How can I compare life insurance policies?

Your agent or broker can offer you several choices of life insurance policies for comparison purposes. There are also websites available that can help you compare prices and companies as well. If you do a search on life insurance policy quotes, various websites will come up. It’s best to make sure you are comparing policies of the same type, such as term insurance compared to term insurance and permanent insurance compared to permanent insurance. That way it is an “apples-to-apples” comparison.

If you are comparing term insurance policies, you will want to compare the following items and make sure the amount of insurance is the same for each policy you are comparing:

• Price on a monthly or annual basis
• Term insurance period (usually 10, 20 or 30 years). Comparing policies of the same term period against each other will give you the fairest comparison.
• Whether or not the insurance has a conversion feature
• The financial strength ratings of the companies you are comparing

Companies are generally rated by four different rating entities, including AM Best, Standard and Poor’s, Fitch and Moody’s. While each entity has many rating classifications, you should stick with companies that have at least one of their ratings in the top classifications. For AM Best, they are A- to A++ (Excellent or Superior). For Fitch, they are from A- to AAA, (Strong, Very Strong or Exceptionally Strong). For Standard and Poor’s, they are A to AAA (Investment Grade). And for Moody’s, they are Aa3 to Aaa (High or Highest Quality with Low or Lowest Credit Risk). The reason for looking at financial strength is so you can be confident the company backing your insurance is easily able to keep its promises.

If you are comparing permanent policies, it’s best to speak with an agent or broker either in person, on the phone or online. The reason is that there are many different features and product types, and making an accurate comparison on your own could be difficult. In addition to pricing and company ratings explained above, here are some points you should ask your agent or broker to compare for you:

• Are premiums guaranteed not to increase?
• Are there any guarantees associated with the cash value accumulation?
• What factors impact the cash value accumulation?
• How may I access the cash value of the policy?