Insurance Company Integrity and Independent Financial Ratings
Obtaining a financially strong insurance company with a history of treating its policyholder’s with integrity is especially important when buying an equity-indexed life policy. Economic variables such as interest rates, bond yields and option costs will change dramatically over time and insurance companies have to adapt to these changes. With indexed life, these economic changes can have adverse effects on cap rates and index credits which can significantly affect cash value growth. Companies that are financially strong with good track records are much more likely to continue to credit their policyholders with fair interest rates and cap rates in uncertain economic conditions. In the long run, with equity indexed life, the policy’s performance will be impacted more by the quality of the insurance company than the performance of a stock index.
A company’s reputation with respect to its treatment of its policyholders is of crucial importance in making the right indexed life policy choice. Before making a final decision on any insurance policy, it is a good idea to investigate the history of the
insurance company with respect to interest rate and policy changes. By comparing the historical performance of each insurance company during changing economic conditions, you can get an understanding of their philosophy and how they might react in the future. Identifying the companies with the best track records of results will help you select the policy that will likely perform better over time.
Financial ratings for most insurance companies are available with one or more of the independent ratings services. These services include AM Best , Standard & Poor’s . Moody’s . Fitch and Weiss Research . Each of the independent rating services has its own criteria for ranking an insurance company. You may also visit the websites of each of these services or you can contact MEG and we can provide the financial ratings of any insurance company. When you obtain a quote for either term life insurance or guaranteed universal life insurance. you will see the AM Best rating for each company listed. We recommend using companies that have at least an “A” rating with AM Best but prefer “A+”.