Privatized Banking: The Best Life Insurance Companies
How do you find the best life insurance companies? You want only the strongest, most stable companies to ensure the best results over the long-term. But what criteria do you use to evaluate and discover which companies are, in fact, the best?
Is there an objective measure, or is it a matter of personal opinion and preference? Do you investigate their portfolio, their tenure in business, their size? Do you base your decision on the illustration or the company’s financial strength? And if you’re going with the illustration, should you look at the guaranteed rates, cash value, or the dividend scale? And is the near-term performance more important, or the figures listed out 50 years from now?
With so many factors to consider and so many figures on the illustration, how do you decide what to evaluate? Should you pick the one variable most important to you? Or do you try to analyze the big picture to find the company most likely to perform best over time?
Do you get illustrations from multiple companies and compare them?
And how long do you want to spend on your calculations?
Or do you give up the evaluation and just go with name recognition, or a trusted friend’s recommendation who is already with a company they like?
Table of contents
What We’ll Cover
In today’s conversation, we’ll give you the criteria to pick the best providers of life insurance. Instead of guessing, you’ll be able to know for sure so you can make decisions for yourself.
- What should you look for to get the best life insurance company?
- How do you objectively rate all the data to know you’re with the best company for you?
You’ll get the criteria to evaluate life insurance companies to find out which one you should use.
What This Article Won’t Tell You
You may have come here looking for the list of all-stars and hoping we’d list out the top life insurance companies by name. Sorry to disappoint. We will not be listing actual companies.
Actually, that’s for your benefit. Not all life insurance companies work best in every state and region. Not all will resonate with your particular end goals. Your unique situation makes one company better for you, and another better for someone else.
We do, however, promise to disclose the criteria for evaluating life insurance companies. Then, you can make sense of it all and decide for yourself. We firmly believe that you are the best person to direct your financial life. Therefore, we aim to provide you the education, tools, and resources to empower you to do just that.
Where Insurance and Privatized Banking Fit into the Cash Flow System
Picking the best insurance company is a huge step towards implementing your Infinite Banking Concept private wealth system. But it is only one small step of a greater journey of building time and money freedom.
That’s why we’ve put together the 3-step Entrepreneur’s Cash Flow System.
The first step is keeping more of the money you make. This includes tax planning, debt restructuring, cash flow awareness, and restructuring your savings so you can access it as an emergency/opportunity fund. This step frees up and increases your cash flow, so you have more to invest.
Then, you’ll protect your money with insurance, legal protection, and Privatized Banking. This second stage is where all aspects of insurance and Privatized Banking live
Finally, you’ll put your money to work and get it to make more. You’ll invest in cash-flowing assets to build time and money freedom so you can leave a rich legacy.
As you are empowered to make the best decisions for you, you’ll move beyond analysis paralysis and make forward traction. Then, you’ll gain momentum on your journey to building time and money freedom.
What Is A Life Insurance Company?
There are two different entities you will likely encounter on your quest to determine the best life insurance companies.
The Life Insurance Company
The life insurance company itself, also known as the carrier, is the provider of the life insurance.
This is the entity that you are entering a legally-binding contract with.
You agree to pay premiums to them, and they agree to pay out a death benefit to you. You write your premium checks directly to the life insurance company. In exchange, they issue the insurance policy, assume your risk, and
The carrier is also the company listed on your illustration. Names you may recognize include Penn Mutual, New York Life, Mass Mutual, Northwestern Mutual.
Life insurance companies do not often work with clients directly. They rely on agents who understand the company and life insurance policies to serve as the matchmaker between you and the life insurance company. To compensate agents for representing them, life insurance companies pay a commission to agents when a policy is sold.
Because of this dynamic, you’ll often also have a life insurance agent or financial services firm that serves as an intermediary. Their role is to understand your situation and goals and then facilitate your decision to best help you accomplish that. They will help decide the best policy type (term and whole life) and product design for you.
This may be the person that you directly interact with and form a relationship with, but they are not the insurance company itself.
Facilitator roles may be called investment advisors, financial advisors, financial planners, life insurance advisors or agents, or financial service firms.
To further complicate matters, some life insurance companies have agents that work directly for one life insurance company. This is called being a captive agent. When you work with that agent, you know you are getting only the life insurance company they can sell.
