Family Insurance Planners Blog
Both homeowners and auto insurance policies are pretty standard. There may be different features that can be selected but a homeowner’s policy in Louisiana will have the same basic coverage regardless of who issues the policy. This is true of auto insurance as well. That’s because the commissioner of insurance in each state regulates what basic policies must include.
This is not the case with life insurance. Most life insurance policies are different – the language in the policies differ, as well as the rates and benefits. No two insurance company policies are the same. There are a number of reasons for this including the fact that life insurance policies are designed and intended to be in effect for many years. Auto and homeowner policies are contracts generally re-written every year.
These differences lead to buyer confusion. It’s important to deal with a trained and experienced agent or broker to help understand the complexity and to understand the features and benefits of the life insurance policy you purchase.
It’s one of those purchases you don’t make often, similar to buying a house or a car or a business. But it’s also different. When you buy a house or a car, you pick and choose size, style and/or model. And, the financing of these assets can be complicated with the application process, credit checks, setting up monthly payments, etc.
When you buy life insurance, it can be even more complicated. You don’t really get to see the product because you’re actually buying a contract. In the case of a home or car purchase, you can track their values; in fact, your finance company will require a certain loan to value ratio and that the asset is insured for the loan amount or current value. With life insurance, what is the value of what you’re insuring?
I’ll cover more of these comparisons in future posts.
There are more than 700 life insurance companies in the U.S. The largest are MetLife/Brighthouse Finance, Northwestern Mutual, New York Life and Prudential. Most are publicly traded companies owned by stockholders. Some are mutual companies and are, in fact, owned by the policy holders.
Two of the largest mutual companies are New York Life (established in 1845) and Northwestern Mutual (established in 1850). Both companies market their products by what are called “captive agents”. Their products generally can only be sold by “their” agents who are hired and contracted to sell their products and have limited ability to sell products of other companies.