How to protect yourself

If you're shopping for a policy:

  • As we've long advised for most consumers, buy term life rather than a cash-value or whole life policy.
  • Shop for the best price by using online insurance brokers, such as,, and
  • Whatever you buy—term, cash-value life, or annuities—sign only with an insurer that has earned the very top financial-strength rating from an independent rater. That would be the A ratings tier at, available to consumers free, as well as the AAAq grade at Fitch and the AAApi grade at S&P.
  • To further diversify, buy coverage within your state's guaranty association limit from separate companies—for example, a $300,000 death-benefit policy or $100,000 cash-surrender-value policy from Company A, and additional, similar-value policies from Companies B, C, etc. But the added safety of multiple policies might cost you a higher combined premium than you might pay with a single policy.

If you're already a policyholder:

  • Try to maintain good health in case you need to shop for new coverage.
  • If you have cash-value life or an annuity, monitor your insurer's health regularly. When's agency went by the name Weiss Ratings, it spotted trouble long before six major life/health failures in the late 1980s and early 1990s and red-flagged the companies as "vulnerable" an average of 10 months before regulators stepped in—well in advance of other agencies. By contrast, Best did so an average of one day after regulators took action, rating two of those disasters A (excellent) at the time of their impairment. Best says its rating process has been "substantially enhanced" since then, but its financial-strength rating of AIG Insurance was?A when AIG collapsed last September.
  • If you want to bail out of a variable annuity, weigh the policy's surrender charges against any feared losses.

This article appeared in the May 2009 issue of Consumer Reports Money Adviser.

Posted: May 2009 — Consumer Reports Money Adviser issue: May 2009