Who to Buy Whole Life From

With all of the varieties of life insurance to choose from, it is important for  prospective buyers to have a clear understanding of their own personal financial situation so they can select the type that best suits them.  Term policies are ideal for people who need life insurance coverage for a short or definitive period. Variable policies are best suited for those who understand both the potential and the risks of the adding an investment component to their life insurance. Universal policies offer greater flexibility for people who foresee changes in their financial life. And, a whole life plan, provides the most guarantees for someone who recognizes that they might have a permanent need for life insurance.

People who buy whole life insurance have, most likely, done some thorough planning which can uncover the need for life insurance during multiple stages of their life.  They see beyond the obvious need to provide family protection during the dependency years to the less obvious, but equally critical, needs to protect a spouse who may need a lifetime of income, or to provide liquidity for their estate so it can pass easily to their heirs. They also are concerned about protecting their own insurability so that, if they should develop a medical condition, they can never lose their coverage.

The person who buys whole life insurance is serious about his plans and wants to do as much as possible so as not to disrupt them.  Whole life does just what the name implies. It protects the insured throughout his “whole life”.  That’s a long term obligation, so it is critical that the whole life provider be of sound financial strength and it is important that serious consideration be given to whom to buy whole life from.  

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Buy at the Top

There are hundreds of life insurers that offer whole life insurance, but there are only about 30 that meet the strictest standards for superior financial strength.  Rating agencies, such as Moody’s and Standard & Poor’s assign a letter rating to each life insurer based on their ability to meet their financial obligations even in the most adverse economic environment.  For both agencies, an ‘AAA’ rating is assigned to those companies that they see as being able to whether any economic storms, whereas a ‘BBB’ rating by S & P means that the company may experience some problems.  Even an ‘A’ rating by Moody’s indicates that, while the company may be financially secure, there are signs of possible long-term susceptibility.

By Low

With whole life, the key competitive factors are premium rates and cash value growth.  Even if you limit your selection of whole policies to the top 30 insurers, you will still be able to find competitive rates and cash value guarantees. Lesser rated companies often find themselves having to offer more competitive premium rates in order to attract more business.  This can have the potential of hurting their financial strength further in the future. 

Although all  life insurers are highly regulated and they must adhere to strict reserve standards, even the smallest risk of insolvency is not worth the loss of peace-of-mind for most people. One thing to be aware of, is that most companies price their top underwriting class very competitively. The problem is that fewer people can qualify for these classes as they require a nearly unblemished medical history. The rate they promote or quote you is somewhat likely not to be the rate you will actually be offered depending on your health condition.

Check Beneath the Surface

When comparing any number of whole life policies from top companies, you may find that their premium rates are all fairly competitive among their best underwriting classes .  The larger differences in premium rates occur in their lower underwriting classes. So, unless you are in superior health, and can qualify for ‘super’ preferred status, you will need to compare their rates for the lower underwriting classes.  The differences in their regular preferred and standard rates can be substantial, so it’s best to compare those to determine their true competitiveness.

Ask the Expert

Although whole life policies have been around longer than the other types of life insurance, many insurance professionals today tend to specialize in the newer universal and variable policies.  Because of that, whole life has become a specialty of its own.  When buying a whole life policy, it is recommended that you seek out an experienced insurance broker that works with a good number of the top life insurers and one who is clearly experienced working with whole life policies.  They can be the best resource to help you compare policies and rates.  They are also knowledgeable about the various underwriting requirements for each company so they can point you to the ones that are the most liberal for offering super preferred rates.

Summary

In the spectrum of life insurance plans, whole life still reigns as the most secure and predictable which suits the person who is serious about planning for all of life’s contingencies. The seriousness with which one plans for the future should also apply to the selection of a whole life policy.  People who are concerned about providing a secure future for their family and loved ones, should be equally concerned with finding a whole life policy through a secure life insurer.   For the best guidance on plans, rates and underwriting, it’s best to work with a whole life expert.

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