How to Select the Right Car Insurance Company?

Car insurance is mandatory for all car drivers and they should have at least the minimum coverage limits for car insurance that the state law demands. You should also consider additional coverages like collision coverage, comprehensive coverage, uninsured/underinsurance motorist coverage, medical payments coverage, etc. At the same time, it is very important to select the right car insurance company. You have to ensure that the insurance company is reliable and would treat you properly when you file any claim on your car insurance in case of an auto accident.

Visit the Website of Department of Insurance of Your StateEach state in the U.S. has a separate department of insurance and the department would have its own website. Such websites normally publish complaint ratios by consumers for all the insurance companies operating in that state. This ratio would give you an idea how many complaints that any company has received per 1,000 accident claims filed with the insurance company. Experts on auto insurance assert that you should compare the complaint ratios of several companies to decide about their reliability.

Compare Car Insurance Rates of Several Companies

All these companies have their own websites and it is very easy to obtain the cost of coverage for various types of coverages by visiting their website. You should get hold of the premium quotes of as many companies in your area as possible.

Comparison of Auto Insurance Quotes and Complaint Ratios

When you have this list of such companies with lowest quotes, you should compare their complaint ratios. These companies that are able to offer the lowest quote and are also low in complaint ratios are the ideal companies that you could personally approach. At the same time, you should not decide by the complaint ratio of an insurance company in your state. That insurance company might have lower complaint rates in your state but have very high complaint rates in many other states. It is always better to avoid such companies always. Hence, your search for complaint rates should be a national comparison and not just your state alone.Enquire with Auto Repair Workshops

Auto repair workshops that you know very well are also a good source to select a company for auto insurance. They interact regularly with these companies for car repair claims and they would be able to inform you about the companies that have smooth claim processes.

Term Life Insurance Companies, Their Ratings And More

There are countless term insurance life insurance companies. As someone who’s been a life insurance professional for more than 20 years, I can honestly say that the best term life insurance companies, the top rated term life insurance companies, and the best rated term life insurance companies are very similar. It’s not to say they are all exactly alike but they are usually similar. To compare term life insurance companies is really a matter of what’s important to prospective insurance client.

Your priority

My experience has been that what most people are concerned with when it comes to term insurance is what it will cost them.

Clearly some term life insurance companies are more highly rated by companies such as A.M. Best, Moody’s, and Standard & Poor.

Some of the factors that determine a company’s rating are:

  • Financial strength
  • Financial stability
  • Ability to pay claims
  • Claims paying expediency

If any of these factors, among the others that are used, are important to you when you compare term life insurance companies, how important are these factors to you in comparison to price?

What if one company is considered one of the best term life insurance companies in the industry but the premium cost is double that for the same amount of coverage by one that is not considered one of the best rated term life insurance companies?

What’s your priority?

Ratings

Similar to being in school, term life insurance companies and all insurance companies are rated on an A-F basis.

Seems easy to understand, right?

Did you know that and “A” rated company can be rated anywhere from A++ to A-?

Did you know that different ratings companies, including those mentioned above use different criteria to determine ratings?

Did you know that an insurance company can be rated differently by the different ratings companies?If an insurer receives a favorable rating from one rating company and a less favorable one from another rating company, which one do you think they’re going to make sure you’re aware of?

Underwriting

Insurance companies use the term underwriting to determine who pays how much for what. Different companies have different underwriting guidelines. Its name literally means that someone in the company places a signature on the policy saying a particular person meets the company’s underwriting guidelines.

There are three main methods used for underwriting life insurance policies:

  • Fully underwritten-most common-may involve medical exam (blood/urine specimen/attending physician statement).
  • Simplified issue-less common-no medical exam-decision regarding issue usually swift
  • Guaranteed issue-anyone who applies and meets certain conditions is guaranteed that a policy will be issued-(includes accidental death insurance and graded death benefit policies)

There are also different underwriting classifications. The most common:

  • Preferred-best rates
  • Standard-most common
  • Sub-standard, also known as rated or table

Some companies subdivide the classifications. For example:

  • Super preferred
  • Ultra preferred
  • Standard plus

Table can be in the form of a number (usually 1-6) or a letter (usually A-G) – the higher the number or letter, the higher the premium.

