In any event or situation, the usage of tobacco will increase your premium; the only question is by how much. Every life insurance company treats the different forms of tobacco – cigarettes, cigars, and chewing tobacco – in their own fashion, which is why companies will ask you very specific questions during the application process.
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Some insurance companies, in to determine your financial risk to the company, require a medical examination. They are conducted by an independent, licensed healthcare professional either at your home, work, or a near-by licensed clinic.
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Suitability is a term, which basically means that a certain policy is appropriate for a certain individual. However, the difficult part of life insurance suitability is that there are no clear-cut answers for either consumers or professional advisers. State suitability rules exist in only a small percentage of the states and vary in term of requirements, terms and enforcements.
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Due to the potential conflict of interest involved with commissions, there is little movement towards no load/low load policies, which rewards agents with a standard fee not a commission. However, only a properly licensed fee-based planner can retain such a fee. It is also strictly prohibited for an agent to receive both a fee and a commission from the same client, according the California Insurance Code.
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Information about an insurance adviser can be found at the state’s Department of Insurance in which they are licensed to sell and service insurance. Additional information can be found at the National Association of Insurance Commissioners (NAIC) and the Financial Industry Regulatory Authority (FINRA), if applicable. All the information found of these three sources can give you a better understanding of your adviser’s professional background.
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The life insurance industry has changed in recent years. Nowadays, life insurance is less likely to be sold by a “traditional” life insurance agent, and more likely to sold by a financial adviser, financial consultant or financial planner. These types of advisers have expanded their selling and servicing abilities to meet the changing needs of consumers. However, all of these changes have made the process of evaluating an adviser slightly more difficult.
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Every insurance company adheres to their own ethical standards as well as to basic guidelines laid out by their state’s Department of Insurance. A new entity called the Insurance Marketplace Standards Association (IMSA) was recently created. Their mission is to promote high ethical standards in the sale and servicing of individually sold life insurance, annuities and long-term products.
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Risk Based Capital (RBC) is a risk assessment tool to help determine the status of an insurance company, which is used by insurance commissioners. RBC was designed to identify inadequately capitalized life and health insurance companies and provide guidelines for regulatory intervention before a company becomes insolvent.
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Insurance Regulatory Information reports (IRIS) are comprehensive evaluations of the financial statues of life insurance companies, which are issued by the National Association of Insurance Commissioners (NAIC). With more than 5,000 companies filing their financial statement each year with the NAIC, the IRIS financial ratios serve as an early warning system to spot troubled companies.
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There are four rating agencies that evaluate and rate life insurance companies, which are A.M. Best, Standard & Poor’s, Fitch and Moody. Each of these agencies has their own method of rating an insurance company. There are internal areas of consideration; financial leverage, management stability, etc., and external factors; competition, diversification, etc. As a rule of thumb, only companies who have received a top rating should be considered.
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Selling one’s life insurance policy for a life settlement is a good
The insurance industry is a powerful kingpin, with a total of $1.22