Other agents are independent. They work with multiple companies and can help you source the best company to match your goals and objectives.
The Best Life Insurance Company = Best Company + Best Facilitator
Because of the integrated nature of how life insurance is bought, it’s essential to have the best company AND the best agent. One without the other will handicap your progress, preventing you from getting what you want and need.
So, rather than scrutinizing life insurance to a painful level – I mean, no one actually enjoys that, right? – here’s what you need to know.
We’ll give you the 8-point checklist to finding the best life insurance companies. This will include the top four markers of insurance carriers and the top four attributes of an ideal financial services company. And, just for good measure, we’ll add in the two elements that are often over-inflated but end up not making much difference overall.
Four Elements of a Great Life Insurance Company
#1) The Best Life Insurance Companies are Mutual Companies
A primary characteristic of a great life insurance carrier is that they are a mutual company or mutual holding company. Here’s why.
The owners of a mutual company are the policy owners. Mutual companies reward their owners by paying out dividends to their policy owners. These dividends can be added to the cash value of the policy, accelerating your cash value growth.
The alternate classification is a stock company, which has a dual responsibility to stockholders and policyholders.
Find out more about mutual companies, and how that qualifier helps you determine what kind of policy you want to use for Privatized Banking.
#2) The Best Life Insurance Companies Have Strong Financial Ratings
The Strength of Life Insurance Companies in General
Life insurance companies as a whole are known for their conservative investment nature. They want predictable long-range growth in their own financial portfolio because that gives credence to the guaranteed growth they promise to policy owners.
Additionally, life insurance companies have strong reserve requirements. Because of this, they keep dollar-for-dollar reserves to protect themselves against insolvency.
Relatively few life insurance companies have failed over time. As data from the National Organization of Life and Health Insurance Guaranty Associations (NOLHGA) shows, in the 12 years from 2005 – 2017, only 19 life insurance companies have become insolvent. Contrast this with FDIC data demonstrating 523 bank failures over that same period.
If a life insurance company were to go under, they are commonly taken over by another life insurance company. This fulfills commitments to policyholders and upholds the integrity of the industry.
On top of that, there’s a state Guaranteed Insurance Fund (GIF) that insures the insurance company against insolvency. Its role is to protect policy owners against the worst-case scenario of default, similar to the FDIC insuring bank deposits.
Ratings That Highlight the Best Life Insurance Companies
To isolate the strongest companies that are most financially sound and least likely to fail, several rating agencies publish comparative grades for each company.
Standard and Poor’s, A.M. Best, and Fitch Ratings monitor financial strength and credit-worthiness of companies. Then, they assign a letter grade rating accordingly. These rating agencies each consider different data that may include the company structure, claims payment, financial reserves, and comparison to peer companies.
Most rating agencies publish data for the public as a subscription service, so you’d have to pay to access it directly. However, individual insurance companies disclose their ratings.
We recommend choosing a company with A ratings on each of these scales. This will land you in companies approved as strong, very strong, or exceptional. Consequently, you’ll avoid companies with fair, marginal, weak, distressed, and poor rankings.
Another tracking mechanism is the Comdex score, which is compiled by EbixLife using VitalSigns software. This is a composite ranking of insurance companies, according to several industry standards. The Comdex score consolidates many of the other rating agencies’ data into one score ranging from 0 – 100, with higher rankings being better.
We advise working with companies that have a Comdex score of 80 or better, meaning you’re working with the top 20% tier of life insurance companies.
#3) The Best Life Insurance Companies Have a Long Track Record
Naturally, the mutual companies that have been around the longest and have the highest ratings have been the strongest. Most of the best companies have their origins in the mid-1800s to the early 1900s.
In addition to pure longevity, you want to know that your life insurance company has at least a 100-year history of paying dividends. This means that even throughout the darkest financial times in our nation’s history, the Great Depression and the Great Recession, they have maintained their profitability, paying out dividends to policy owners.
#4) The Best Life Insurance Companies Have Great Customer Service
All objective criteria aside, who wants to do business with a strong company that treats you like a number?
Instead, you want a company that provides consideration to the intricacies of your unique health profile in assessing your underwriting, rather than rigidly following protocol.