Convertibility

Some companies allow for conversion of a term policy to a permanent policy at a later date without proving insurability.

Other companies allow for conversion but require proof of insurability.

Some companies do not offer convertibility at all.

If convertibility is offered, it is often within certain time limits.

If you’re sure you want term and nothing else, then this is not something you need to consider.

Price

The main factors that affect price:

1. Health

2. Age

3. Life style

They are numbered as such because that is generally the order of priority companies use to classify prospective clients.

Poor health can and will exclude someone regardless of age and lifestyle and no amount of money will buy insurance. On the other hand excellent health can go a long way in reducing premiums.

A person’s age is the next factor. The age is compared to mortality rates. Different companies have different charts for mortality rates.

Another way to describe mortality rate is how many years someone of their age is away from death.

Statistically speaking, insurance companies know pretty accurately how many people of a certain age will die before their next birthday.

Life style is the third factor. The most common consideration is whether someone smokes but there are others as well, such as what someone does for a living. Certain professions are more hazardous than others.

A person’s hobbies have an effect as well. Sky diving, and speed racing are often frowned upon, and may not result in denial of coverage, but could result in higher premiums.

Regardless of all factors, female rates are nearly always lower than male rates.

Fully underwritten vs. simplified issue vs. guaranteed issue

All things being equal, fully underwritten is going to result in the best priced premium. However, often times all things are not equal.

Are you sure your health is as good as you think it is or is it possible a blood/urine sample, saliva swab, or doctor’s report could reveal something you’re not aware of, or if you’re not the most ethical person, perhaps something you simply don’t want to reveal?

A fully underwritten policy takes much more into consideration when determining rating class and price than a simplified issue policy.Depending on your point of view, that can be an advantage or a disadvantage.

Assuming you’re being honest and there’s not already information reported about you to the medical information bureau (MIB), your chances of a policy being issued as applied for are as high as 9 out of 10 if you apply for a simplified issue policy.

On the other hand, there is about a 60% chance you will not qualify for a fully underwritten policy as applied for.

A guaranteed issue policy will definitely be issued. You will know if you qualify before actually signing the application. It’s either yes or no. However because it’s guaranteed, the price is usually much higher, unless it is a conditional policy such as an accidental death policy.

Conclusion

Unless you know the ropes and/or can take the time to weigh all the factors when comparing term life insurance companies, an experienced professional can steer you the best term life insurance companies for you to consider.

Having said that, if you want to be absolutely sure that you’ll get the insurance you want, it’s best to buy a guaranteed issue policy.

If you’re pretty sure you’re in good health but don’t want to go to the trouble of a medical exam or paramedical exam (blood/urine), or you don’t want to reveal certain matters that could affect your ability to obtain insurance, you should consider a simplified issue policy.

Once you qualify for a policy, assuming no fraud is involved, the only one who can cancel the policy once it’s been issued is you. The insurance company cannot cancel you as long as the premiums are paid.

Perhaps it makes sense to apply for a guaranteed or simplified issue policy first. Once issued then shop for the best price and/or the best rated term life insurance companies.

What’s best for you?

I invite any and all questions and comments.

How to Research Insurance Companies

Before you subscribe an insurance you need to understand how insurance companies work. To help understand that we have provided a detailed explanation of Insurance Companies Business Model based on internet research and talking with some friends that are experts and work on the insurance professional field. Let’s breakdown the model in components:

  • Underwriting and investing
  • Claim
  • Marketing

Underwriting and investing

On raw terms we can say that the Insurance Companies business model is to bring together more value in premium and investment income than the value that is expended in losses and at the same time to present a reasonable price which the clients will accept.

