Carrier Ratings And Shopping For Term Life Insurance By Dennis Jarvis At Isnare.com Ezine Articles

Life insurance is very different from most other purchases that you make in that the needed payout may be decades into the future. Company stability becomes a significant issue. It defeats the purpose to select the cheapest plan on the market if the underlying carrier won't be there to pay out years from now. Because of this peculiar "buy now" for "much later on" nature of term life insurance, insurance carrier rating became a critical issue. Let's a take a closer look at the term insurance carrier ratings and how to read them.

The first thing you will notice when you run your term life insurance instant quote is that unlike most websites (even some big ones), we provide all four major rating agencies: AM Best, Standards and Poors, Moody's, and Fitch. We do this for a reason and frankly find it curious that they don't. Aside from wanting to provide you the best information at one source upon which to choose your term life plan, only providing one or two rating agencies can hide the true strength (or lack there of) of a given term life carrier.

As you scan through your quote, you'll notice that the agencies have very different ways of analyzing or rating carrier strength, and quite often, have differing views of a given company. It's best to take a "cumulative" approach to the ratings. If one company has a unfavorable rating, it might be a concern and warrant future research or look for a plan without such unfavorable ratings. How do you decipher the ratings since they all use different scales?

By the the time you figured out each company's rating scale, you would practically be ready to rate the carriers yourself! We have simplified this process by providing the relative rank next to each company's rating. For example, S&P's "AA" rating is their third best and consequently, you'll see a (3) next to their name for a given plan. This really helps to compare the rating agencies in terms of apples and apples as you are really concerned that a number ranking of #1 is #1 regardless of whether it's called "A++" or "AAA". If you see a dash (rare), it means that the rating agency has not issued a rating for that particular carrier/plan.

Ideally, you want the ratings to be 5 or better in our view. As you go beyond "5", the strength of the company starts to become suspect. You'll notice that you don't find many with bad ratings quoted on our system because we believe in only providing the best term life insurance carriers so you can make a decision on price, term, and amount with peace of mind. Our theory is that if the major rating agencies are 5 or better, than can select based on pricing within this category for your given situation (age, health, etc). Some agencies are more strict or better put, less giving on their ratings so providing four different views helps to give you a well rounded feel for the term life insurance carrier's overall strength.

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