Even more important is the service you receive after you’ve become a client. You’ll need ready support when you want to take out or repay loans, re-evaluate a rating, or add insurance on additional family members.
You’ll likely only learn of the carrier’s customer service second-hand, through your agent. That’s one reason your relationship with the life insurance facilitator needs at least as much attention as finding the company in the first place.
Four Elements of the Best Financial Services Firm
Nothing is worse than knowing you’ve got the best company in the world but are working with an intermediary that you can’t stand.
Let’s turn our attention to the equally important task of finding an agent, advisor, or team. This step is critical to your ability to best accomplish your goals.
#1) Overall philosophy
The top priority in finding a life insurance agent is their value system. Search high and low until you find a like-minded advisor that resonates with your objectives. Don’t settle for anything less.
Here are some questions you can ask yourself to find out if they meet your criteria.
Are they interested in finding out about what you want? Are they uncovering your life goals, mission, objectives, and designing a strategy to support you, or do they tell you that they know what you need better than you do?
This question flips the typical financial planning paradigm on its head because typically, the advisor is elevated as the expert, manager, and director of your financial life. However, we, as proponents of Prosperity Economics, believe you are the best person to be in control and direct your financial future. If your goal is control, you need support to empower you to take the wheel, not someone to rip it out of your hands and demote you to the backseat.
Is your advisor’s finish line a net worth calculation, or a cash flow objective?
Neither is right or wrong. It just depends on what you want to accomplish. However, if your goal is to create cash flow from assets to build true time and money freedom, make sure your financial advisor’s aim isn’t accumulating a target net worth.
Does your advisor base recommendations on principle, or are they product-driven?
You want a guide that starts with the principles of abundance and wealth creation, helping you understand your decisions, rather
Once you’re confident that your financial advisor’s highest values include putting you in control and increasing your cash flow, are they experienced in helping people do just that?
There’s a tremendous amount of knowledge and competence that can only be gained by experience. And by experience, I mean the volume of business. Someone who’s just getting started and doesn’t have a long line of satisfied clients who look like you won’t be adept at addressing the nuances of best serving you.
If you’re looking for Privatized Banking strategies to maximize your financial stability and access to capital in your business and real estate ventures, work with an advisor who’s been there and done that, many times over.
As much as you should be educated and equipped to make your own decisions, don’t work with an advisor that thinks you’re crazy or doesn’t understand what you’re talking about. If you have to teach them how you want to use your policy or help them design it properly, you’re working with the wrong advisor.
Your advisor should be skillful at working with clients like you, who have similar objectives. They should understand the ins and outs of the Infinite Banking Concept, know how to design a high cash value policy, and be abundantly familiar with utilizing whole life policy loans.
#3) Relationship with Carrier
With sufficient experience and business volume, an advisor will earn a substantial relationship with the carrier. A high-producing advisor will have more pull when it comes to getting things done in your favor.
This could mean gaining a more favorable underwriting rating based on a comprehensive understanding of your health history, rather than one based purely on medical records. The relationship could garner you quicker processing of premium payments, expediting your loan timelines.
Remember, your advisor is your intermediary with the insurance carrier. You’ll benefit from their secure relationship that comes from business volume.
#4) Succession Plan
If something were to happen to your advisor, would you have someone to help you carry out your financial strategy in their absence?
Unfortunately, financial advisors often operate in a competition-based mindset. Protecting their own turf leads to isolation instead of collaboration. This hurts you as the client. If you’re working with a one-man-band, you’re in jeopardy of losing that support to sustain your financial objectives if that advisor quits the business, retires, becomes disabled, dies, or otherwise leaves the business.
Abandoned clients are more common than you may realize. When a client loses their advisor relationship, the industry calls this being orphaned, as there is no one to continue servicing the policy. And it’s not a very cost-effective strategy for advisors to pick up orphaned clients, because often there’s little to no commission to do so.
The Team It Takes to Ensure Continuity
To ensure you have continuity and congruency of your strategies on your path to building time and money freedom, ensure that your financial advisor has a contingency plan. This means that you should build a relationship with a financial team, not just with an advisor. Having more than one advisor sitting with you during your meetings ensures that someone is familiar with your mission and objectives. There should also be a back-up plan of like-minded advisors to help you, no matter what happens to your primary advisor.
