One of the key steps in purchasing any insurance policy is to evaluate the financial strength of the insurance company. The risk is that the company may default. In other words, not be able to pay benefits because they do not have the capital necessary to do so. The following chart illustrates the different companies that rate life insurance companies and the ratings they give.
|A.M. Best||Standard & Poors||Moody\'s||D&B||Weiss|
Again, the rating system measures the financial strength of the company, the higher the rating the better.
This is a process used by insurance companies to evaluate applicants. The insurance company wants to be able to determine an applicant's exposure to risk. The goal is to make sure that the applicant's risk exposure is equal to the risk exposure the company has set its premium rates to. In other words, the companies use this process to minimize there own risk taken by issuing a policy. Insurance companies use several sources for underwriting an application. They can include...
- The agent
- The application
- Bureaus and associations
- Physical exam
- Previous medical records
- Smoker versus non-smoker
Insurance companies will base whether or not the application is accepted or rejected, the type of policy available to the applicant, and the premiums it charges on this process.
InvestingDespite investor distrust, rating agencies can be helpful. Just be sure you use these ratings as a starting point.
Financial AdvisorThese Schwab funds are strategically designed and have performed well on a historical basis, meaning they're solid options for retirement.
InvestingWhether you held a AAA or AA+ rating, the difference didn't seem to matter to Mr. Market on Monday.
Small BusinessA transfer price is what one unit of a business charges another unit of the same business for a good or service. The transfer price is usually close to the prevailing market rate when different ...
InvestingThese five funds are some of the best bets for muni bonds for those seeking diversification and tax benefits.
InvestingTreasury Building: the U.S., China, Germany, Brazil and other nations face $7.7 trillion in maturing debt as borrowing costs rise
InvestingHigh-yield bonds present a lot of risks but do they outweigh the rewards? Here are some ETFs to consider, with caution.
InvestingGoogle stock comes in two different flavors with different rights for shareholders.
InsuranceMedicare is the United States’ health insurance program for those over age 65. Medicare has four parts, but you might not need them all.
InvestingSeries A, B and C funding rounds have nothing to do with the alphabet, rather with the development stage of startups raising venture capital.