Yes, policyholders should also take a serious look at the financial stability of their current insurance company especially if annuities or cash value life insurance are involved. During the credit crisis starting 2008, many banks and insurance companies failed leaving policy holders exposed. Thus, an important area of concern for most consumers should be to find coverage provided by a stable institution.

Ratings from the professional independent rating agencies such as Moody's, Standard and Poor's, Fitch and A.M. Best have grown ever more important to consider when selecting an insurance company. These four independent agencies rate the financial strength and claims paying ability of insurance companies. They each have their own rating scale and rating standards, so you should use the ratings from more than just one rating agency when evaluating your insurance company. Stick with an insurance company that has a rating of within the top classes of each agency. The rating scales typically go from triple A to D or F (depending on the rating agency) like a report card. Don't rely on what the agent or insurance company tells you, because they can be using old ratings or selecting the most favorable report - do your own research.

While an affordable premium and financial strength of the insurer are extremely important, let's not forget the main reason that we purchase insurance - risk management and protection. Sometimes, it's worth the piece of mind to spend a little more in premium to have the appropriate coverage for your personal situation. (Take a look at How Safe Is You Insurance Policy? for a much more in-depth information on this topic)

This question was answered by Steven Merkel.

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