There are countless term life insurance companies. As someone who has been a life insurance professional for over 20 years, I can honestly say that the best term life insurance companies, the highest rated term life insurance companies, and the best term life insurance companies top rated are very similar. It does not mean that they are all exactly the same, but they are generally similar. Comparing term life insurance companies is really a question of what is important to the prospective insurance customer.
Your priority
My experience has been that what most people worry about when it comes to term insurance is what it will cost them.
Clearly, some term life insurance companies are rated higher by companies like AM Best, Moody’s, and Standard & Poor.
Some of the factors that determine the rating of a company are:
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Financial strength
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Financial stability
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Ability to pay claims
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Claims paying convenience
If any of these factors, among the others that are used, are important to you when comparing term life insurance companies, how important are these factors to you compared to price?
What if a company is considered one of the best term life insurance companies in the industry, but the cost of the premium is double that for the same amount of coverage for one that is not considered one of the companies in top rated term life insurance?
What is your priority?
Ratings
Just like in school, term life insurance companies and all insurance companies receive an AF rating.
It seems easy to understand, right?
Did you know that an “A” rated business can be rated from A ++ to A-?
Did you know that different rating companies, including those listed above, use different criteria to determine ratings?
Did you know that an insurance company can be rated differently by different rating companies?
If an insurer receives a favorable rating from one rating company and a less favorable rating from another rating company, which one do you think it will make sure to know?
Subscription
Insurance companies use the term underwriting to determine who pays how much and what. Different companies have different underwriting guidelines. Its name literally means that someone at the company places a signature on the policy saying that a particular person meets the company’s underwriting guidelines.
There are three main methods used to write life insurance policies:
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Fully underwritten, the most common, may involve a medical examination (blood / urine sample / attending physician’s statement).
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Simplified problem, less common, no medical examination, the decision regarding the problem is usually quick
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Guaranteed issue: anyone who applies and meets certain conditions is guaranteed that a policy will be issued (includes accidental death insurance and graduated death benefit policies)
There are also different underwriting classifications. The most common:
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Best preferred rates
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Standard-most common
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Substandard, also known as classified or table
Some companies subdivide the classifications. For instance:
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Super preferred
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Ultra preferred
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Standard plus
The table can be in the form of a number (generally 1 to 6) or a letter (generally AG); the higher the number or letter, the higher the premium.
Convertibility
Some companies allow the conversion of a term policy to a permanent policy at a later date without proving insurability.
Other companies allow conversion but require proof of insurability.
Some companies do not offer convertibility at all.
If convertibility is offered, it is often within certain time limits.
If you are sure that you want a deadline and nothing more, then this is not something you should consider.
Price
The main factors affecting the price:
1. Health
2. Age
3. Lifestyle
They are numbered as such because that is generally the order of priority companies use to rank potential customers.
Poor health can and will exclude someone regardless of age and lifestyle and no amount of money will buy insurance. On the other hand, excellent health can go a long way towards lowering your premiums.
The age of a person is the next factor. Age is compared to mortality rates. Different companies have different charts for death rates.
Another way to describe the death rate is how many years a person your age is away from death.
Statistically speaking, insurance companies know quite precisely how many people of a certain age will die before their next birthday.
Lifestyle is the third factor. The most common consideration is whether someone smokes, but there are others as well, such as what someone does for a living. Some professions are more dangerous than others.
A person’s hobbies also have an effect. Skydiving and sprinting are often frowned upon and may not result in denial of coverage, but could result in higher premiums.
Regardless of all factors, women’s rates are almost always lower than men’s.
Fully subscribed vs. simplified problem vs. guaranteed issue
All other things being equal, the full subscription will result in the premium at the best price. However, many times not all things are the same.
Are you sure your health is as good as you think or is it possible that a blood / urine sample, saliva swab, or medical report could reveal something you are not aware of, or if you are not the most ethical person ? Maybe something you just don’t want to reveal?
A fully underwritten policy takes much more into consideration when determining rating class and price than a simplified issue policy.
Depending on your point of view, that can be an advantage or a disadvantage.
Assuming you are being honest and there is no information about you reported to the medical information office (MIB), your chances of having a policy issued as you requested are as high as 9 out of 10 if you apply for a simplified issue policy.
On the other hand, there is a 60% chance that you will not qualify for a fully underwritten policy as requested.
A guaranteed issue policy will definitely be issued. You will know if you qualify before signing the application. Either it is yes or no. However, because it is guaranteed, the price is usually much higher, unless it is a conditional policy, such as an accidental death policy.
conclusion
Unless you know the ins and outs and / or can take the time to weigh all the factors when comparing term life insurance companies, an experienced professional can guide you to the best term life insurance companies to consider.
That said, if you want to be absolutely sure that you are getting the insurance you want, your best bet is to purchase a guaranteed issue policy.
If you are fairly certain that you are in good health but do not want to go to the trouble of a medical or paramedical exam (blood / urine), or do not want to disclose certain matters that could affect your ability. To get insurance, you should consider a simplified issue policy.
Once you qualify for a policy, assuming there is no fraud involved, the only one who can cancel the policy once it has been issued is you. The insurance company cannot cancel it while the premiums are paid.
It may make sense to first apply for a simplified or guaranteed issue policy. Once issued, look for the best price and / or the highest rated term life insurance companies.
What is the best for you?
I invite each and every question and comment.