Education Center

How to Compare Disability Insurance Companies

When you’re shopping for the best disability insurance policy, it’s a good idea to look at what several different disability insurance companies have to offer. It’s important to choose a solid company that offers the coverage you need at an affordable price. Some of the factors you should consider when selecting a disability insurance provider include:

  • How is disability defined? Not all disability insurance companies define disability in the same manner. Before choosing a company, make sure you understand the circumstances under which you’ll receive disability insurance benefits.
  • What products are available? There are many different types of disability policies, and the best disability insurance companies offer a variety of options from which to choose.
  • How financially solid is the company? Before you purchase disability insurance, you’ll want to make sure that the company is financially strong. After all, you want to be sure that you can expect the company to be around if you need to file for benefits.
  • Does the company have a good reputation? Ask your friends and colleagues about past experience with disability companies. You can learn a lot about which companies provide excellent service and which are lacking by discussing the subject with people you know and trust.

Beware of Cheap Disability Insurance Companies

Though there is no reason to pay more than you have to for disability insurance, it’s important that you don’t let price alone dictate your choice of disability insurance companies. When researching disability insurance providers, it’s important to narrow down your choices only to those organizations that exhibit financial soundness with successful track records and good reputations in the field.

You should certainly compare prices for disability insurance coverage, but you don’t want to make the mistake of letting your desire for low premiums keep you from getting the best possible coverage. Make your short list of disability providers based on company quality, and then compare prices among the leaders. After all, it’s important to make sure that the company you select will be willing and able to honor its commitment to you if you need to file for disability insurance benefits.

The Importance of Disability Insurance Company Ratings

When selecting among the different disability insurance companies, it’s important to choose a top notch organization that you can count on to be there if you need to utilize your disability insurance benefits. If you make the mistake of purchasing disability coverage from a company that lacks financial strength, you could find yourself in a serious bind if you need to file a claim.

It’s certainly important to evaluate the financial strength rating of any disability insurance company you are considering. The good news is that it’s not difficult to get the data you need to make an informed decision. Several independent rating companies assess the different insurance providers on an ongoing basis.

When evaluating disability insurance companies, look for ratings assigned by A.M. Best, Fitch, Moody’s, and Standard & Poor’s. Each ratings company uses different criteria to determine the ratings it assigns to disability insurance provides, so it’s a good idea to look at more than one rating before making a decision that a particular company is the best disability insurance provider for you.

Understanding Disability Insurance Company Ratings

When looking at ratings of disability insurance companies, it’s important to make sure you understand what the rankings actually mean. Four different independent organizations rate disability insurers, and each one uses a different technique and ranking system. Here’s what you need to know to make sense of disability insurance company ratings:

A.M. Best:

A++: Secure/Superior

A+: Secure/Superior

A -: Secure/Excellent

A-: Secure/Excellent

B++: Secure / Very Good

B+: Secure / Good

B -: Vulnerable / Fair

B-: Vulnerable / Fair

C++: Vulnerable / Marginal

C: Vulnerable / Weak

C-: Vulnerable / Weak

D: Vulnerable / Poor

E: Vulnerable / Under State Supervision

F: Vulnerable / In Liquidation

S: Rating Suspended

Fitch:

AAA: Secure/Highest

AA+: Secure/Very High

AA: Secure/Very High

AA-: Secure / Very High

A+: Secure / High

A: Secure / High

A- Secure / High

BBB+: Secure / Adequate

BBB: Secure / Adequate

BBB-:Secure / Adequate

BB+: Uncertain

BB: Uncertain

BB-: Uncertain

B+: Possessing Risk

B: Possessing Risk

B-: Possessing Risk

CCC: Substantial Risk

DD: Liquidating

SR: Suspended Rating

Moody’s:

Aaa – Exceptional

Aa1– Excellent

Aa2– Excellent

AA3– Excellent

A1– Good

A2– Good

A3– Good

Baa1– Adequate

Baa2– Adequate

Baa3– Adequate

Ba1, Ba2, Ba3: Questionable

B1, B2, B3: Poor

Caa: Very Poor

Ca: Extremely Poor

C: Lowest

Standard & Poor’s:

AAA: Extremely Strong

AA+: Very Strong

AA: Very Strong

AA-: Very Strong

A+: Strong

A: Strong

A- Strong

BBB+: Good

BBB: Good

BBB-: Good

BB+: Marginal

BB: Marginal

BB-: Marginal

B+: Weak

B: Weak

B-: Weak

CCC+: Very Weak

CCC: Very Weak

CCC-: Very Weak

CC: Extremely Weak

R: Regulatory Action

 

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