliva swab or medical report could reveal something you are not aware of, or if you are not the most ethical person? Maybe something you just don’t want to reveal?

A fully written policy takes much more into account when determining rating class and price than a simplified issue policy.

Depending on your point of view, that can be an advantage or a disadvantage.

Assuming you’re being honest and no information about you has yet been reported to the medical information bureau (MIB), your chances of having a policy issued based on application are as high as 9 out of 10 if you apply for a simplified issue policy .

On the other hand, there is a 60% chance that you will not qualify for a fully underwritten policy as requested.

A guaranteed issue policy will definitely be issued. You will know if you qualify before you sign the application. It’s yes or no. However, because it is guaranteed, the price is usually much higher, unless it is a conditional policy, such as an accidental death policy.

Conclution

Unless you know how it works and/or can take the time to weigh all the factors when comparing term life insurance companies, an experienced professional can point you to the best term life insurance companies to consider.

With that being said, if you want to be absolutely sure that you’ll get the insurance you want, it’s best to buy a guaranteed issue policy.

If you are pretty sure you are in good health but don’t want to bother with a medical exam or paramedical (blood/urine) test, or don’t want to disclose certain matters that could affect your ability to get insurance, you should consider a policy simplified issue.

Once you qualify for a policy, assuming there is no fraud, the only one who can cancel the policy once issued is you. The insurance company cannot cancel it as long as the premiums are paid.

It may make sense to apply for a guaranteed or simplified issue policy first. Once issued, shop around for the best price and/or best term life insurance carriers.

What is the best for you?

I invite any and all questions and comments.