Life Insurance Protection Beneficiary Safeguard Concept

How do I choose a suitable life insurance company?

About 1,000 life insurance companies in the United States sell life insurance, however many are members of firms’ organizations and hence are not rivals. A separate company allows a group to distribute their products through separate distribution platforms, to fulfill the regulatory requirements of specific States more efficiently, or to achieve other organizational objectives. There are over 300 groups of companies.

In addition, not every group has a licensed corporation to operate in each country. You should generally purchase from a company that is licensed in your state because if there is an issue then you may depend on your state insurance department. And if the insurance company bankrupts, the life insurance fund of your State will only help policyholders of licensed companies. Contact the state insurance agency to find out which companies are licensed in any state.

When choosing a life insurance company, several other factors have to be considered:

  • Identity-The names of life insurance companies may be confusing as the names of many companies may be similar. Life insurance company names mostly contain terms implying financial strength (e.g., Security, Guaranty, or Reserve, or Security), financial sensibility (e.g., Bankers, Investors or Financial), maturity (e.g., Pioneer (First) or old), responsiveness (e.g., Reliable, Assurance, Trust), integrity (e.g., Beneficial, Fair or Citizens), the scope of business (e.g., Continental, Local, or International), government (e.g., American, Republic, or Capital), or famous and honorable Americans (e.g., Lincoln, Washington, or Jefferson). Make sure you know the complete name, main office address, and association (if any) of the insurance company you consider.


  • Product- many (not all) insurance companies offer a wide selection of policies and features, so select the company that provides the products and features that fit your requirements.


  • Financial Rigidity-the life insurance plan is long-term. No life insurance policyholders are not given any guarantee similar to what the FDIC (Federal Deposit Insurance Corporation) offers to bank accounts. Select a company that you believe is financially solid for several years, through ratings of independent rating organizations.


  • Market Principles- many life insurance companies agree to the standards of operation and ethics of IMSA ( Insurance Marketplace Standards Association), a non-profit organization that favors ethical behavior in marketing life insurance.


  • Guidance & Service- for many people, life insurance is a strange, difficult product, so dealing with a representative who you can connect with and who is attentive to your needs is beneficial. This could be related to the choice of a life insurance provider as one or a few life insurance companies are represented by some agents.


  • Insurance Claims- you might wish to look into the database national claims to see if it has any complaint records on a company. In addition, your state insurance authority can tell you if the insurance company you are thinking about doing business with has received a high number of consumer complaints about its service in comparison to the number of policies it has sold.


  • Cost and Premium- Premium is the amount you give to the company for the life insurance agreement with all its features. Premiums can vary substantially for even a given death benefit & kind of insurance (for example, as term life insurance), maybe because specific policies’ companies have benefits that many don’t or because some are charge too much for the same coverage. Therefore, the first step while comparing policies is to ensure that you compare the same insurance plans, depends on the following;

-Your Age

-Type of coverage and its benefits

-Amount of insurance you are buying

The policy premium is not equal to the cost of the policy’s protection portion. One insurance policy may have a larger premium than another, but it may also provide more benefits. For example, it may pay a policy share of profits or dividends. Or both could offer dividends but at differing times in different amounts. Each scenario may include a reduced cost of protection for larger premiums coverage. How can you determine the cost of a policy? Companies should guide you about the Net (total) payment cost index with its surrender cost index for your insurance. If you want to maintain the insurance for some time,  use the surrender cost index. But if you expect to maintain the policy indefinitely, use the net (total) payment cost index. In general, a lower-cost index is preferable.

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About the author


Hi. I'm Shoaib Humayun, a passionate blogger with an interest in everything. This blog guides people about their ideas.

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