You can buy life, disability and long-term care insurance and annuities through an insurance company or an agent.
When you work with a company, you’ll apply for coverage through one of their agents who will present products specifically from their employer. When you work with an independent insurance agent, they’re affiliated with several different insurance carriers and can offer multiple options.
Because each insurance company calculates risk differently, your rates can vary. That’s why it’s smart to compare companies and agents before you make this important decision.
Choosing a Company
Now that you’ve made the decision to purchase a policy, how do you know if the company you choose to purchase through is the right one? Here are some tips to guide you through the decision.
Check out a company’s ratings.
The best way to check the financial health of a company is by looking at its “rating.” Several private companies conduct financial analyses of insurance companies and their reports can typically be accessed online, via the phone or by visiting your local library. Some will provide their ratings for free and others will charge a small fee. Keep in mind that not all agencies use the same ratings system. For instance, Aaa is the top rating at Moody’s, but A++ is the best ranking at A.M. Best. So be careful when comparing information from different ratings agencies. Also remember that a company’s rating is just one of several factors to look at when considering a purchase. If you’re evaluating two policies and one is underwritten by a company with an A.M. Best rating of B+ (“good”) and the other is from a company with an A rating (“excellent”), don’t automatically assume you should buy from the higher-rated company. If the policy from the other company has more of the features you’re looking for, it might be the better choice.
Does company size matter?
Purchasing through your workplace.
Check for complaints against a company.
Life insurance companies are regulated by state departments of insurance, which track complaints filed by consumers. To look up complaints against a particular company, visit the National Association of Insurance Commissioners’ searchable database.
The Bottom Line
The “right company” for you is the one that provides you with appropriate recommendations, products and prices, has a record of outstanding customer service, and the financial capacity to meet its financial obligations to you and your beneficiaries when they come due.
Choosing an Agent
Here are five tips to help you choose the right agent:
The easiest way to start your search is to get referrals from the people you trust such as friends, family members and other professional advisors you already work with, like lawyers or accountants. You can also try Life Happens’ online agent locator below.
Find out about their specialties.
Ask if they hold any professional membership.
Schedule a meeting.
Interview at least two agents to establish a basis for comparison in terms of qualifications and character, not just fees. Ask for customer references and check that the agent works with financially sound insurance companies.
Inquire about their education and training.
Get started with our agent locator to find an insurance professional in your area.