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How to choose a company to buy life insurance from

how to pick a life insurance company

There are many choices when it comes to buying life insurance. With the tough economic times, it is important to buy life insurance  from a strong company, with a proven track record of paying claims and a high credit rating.

Credit ratings for a life insurance company

All Life Insurance Companies  in Australia are rated by financial strength and the good ones will be proud to tell you their rating. The strongest insurers are the ones with an A rating or better, such as AA or AAA, which is the best.

These ratings are formally issued by an independent credit ratings company called Standard & Poor’s. These ratings give you current opinions on the worthiness of a given company. These ratings take into consideration the:

  • Likelihood of payment capacity and willingness of the insurance company to meet its financial commitment on a policy in accordance with the terms of the policy;
  • Nature of and provisions of the policy;
  • Protection afforded by, and relative position of, the policy in the event of bankruptcy, reorganization, or other arrangement under the laws of bankruptcy and other laws affecting the life insurance company’s rights.

You can read more information on how credit ratings work on the Standard and Poor’s website .

Choosing an easy life insurance policy

Easy-to-apply life insurance policies  usually ask very limited questions or ask only a few questions over the phone. This is in compared to other life insurance companies who would go through a full application usually consisting of thirty to fifty questions. These questions surround your:

  • Occupation;
  • Past times;
  • Insurance history;
  • Current insurance; and
  • Medical history in the form of a medical questionnaire.

Generally speaking, if a life insurance company  asks you only a few questions at application time the following may occur:

  • Your premiums may be higher – a life insurance company cannot adequately assess your level of risk based only on a few answers. Therefore more risks are applied to your situation thus resulting in higher life insurance premiums; and, or
  • Generally the greater the number of restrictions placed on your particular life insurance policy. Here is an example of a life insurance policy restrictions from a product disclosure statement (no company names are mentioned):

Under these restrictions a life insurance company  will not pay any benefit or refund any premiums if one of the following, directly or indirectly results in a claim:  an intentional self-inflicted act;  any pre-existing condition. This means any sickness, injury, condition or related symptom, for which, in usually the five years before the policy commencement date; or  symptoms existed that would cause a reasonable and prudent person to seek diagnosis, care or treatment from a registered doctor or allied health professional; or  medical advice or treatment was recommended by, or received from a registered doctor or allied health professional.

If you are unsure which life insurance company to go with when selecting a life insurance policy, speak with an xLife financial adviser. We can help you choose the right life insurance company and life insurance policy for you situation. We can also offer you free Life Insurance Quotes to help you make an informed decision.

Category: Insurance

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