Succession plans take time to build. Additionally, the right mindset is needed to build a sustainable financial services team. The advisors must be committed to collaborating, sharing knowledge and ideas, training and developing advisors, and improving the industry overall.
Two Things That Don’t Really Matter
Now that we’ve covered the main things you should investigate to make sure you’re working with the best life insurance company and the best financial team, I want to point out two things that don’t matter.
Unfortunately, these important-sounding buzzwords are thrown around all too often. Advisors and life insurance companies use these points to differentiate themselves. They add to your confusion by making mountains out of molehills. Then, clients who want the best get fixated on minor details and lose sight of what’s most important in getting the best life insurance policy.
Two primary non-issues are dividend rates and non-direct vs. direct recognition. We cover both of these in greater detail when we discuss how we build life insurance policies for high cash value and long-term growth, so we’ll just touch on them briefly here.
Whole life insurance dividend rates are projections that an insurance company makes for what they will pay policyholders in non-guaranteed dividends, based on the last year’s financial performance. Dividends then increase your policy’s cash value in the year they are paid and accelerate cash value growth over time. Consequently, a high dividend would add more growth to your policy than a low dividend.
However, dividend rates are part of the non-guaranteed policy values. They are projections – expectations, not guarantees. Every year, the company adjusts its dividends.
While one company may illustrate higher dividends today, another company may illustrate higher dividends next year. Over time, the best life insurance companies tend to pay out dividends fairly equally across the board.
Additionally, some companies are more masterful at coming in right at the dividend they expected, while other companies miss their projections by yards – or thousands of dollars.
So, basing your life insurance company decision on non-guaranteed dividend rates alone is a complete shot in the dark.
Non-Direct or Direct Recognition
Direct and non-direct recognition are measures of how dividends are paid when life insurance loans are outstanding against your cash value.
A direct-recognition company directly recognizes the loan, lowering your dividend for the portion of the policy you have borrowed against.
A non-direct recognition company does not recognize the loan or differentiate dividends paid whether you have an outstanding loan or not. They continue to pay the full dividend rate on your full cash value.
Leveling the playing field, direct-recognition companies often have a higher published dividend rate. You enter the contract knowing that with greater policy utilization, the dividend you receive will be lower than the published rate. On the other hand, if you work with a non-direct recognition company, you’ll often have a lower dividend rate from the starting gate, but the confidence to know your dividends won’t be reduced by your policy loans.
If you plan to use your policy for Privatized Banking, neither having a non-direct or a direct recognition company is a leg up, since both will perform about equally over time as you use them.
If you’re the kind of person who skips to the end to find out the answers first, here’s the cliff notes version.
In evaluating the best life insurance companies, make sure you evaluate the most important criteria and leave the rest off the table.
First, you want to ensure you’re working with a mutual company with high ratings and a 100+ year history of paying dividends. The company should demonstrate favorability towards policy utilization through loans and have exceptional customer service.
Then, and even more critically, make sure you’re working with a philosophically-aligned advisor team that puts you in control. They’ll need substantial experience working with clients like you, and an active succession plan in place.
Your Decision Point
Now you’re ready to move forward. I hope you feel empowered with this 9-point checklist. Then, you’ll never have to second-guess your decision, and you can move on to the important stuff: focusing 100% on your strategy.
May I be real with you? Finding the best life insurance company is only about 5% of the journey to leveraging the Privatized Banking strategy because it’s at the front end of selecting the right product. The other 95% of your success with the Privatized Banking strategy comes from what you do with it.
The most critical questions are everything that happens next:
- How much are you funding it with?
- Do you have the right product design for maximum early cash value and long-term growth?
- What best investments will you select to invest your capital by borrowing against your cash value?
- How will you maximize your cash-flowing assets to build time and money freedom and a legacy of real wealth?
For more information on Specially Designed Life Insurance Contracts, get our free Quick & Easy Privatized Banking Guide.
If you would like to implement life insurance and Privatized Banking in your own life, talk to us about how it would work for you.
Book a strategy call to find out how, and also get the one thing you should be doing today to optimize your personal economy and accelerate time and money freedom.
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