Checking Insurance Company Safety
Any insurance company product you buy—whether it is an insurance policy or some type of annuity—is only as secure as the company that is issuing it. If you are buying an insurance company product, understanding the company’s underlying financial health should play an important role in your decision. And if you own a policy or an annuity, keeping track of the issuing company’s financial health should play an important role in your investment monitoring process.
How can you evaluate the financial health of an insurance company?
One approach is to check the financial safety ratings that have been assigned to the company by one of the ratings agencies.
Listed below are the Web sites of the most widely used rating agencies that evaluate the financial stability of insurance companies. All provide ratings information free to consumers on their sites (although some do require you to register).
It is important to note that these agencies use different methodologies to evaluate financial stability. In addition, the agencies all use different rating scales, so an “A” rating by one agency is not comparable to an “A” rating by another. All of the rating agencies provide an explanation of their methodologies and rating scales on their Web sites.
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