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If you have searched for life insurance, you're biggest hesitation has probably been a fear that the company may go bankrupt, or may find some excuse to avoid paying when you need to submit a claim.

Two bits of education can put you in the driver's seat when it comes to choosing a policy. The first is to know the kind of insurance you want and know whether or not any given company offers it—as well as what conversions are available if you should need something different I the future. The second is to know something about the company itself. Neither piece of that puzzle takes a college degree or a month of research.
The following (in no particular order) are examples of top, nationally known companies, with solid financial ratings that have a wide variety of products designed to meet your needs.

• Metropolitan
• United Wisconsin Life
• Bankers Life & Casualty Company
• Fidelity and Guarantee Life
• American General Life
• New York Life

Major types of insurance
Three major types of insurance are offered by insurance companies today. They are Term Life—which is cheap, but either expires or goes up in price at the end of the term, Universal Life—which is a flexible premium policy with a lot of built in options that prevent you from lapsing your policy, or Guaranteed Whole Life—a type of policy with a set premium and a benefit that can never change and will be paid directly to you if you live to be 100 years old.

Minor insurance variations
Several other types of insurance policies are available and are written in the terms of one of the major three. For example, key man insurance, joint life insurance, and second to die insurance can all be written as Term, Universal, or Whole life. If you know the basic type you are looking for, and also know the purpose of the insurance, a knowledgeable agent will be able to explain any variations the company may offer.

More important than price
We spend most of our lives looking for bargains, always hoping to get the biggest benefit for the smallest reduction in our check books. Thus, it is no surprise that when looking for life insurance, the first thing many folks consider is the size of the face value compared to the size of the premium. However, insurance should never be purchased on the basis of price alone. Granted, price is important because if we can save a dollar on one thing, we have to put on something else. And, if a company is radically higher than other companies for the same type of insurance, they'd better have some impressive interest rates or built in features, or they won't be in business very long. On the other hand, if a company is radically cheaper than all the competitors for the same product, you need to ask how long it takes to settle claims and whether that company has actually been bought up by a larger company. When you need help, will you be giving the 800 number run-around and told you have to contact your agent (who may not be with the company any longer), or will you promptly be given the help you need.
 

Getting at the truth
But how do you find out who is really reputable? No agent is going to tell you that his company takes several months to pay off. He couldn't keep his job very long if he did. You can begin by asking your friends who they have; also, talk to a funeral director and find out which companies pay with the least hassle.
 

Now, be aware that a funeral director has the license to sell you a "pre-needs" insurance which is simply a life insurance policy for which you pay the premium while the funeral home receives the benefit. However, if you are direct with your questions and clearly indicate that you want to know which insurance companies have been the easiest to work with and the most dependable, the funeral director should be willing to tell you.

A third opinion
An unbiased report on any company can be obtained from any of the five top insurance rating companies.

• A.M. Best Company, (908) 439-2200
• Standard & Poor's, (212) 438-2000
• Wiess Research, (800) 289-9222
• Duff & Phelps, (312) 368-3198
• Moody's Investors Service, (800) 811-6980

Ratings furnished by a third party company are on the financial strength of the company itself. It is not a comment on the quality of the product. Even if you choose a company with a lower rating—in hopes of a lower premium—you do not have to worry about the company being unable to pay due to bankruptcy or other financial problems. By law, any insurance company must pay into a company called the "Guarantee Association." This organization protects you—the client—and insures that in the event of financial problems, other companies would buy up the book of business and would pay off on any policies sold by that company. Furthermore, in a free-enterprise economy, major companies do merge with others, and sometimes get bought up by other companies even when—(often because) they are financially solid. Purchasing a solid company can improve the ratings for both the purchaser and the purchased. The most reliable indicators of strength are the total assets, the outstanding debt ratio, and the overall size of the company.

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