How Can I Determine the Financial Strength of My Insurance Company?

How do you compare life insurance companies? What features do you examine? What criteria do you use? How do you know what to look for? Making sure that your insurance company is financially sound is an important part of helping to ensure family security.

Fortunately, there are a number of independent companies that make these evaluations. These rating companies carefully examine each insurance company in the areas of profitability, debt, liquidity, and other factors. From the results of these examinations, they then issue overall ratings.

Looking up a company’s rating will provide you with a snapshot of that company’s financial health. Tracking the company’s rating on a regular basis may give you some advanced warning of trouble.

The four most prominent rating companies are A.M. Best, Standard & Poor’s, Moody’s Investors Service, and Fitch Ratings. Each of these services uses slightly different criteria when rating companies. As a result, each may have a slightly different view of a given company. A.M. Best ratings are based on financial conditions and performance; Moody’s, Fitch Ratings, and Standard & Poor’s ratings are based on claims-paying ability.

You should be able to find copies of at least one of these ratings in the reference section of your local library. If you are unable to find them, or if the ratings in your library are outdated, you can contact the services directly. All four services will provide ratings over the phone.

A.M. Best Company: 908-439-2200, www.ambest.com

Standard & Poor’s: 877-772-5436, www.standardandpoors.com

Moody’s Investors Service: 212-553-0377, www.moodys.com

Fitch Ratings: 800-893-4824, www.fitchratings.com

The information in this article is not intended to be tax or legal advice, and it may not be relied on for the purpose of avoiding any federal tax penalties. You are encouraged to seek tax or legal advice from an independent professional advisor. The content is derived from sources believed to be accurate. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. This material was written and prepared by Emerald. © 2012 Emerald Connect, Inc.

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IMPORTANT NOTE: Gene R. Bell is a registered representative registered with the following registrations 6, 63, 65, 7 and can transact business with clients in ID, WA. Gene R. Bell is also an investment advisor representative licensed in WA. Seth Lake is a registered representative with the following registrations 66, 7 and can transact business with clients in WA, OR. Seth Lake is also an investment advisor representative licensed in WA. Heidi Henderson is a registered representative with the following registrations 6, 63 and can transact business with clients in WA. If you are not a resident of the states noted above, all investment-related information on this site is for informational purposes only and does not constitute a solicitation or offer to sell securities or insurance services over the internet. Securities offered through H.D. Vest Investment ServicesSM, Member: SIPC, Advisory Services offered through H.D. Vest Advisory Services SM, 6333 North State Highway 161, Fourth Floor, Irving, TX 75038, 972-870-6000.

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