Life insurance is a legal contract between an individual (policy-holder) and a company providing the insurance (insurer), where the insurer promises to pay certain lump sum amount of monetary benefit to the policy-holder upon the death of the insurance holder in exchange for a premium to be paid by him. Apart from death, there may also be contracts covering other events like damages, losses, treatment for terminal illness, critical illness, hardships and funeral expenses that triggers a payment to a policy-holder.

An insurance can be claimed with assistance from an insurance agent, but it will be the carrier which ultimately settles all claims. Considering that the life insurance companies will begin to owe interest once a claim is filed, it takes about 7-10 days to settle a claim on an average. Life insurance companies can be broadly classified into two categories, each having its own set of features.

Stock insurance companies : Stocks are sold by these companies either directly to stockholders or through the stock market. In either case, only those policy-holders who possess stocks have a voice in the company, and not all policy-holders can raise their point in the company business.

Mutual insurance companies : In these companies, all its policy-holders have their voice in the company matters. Thus, making all policy-holders to automatically become its owners and have the voting capacity to say how the company has to do business or to be run. The policy-holders all also given the rights to vote to choose the member of its board of directors.

The insurance policies issued by these companies are further classified into two types as discussed below:

• Protection policies – Commonly called as term policies, these policies provide an insurance benefit which is usually a lump sum payment in case of occurrence of any unfortunate event.
• Investment policies – Commonly known as whole life or universal life or variable policies, these policies are designed to allow the capital investment to grow. The capital can be either regular periodic distributions or a single lump sum payment. This premium which is allowed to grow for a certain period of time will be paid to the policy-holder.

The purchase of life insurance for self or others is one of the best gifts you can give to your loved ones. It is an assurance to the person left behind that you love and care for him/her even in your absence. An insurance claim amount with the right coverage will help them move forward financially. The primary function of an insurer is to provide monetary protection against the resultants of certain adverse and undesirable events. Hence, choosing the right life insurance company is one of the toughest decisions to make. Life Insurance companies in the U.S. can be ranked on the basis of direct premium written, i.e., a number of new/fresh policies issued and not re-issued/renewed. While there are hundreds of insurance companies in the market racing to sell their services, it is important to keep certain points in mind while choosing the insurer.

Financial Strength of the company indicates the insurer’s capacity to pay out the claims after several years down the line. Preferably look for a rating of B or lower for insurance companies done through agencies like A.M. Best and Standard & Poors for instance. One would want a life insurance company that will pay out without any default when your family needs the benefit most.

• Service quality : Refer service and customer satisfaction ratings given by various survey agencies like J.D.Power etc. and try to get other customers’ feedback on their experiences in dealing with the company. Also, read online reviews or call up a few companies to see how they respond or how fast they can get you connected with someone right, etc.
• Premium amounts or pricing : Try to get a few quotes from different companies and choose the one that suits your requirement for premium payment and claim amount.

The initial communication with the insurance agent is critical as the buyer, and the agent needs to understand the policy requirements based on the goals, budget, and the product. The agent’s support during annual reviews, product changes like conversions, the addition of new riders, etc.is essential. Check for the tolerance of the company towards risks by referring to a few complaints filed against the company with state regulators.Search online or through some carriers to get an idea of the types of complaints filed against them in the past.

In the end, the insurance policy should be bought considering parameters like Cost certainty, term lengths, conversion restrictions, disability protection and End-of-life care.