The Need for Checking Financial Strength Ratings Before Purchasing Life Insurance

life insurance ratings

There is an almost overwhelming set of decisions to make when shopping for life insurance, the type, length, death benefit, and beneficiary. When you throw in various riders and endorsement options is it any wonder that many consumers fail to really think about the exact life insurance company that they choose? But how should you – the consumer decide which life insurance company to trust? Do you base your decision off of the ads and marketing? Or should you focus on word of mouth or the captive life insurance agent that you met at the Elks Club?

But there is a better way – In the ideal world you would first consider the overall financial health of a given insurer. But how do you do that?

About Life Insurance Ratings

There are numerous ways to rate life insurance companies, from surveys done by JD Power to your state Insurance Regulators. However the type of life insurance rating that may be most important is called the Financial Strength Rating. A Financial Strength Rating is an “opinion” written by a credit rating agency about a given insurers ability to meet its claims and ongoing obligations. Financial Strength Ratings are slightly different than Credit Ratings as they take into account policies and claims. Financial Strength Ratings, sometimes abbreviated FSRs, are created by the big three credit rating agencies: Standard and Poor’s, Fitch, Moodys, and insurance rating specialist AM Best.

Why Consumers Should Check Life Insurance Ratings

Consumers should check financial strength ratings to help them assess if the proposed life insurance company will be able to pay out insurance claims in the future. Companies with a lower financial strength rating have a higher chance of either falling into a state regulator’s control or becoming insolvent. Insurers that have a higher financial strength rating correspondingly would have a lower chance of becoming insolvent or other. Consumers benefit from buying life insurance from higher rated carriers because it will potentially allow them to circumvent poorly run insurance conglomerates and be more assured of receiving the agreed upon pay out in the event of a payable claim.

The need to check financial strength ratings is potentially highest with life and annuities because clients will often keep a these types of insurance products for 20+ years. In the case of whole and universal life some clients will end up keeping their life insurer for their entire life. Therefore taking a little extra time to fully understand the financial trajectory can pay huge dividends down the road.

How to Check Financial Strength Ratings

For consumers of the digital age its not all that difficult to check a companies life insurance rating. Keep in mind that there are essentially four different financial strength ratings from four different agencies. Each rating agency uses their own lettering system and lettering grades, therefore it is not really possible to check one financial strength rating from one rating agency vs another financial strength rating from another rating agency To check a financial strength rating with insurance specialist AM Best, merely go and type in the name of the insurer that you want to check.

The Corporate Entity:

Checking financial strength ratings with some insurers can be confusing as many conglomerates have numerous different corporate entities. Understanding exactly which entity you are receiving a quote from may be the hardest part of checking the rating. If you are confused or do not understand, ask your life insurance agent.

Best Practices When Checking Financial Strength Ratings:

  • Compare Apples with Apples. Choose One rating agency to compare all of your potential carriers.
  • Consider doing a full secondary check with a different second rating agency.
  • Try and check the financial strength rating yourself rather than depend on an out of date document or website.
  • Always check financial strength ratings whenever you are considering any type of insurance.

Author: Scott W Johnson is the owner of Whole Vs Term Life Insurance.


Three Auto Insurance Scams You Don’t Want To Fall For

Auto Insurance Scams
Getting into a vehicular accident, though the damages are minor, is indeed frustrating. Precious time and money are wasted into repairing your own car and compensating for the damages caused by the collision. When proven to be at fault, you have to shoulder repair costs of the other car or property involved as well as the medical costs of the injured motorist or pedestrian.

But what if getting into an “accident” is no accident at all? What if the “tragedy” was actually planned for fraudsters to reap money?

Auto insurance scammers use tricks to claim cash from insurers and innocent drivers become pawns in their shady schemes. In the U.S., more than 20 percent of bodily injury claims and 10% of car damage as a result of car accidents are bogus. In an article in Bankrate back in 2013, it states that in NYC alone, officials estimate that fake auto claims add $241 million to premiums. Scammers victimize law-abiding drivers by creating blemished driving records, legal flaws, and higher premiums.