The earnings can be described by the following formula:

Earnings = earned premium + investment income – incurred loss – underwriting expenses.

Insurance Companies gain their wealth with these two methods:

  • Underwriting, is the process that Insurance companies use to select the risk to be insured and chooses the value of the premiums to be charged for accepting those risks.
  • Investing the values received on premiums.

There is a complex side aspect on the Insurance Companies business model that is the actuarial science of price setting, based on statistics and probability to estimate the value of future claims within a given risk. Following the price setting, the insurance company will consent or refuse the risks using the underwriting process.

Taking a look at the frequency and severity of the insured liabilities and estimated payment average is what ratemaking at a simple level is. What companies do is check all those historical data concerning losses they had and update it on today’s values and then comparing it to the premiums earned for a rate adequacy assessment. Companies use also expense load and loss ratios. Simply putting this we can say that the comparison of losses with loss relativities is how rating different risks characteristics are done. For example a policy with the double losses should charge a premium with the double value. Of course there is space for more complexes calculations with multivariable analysis and parametric calculation, always taking data history as it inputs to be used on the probability of future losses assessment.The companies underwriting profit is the amount of premium value collected when the policy ends minus the amount of paid value on claims. Also we have the underwriting performance A.K.A. the combined ratio. This is measured by dividing the losses and expenses values by the premium values. If it is over 100% we call it underwriting loss and if it is below the 100% then we call it the underwriting profit. Don’t forget as part of the Companies business model there is the investment part which means that the companies can have profit even with the existence of underwriting losses.

The Float is how insurance companies earn their investment profits. It is amount of value collected in premium within a given time and that has not paid out in claims. The investment of the float starts when the insurance companies receive the payments from the premiums and end when the claims are paid out. As it is this time frame is the duration from which the interest is earned.

The insurance companies from the United States that operate on casualty and property insurance had an underwriting loss of $142 Billion in the five years ending on the year of 2003, and for the same period had an overall profit of $68 Billion consequence of the float. Many professionals from the industry think that is possible to always achieve profit from the float not having necessarily a underwriting profit. Of course there are many thinking streams on this matter.

Finally one important think you should consider when subscribing a new insurance is that in economically depressed times the markets have bear trends and the insurance companies run away from float investments and causes a need to reassess the values of the premiums which means higher prices. So this is not a good time to subscribe or renew your insurances.

The changing on profit and nonprofit times is called underwriting cycles.

Claims

The actual “product” paid for in insurance companies industry are the claims and loss handling as we can call it the materialized utility of insurance companies. The Insurance Companies representatives or negotiators can help the clients fill the claims or they can be filled directly by the companies.

The massive amount of claims are employed by the claim adjusters and supported by the records management staff and data entry clerks within the Companies claims department. The classification of the clams are made on severity criteria basis and allocated to the claim adjusters. The claim adjusters have variable settlement authority according to each ones experience and knowledge. After the allocation, follows the investigation with collaboration of the customer to define if it is covered by the contract. The investigation outputs de value and the payment approval to the client.Sometimes a public adjuster can be hired by the client to negotiate an agreement with the insurance companies on his behalf. On more complex policies where the claims are hard to manage the client may and normally uses the a separate policy add on for the cover of the cost of the public adjuster, called the loss recovery insurance.

When managing claims handling functions, the companies tries to steady the requirements for customer contentment, expenses of administrative and over payment leakages. Insurance bad faith usually comes from this equilibrium act that causes fraudulent insurance practices which are a major risk that are manage and overcome by the companies. The dispute between the clients and insurance companies often leads to litigation. The claims handling practices and the validity of claims are the escalating issues.

Marketing

Insurance Companies use negotiators and representatives to initiate the market and underwrite their clients. These negotiators are bond to a sole company or they are freelancers, which mean that they can rules and terms from many other insurance companies. It is proven the accomplishment of Insurance Companies goals is due to dedicated and tailored made services supplied by the representatives.

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