How to choose the best life insurance company

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How to choose the best life insurance company

Choosing a life insurance company involves a little more thought than a swipe on Tinder. This is a company you’re going to be with for the next couple of decades, and there’s potentially hundreds of thousands of dollars – and your family’s financial safety net – on the line.

To be honest, most large, top-rated life insurance companies—the ones most people will purchase from—are pretty much the same. Yes, there are differences between them, but at the very least all of them will do what you need them to do: give you a life insurance policy, and pay it should the need ever arise. Despite customers’ common mistrust of insurers, you’re unlikely to ever come across the Fyre Festival of life insurance companies.

Still, there will be a company out there that works best for you. You just have to know how to find it.

Here are five questions you should ask when deciding which life insurance company is right for you.

What is a company’s financial rating?

A big concern for people is what might happen if their life insurance company goes bankrupt. If you’ve paid hundreds or thousands of dollars in premiums and a company goes belly-up, what happens to your life insurance?

Luckily, that shouldn’t be something that keeps you up at night. There’s a very, very slim chance that a life insurance company will file for bankruptcy, and on the off chance that they do, there are multiple levels of regulated protection in place to ensure that your policy stays in force and/or is paid out.

Still, you can do some research into companies to find out how they’re rated to give yourself some extra peace of mind.

Life insurance companies have financial ratings from A.M. Best, along with groups like Fitch Ratings, Moody’s, Standard & Poor’s, and Weiss Ratings. Those ratings will give you a good indication of a company’s financial past, and their future. You can also look at more consumer-focused ratings like those from J.D. Power and the Better Business Bureau.

How does a company work with complicated health histories?

Your life insurance rates are largely based on your current health and your health history. That’s why, during the underwriting process, insurers look at things like your health, your family’s health, your medical records, and even things like your motor vehicle record and hobbies.

If you have complicated health issues – say, you have diabetes or high cholesterol, or you previously had cancer – that can be a red flag for insurers. It makes you riskier to insure, and it can cause your rates to skyrocket or, in rare cases, even make you uninsurable.

But not all insurers treat health issues the same way. Some may be lenient to diabetic applicants if they show a history of managing their condition, for instance. Just because one insurer quotes a high rate doesn’t mean another won’t be more willing to work with you for affordable coverage.

You should be honest on your application so an insurance company knows exactly what your health looks like and can provide an accurate assessment of the coverage they can offer you. If they can’t provide competitive rates, use an independent broker that works with multiple carriers to "shop" your policy around and see who can give you the best coverage options.

Which company offers the best life insurance rates?

This is one of the most important aspects of choosing a life insurance company, because it has the most immediate impact on your wallet. Once you are approved for a life insurance policy, there’s not a whole lot you have to do for the next 30 years. Yes, you should assess your needs to make sure you still have enough coverage (or even make sure you’re not overinsured), and maybe you’ll have to change a beneficiary once or twice.

But overall, the most you’ll interact with your policy is through your premium payments. Choosing a more expensive policy could mean the difference in thousands of dollars over the life of the policy.

As mentioned, your health plays a big role in how your life insurance rates are set, but some insurers just offer better deals than others, the same way a Toyota Corolla and a Ford Focus are priced differently. Monthly rates might be lower at one insurer, but another insurer might have a better discount if you pay your premiums annually instead of monthly.

One thing to note is that you can’t get the same policy for cheaper by going directly through the carrier. Life insurance prices are regulated and commission costs are built into the premium, so while comparable Prudential and AIG policies will be priced differently, that AIG policy you got a quote for will be the same whether you go through an independent broker like PolicyGenius or AIG themselves.

If you do go through a broker, do your due diligence there, too. Check reviews to make sure you're going with a solid company that will help you choose the right policy.

Does a company have the riders and/or policy type I’m looking for?

Getting a life insurance policy is great, but sometimes you need to customize it a bit. Riders can help do that by making small amendments to a policy. For instance, an accelerated death benefit rider allows the policyholder to tap into the death benefit coverage early in the event of terminal illness; a disability waiver of premium rider temporarily suspends premiums if the policyholder is unable to work.

There are also different types of policies. A return of premium policy is a type of term life insurance policy that refunds premiums paid when the policy expires.

However, not all insurance companies offer the same riders and policies. If you want to tailor your policy, make sure you’re applying with a company that fits your needs.

What are the additional benefits a company offers?

The last thing you’ll want to find out is what benefits a company has that aren’t directly tied to your life insurance policy.

You’ll first run into this during the application process. Can you apply online? Do they have a higher-than-average number of application forms? What’s their average turnaround time for approving your application? If a company takes a long time or has a long application form, you’ll need to look elsewhere or set your expectations appropriately.

You’ll also experience this if you ever need to update your policy. Can you change your beneficiaries, address, or payment information online? Do any or all of those require a phone call or paper request? If you prefer to do things electronically, you might take this into consideration when you’re comparing companies.

So now you know what questions to ask – but how do you find out the answers? You could go to every individual insurer and find find out, or you can let PolicyGenius help. Our life insurance company reviews give you a rundown of the top-rated carriers in the country, a free life insurance quote will allow you to compare policies side by side, and our licensed experts can help answer any questions you have before you apply.