Have you ever been victimized by a car insurance scam? If you’re a car owner and you got your vehicle insured, the chance is you are hit by auto insurance fraud even if you’ve never encountered a scammer. Industry experts stress the idea that a large chunk of the rise in premiums is caused by false claims. Thanks to fraudsters, insured drivers like you are now facing huge increases in your car insurance premiums.

Let’s unmask the worst auto insurance scams and how to protect yourself from them.

Scam #1: The Crash For Cash

Auto insurance scammers are great actors. These con artists deserve an Oscars for creating stories that seem realistic and pretending to be badly injured after a staged collision. For years, they intentionally damage innocent motorists’ car and even risk their own lives in order to claim cash from insurers. Should they have no insurance, they try to claim cash for the self-induced damages from you.

Take note of these five staged accident tricks:

1. Swoop and squat: cammers trap the victim in a form of staged rear-ending collision. For insurance and policing, the rear-ending driver is almost always regarded to be at fault due to not leaving enough stopping distance. Fraudsters know the drill and prey on innocent rear-end drivers.

The car ahead of you may slow down or come to a stop in a busy traffic. It will then swoop in front of your car, causing the other driver (scammer) to crash into your car from behind. The driver will go down, approach you, and claim that you hit the rear of his or her car.

2. Drive down: When waiting to make a turn, you see what appears to be a friendly stranger (scammer) who has the “right of way” wave you into traffic and persuade you into turning early. The con man then proceeds just in time and rams into the side of your car then merges into traffic as you do. He’ll then deny having given you permission and leave you accountable.

3. Wave down: Similar to drive down, two vehicles set up a crash with a victim who’s given a “wave”, indicating it’s safe to pull out of a parking lot or side street. The fraudsters proceed just in time to collide.

4. Enhanced damages: Let’s say that a legit accident took place. Not-at-fault drivers (scammers) may cause additional damage to his or her own vehicle to pump up a claim.

5. Fake hit and run: Some con artists even risk their own lives for cash. They act as pedestrians and wait patiently for an oncoming car. They cross the street just in time to bump the car with their bodies and pretend to be badly injured so they could file an injury claim.

How to protect yourself: Firstly, alertness on the road is key. Never follow other cars too closely, even in the middle of a congested traffic and be very mindful when taking a turn.

Secondly, gather as much as evidence as possible. Installing a dash cam is a lifesaver for it can capture and uncover their fraudulent activities. You should also demand a police report and get the contact information of the fraudster. Every scammer would get startled upon hearing the word “police.”

Scam #2: The Bad Samaritan

With a number of criminal activities existing today, you can’t blame some folks for having trust issues – especially when strangers become “too good to be true” out of the blue.

One example is when you’ve met a car accident and you’re waiting for the tow truck and cops to arrive.
A con artist may approach you on the spot or call you on phone, thanks to the tip from a crooked tow truck driver or mechanic. This guy may pretend to be a third-party insurance official or consultant in order. Once he gets your attention, he’ll lure you into using the services of a health clinic for your injuries or to using a particular lawyer. But in reality, these are all a setup to steal your information in order to file false insurance claims of which they’ll take a hefty cut.

How to protect yourself: Never ever transact and give out information with third-parties. All your concerns should only be addressed to your insurance company and the other driver’s insurance company.

Scam #3: The Fake Injury Claim

Fake Injury Claim
Scammers will gather all their acting skills and resources make it look like they’re suffering from an injury.

After a collision, the other driver may complain injuries including back pain or whiplash. The con man would demand hospitalization and that’s where he files an insurance claim with your insurance company to cover the costs even if it’s bogus. Since whiplash and phantom pain might be hard to detect on an X-ray, some scammers go to the extent of contracting with unscrupulous doctors, chiropractors, and physical therapists to fake their injury reports.

How to protect yourself: File a police report, even if the accident is minor. If the record notes only slight scratches and minor damages, the insurance company will less likely believe the other driver suffered major injuries. Again, take as many evidence as you can, including footages recorded on dash cam and phone camera to get the law on your side.

Author Bio: Carmina Natividad is a resident writer for Insurance Adviser, one of the largest and most credible General Insurance businesses in Australia and New Zealand, providiving high quality risk management advice for business owners.