5 Things to look for in a life insurance company

Ready to stop procrastinating on buying a life insurance policy? This task is probably the last thing most people want to do in their spare time. It can be difficult to imagine the worst happening to you or your family, and you may worry that you’re not making the right choices. Even if you finally feel ready to take the first steps, you may not know where to start.

There are many things you may want to consider whilst searching for the right policy for you, but if you’re unsure, here are five things to look for when taking out cover:

1. Who issues the policy

   Life and funeral insurance policies can be sold directly by an insurer or through a local distributor they’ve partnered with. In either case, knowing who backs up the policy could give you more confidence in the company you choose.Insurers often place limits on the amount of cover you can have with them. So, if you were to get life insurance policies from two different distributors, the amount paid at claim time could be reduced if both distributors are working with the same insurer. Knowing who backs your policy (or policies) could help you avoid this problem.

   In New Zealand, there are a few ways to figure out who issues a policy. This information should be disclosed on the life insurance company’s website and mentioned in the policy wording. You can also search online for recent press releases (like this one about insurer Momentum Life) to see if the company you’re buying from issues their own products or works with another insurer.

2. Their Financial Strength Rating
   

   Once you’ve worked out who issues the policy you’re interested in, you’ll want to check their Financial Strength Rating. This “score” provides information on how healthy an insurance company is and how well placed they are to pay customer claims.New Zealand life insurers must be rated to hold a licence. Many insurers in the country are rated by A.M. Best, an independent financial reviewer. They provide both a Financial Strength and an Issuer Credit Rating. New Zealand insurers will put this information on their website, along with proof that they meet the Solvency Standard, as required by the Reserve Bank of New Zealand. Both of these together can help customers pick an insurance company that is likely to be there for them well into the future.

3. How much you’ll pay

   The household budget is a big concern for many families. Often, people assume life insurance premiums are too expensive before they even start to shop around. This could be a costly mistake—potentially leaving your family financial vulnerable if the worst were to happen.Luckily, getting an insurance quote is often a quick and easy process. Comparison sites provide customers with snapshots of different policies, including how much you can expect to pay. However, it may be a good idea to call different insurance companies directly for a more personalised quote. These are generally provided free of charge and with no obligation to buy.

4. What is and isn’t covered

   Of course, price may not be the only thing that matters to you. Life and funeral cover may vary widely from insurer to insurer. Taking a good look at the fine print could help you decide which policy is right for you.One thing to look for when comparing insurance policies is if there are any waiting periods before you’re fully covered. It’s common for certain causes of death to be excluded for a matter of months or years after you first take out cover. Once the waiting period ends, you may be covered for any cause of death going forward.

   Another consideration is if any pre-existing conditions are relevant to the policy. These may affect whether a future claim is paid. Depending on the type of policy you get, your doctor may need to perform a physical or provide some medical history to the insurer to help them decide if any exclusions will be added to your policy.

5. What their customers think

   Strong finances, affordable premiums and fair terms and conditions are all good, but how helpful is their customer service? You may also want to look at an insurance company’s reviews to get a better sense of what to expect.If most of the insurer’s reviews are positive, then a few bad comments shouldn’t scare you off. Any business is bound to get negative feedback now and then. However, if the company seems to have mostly poor reviews going back for months or years, that could be a bad sign. If you can, try to find feedback from verified customers, such as through platforms like Feefo or Trustpilot.

Life insurance could be an important part of your family’s financial future. Having this safety net in place could help everyone rest a little easier, and hopefully considering the five factors above makes choosing a policy a bit easier as well.