COMPANY RATINGS

Company Ratings

The two most popular rating services are:

􀂃 A.M. Best Company
􀂃 Standard and Poor’s
These two rating services differ from each other in their rating methodologies.
• A.M. Best Company uses profitability, leverage, and liquidity to assign ratings from
A++ (Superior) to C and C (Fair) and below.
• Standard and Poor's uses the claims paying ability of an insurance company to
assign ratings from AAA (Superior) to D (Insurers placed under an order of
liquidation).
Other reputable rating services include:
􀂃 Moody's Investors Service
􀂃 Duff and Phelps
Important Point: Besides private rating services, there is also the National
Association of Insurance Commissioners. This government organization measures
the performance of insurance companies and prepares analytical reports as part of
the Insurance Regulatory Information System (IRIS). Agents can access the IRIS
ratios to get a better idea of a company's financial condition in various areas.
CHOOSING THE RIGHT TYPE OF LIFE INSURANCE
There are two basic types of life insurance, which are:
• Term Insurance
• Permanent Insurance
There are many variations on both of these types of Life Insurances.
Term Life Insurance
• Term Life Insurance provides life insurance for a specified period of time. These
policies provide benefits in the event of death, but they generate no “cash value, ” or
savings.
Important Points
􀂃 If a prospect has a limited amount to spend, and only needs insurance for a finite
period of time, he/she may be able to get more coverage by buying term
insurance than by buying permanent insurance.
􀂃 Keep in mind that the cost of term insurance increases as the prospect gets
older, which may make it more expensive than permanent insurance in the long
run.
• When the individual buys term insurance, he/she need to make a choice as to
how long he/she wants the protection. The individual may renew the policy
without a physical examination for the period of years specified in the policy.
Some term insurance can be converted to permanent insurance up to a specified
age with no physical examination. Premiums for the converted insurance will
most likely be higher than the premiums you would be paying for the term
insurance.