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January 11, 2021

What is A.M. Best Ratings and Why Should You Care? Ratings Explained

Fitch rating and Standard and Poors.

A.M. Best Ratings AT A GLANCE

Year Founded	1899
Size	Largest credit rating agency in the world specializing in the insurance industry
HQ Address	Ambest Road Oldwick, NJ 08858 United States
Phone Number	800-544-2378

A.M. Best Company Information

So, what makes this one rating company special? They aren’t the only rating company out there, but they are the most notable and most widely used.

To quote A.M. Best, their rating system “. . . is an independent opinion of an insurer’s financial strength and ability to meet its ongoing insurance policy and contractual obligations. It is based on a comprehensive quantitative and qualitative evaluation of a company’s balance sheet, strength, operating performance and business profile.”

Aside from giving the companies a letter grade on their scale, the rating company also includes an outlook projection. They give them an outlook of either positive, negative, or stable. While these are just guesses, with A.M. Best they have research and previous information to base their outlooks on.

A.M. Best provides a way for each company to see just where they rank with consumers and helps them know just what they have to do to correct their mistakes.
Finding out what is A.M. Best ratings for insurance companies is the first step towards getting a secure policy for you and your family.

How Does A.M. Best Insurance Ratings Scale Work?

For a professional company, using a basic method of grading insurance companies has proven to be an effective and helpful tactic. Here’s how the A.M. Best Insurance rating scale works:

A++, A+, A, and A- all identify the top insurance companies. Receiving an A for the company shows how financially strong they are, how capable a company is of guaranteeing your policy and keeping it secure.
B++, B+, B, and B- ratings rank companies as good for those who can’t afford what higher ranked companies offer their services for. With a B ranking, you can depend on the company to provide a secure policy for affordable rates and rely on them to help your family get the help they need once you’re gone. For client’s knowing that your family has something to fall back on during difficult times is a welcome relief.
C++ and C+ are the only two scores for the C category, indicating an average insurance company. No bells or whistles attached, just a straightforward policy with straightforward premiums, a great choice for the first time you buy life insurance.
A ‘D’ rank is only reserved for companies that fall below A.M. Best’s minimum standards, an E rank means the company is under state supervision, and an F rank is only for companies going into liquidation. Any rating below a C shows how unreliable the company within the industry.

It’s obviously important to understand the rating scale of the insurance company before buying your life insurance.

A.M. Best Ratings For Insurance Companies

Now you have an understanding of what is A.M. Best ratings and how they work. A visit to the A.M. Best website is the perfect choice when looking for an insurance company. A company’s ranking shows just how dependable they are and if you’re getting all the benefits you should be for what you’ll pay in premiums. “What is A.M. Best ratings” is a question best asked when beginning to search for a policy, a question that can make your search easier and simpler than you originally thought.

Why A.M. Best Matters

Sure, it’s nice to find a company with an A+ rating, but does it matter? How does it impact you or your life insurance policy?

These ratings are a good indicator of how much you can trust your insurance company. If a company doesn’t have good financial strength, there is always a chance that the company could go bankrupt and your policy wouldn’t be paid out, which is a terrible turn of events.

There is no way to predict the future or what could happen to a company, but rating systems give us more direction that completely guessing. The A.M. Best ratings give you an idea of the past and stability of a company without you having to do the research yourself.

Unless you’re really connected with the insurance industry, you probably don’t know which insurance companies have been around the longest or which ones have experienced financial problems in the past.

Because life insurance is such an important purchase, it’s vital that the company that you choose is going to be around for hundreds of years to come. Life insurance gives you and your loved ones the peace of mind and financial coverage that they need in case something tragic were to happen.

How do A.M. Best Ratings Compare?

How does A.M. Best compare to other popular rating companies? A.M. Best is not the only company on the market that rates insurance. A few other popular options are Fitch and Standard and Poors.

Below we compared A.M. Best, Fitch and Standard and Poors. In this table, it is important to note that though the ratings may appear in the same row, it does not mean they are equal to each other. For example, Fitch’s AA rating may differ from Standard and Poors.

A.M. Best	Fitch	Standard and Poors
A++, A+	AAA	AAA
Superior ability to meet ongoing obligations	Exceptionally strong capacity to pay financial commitments	Extremely strong financial security characteristics. Highest S&P rating
Not Applicable	AA	AA
Companies rated A+ are one “notch” lower than those rated A++	Very strong capacity to pay financial commitments	Very strong financial security characteristics
A, A-	A	A
Very strong capacity to meet financial commitments	Strong capacity to pay financial commitment	Strong financial security characteristics
B++, B+	BBB	BBB
Good ability to meet financial obligations	Adequate capacity to pay financial commitments	Good financial security characteristics
B, B-	BB	BB
Fair ability to meet financial commitments	Elevated vulnerability to default risk but has flexibility to service financial commitments	Marginal financial security characteristics
C++, C+	B	B
Marginal ability to meet their ongoing insurance obligations.	Significant risk of default with limited margin of safety	Weak financial security characteristics

History of A.M. Best

Alfred Best founded A.M. Best Company in 1899. A.M. Best is one of the oldest and most established rating companies in the world. They were established with the goal of reporting the financial stability of insurance companies. They currently have ratings for companies that are in more than 80 different countries across the world.

Bottom Line

When you start looking for a life insurance policy (or any other kind of insurance policy), it’s important that you look at the company’s A.M. Best rating. While their rating shouldn’t be the determining factor in your decision, it’s important to know that you’re buying a policy from a reputable company.

A faulty insurance company shouldn’t keep you from getting the coverage that you and your loved ones deserve. Don’t be one of the countless stories of a family that suffers the loss of a family member, and then learns that they have thousands of dollars of debt and no way to pay for it.

Good Financial Cents, and author of the personal finance book Soldier of Finance. Jeff is an Iraqi combat veteran and served 9 years in the Army National Guard. His work is regularly featured in Forbes, Business Insider, Inc.com and Entrepreneur.

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Source: goodfinancialcents.com

January 11, 2021

5 Best Places to Find Insurance for Freelancers

U.S. Bureau of Labor Statistics, 10 million workers are self-employed in the country. Being a self-employed worker can be liberating, but it also means you’re your own HR department, too. One of the biggest challenges you’ll face is finding affordable insurance options.

With a traditional employer, you had a limited array of health insurance options, and you might’ve had access to a team that could help you understand the paperwork and process. Now that you’re on your own, you’ll also have to navigate this maze on your own.

It won’t be easy, but we can help lessen the burden a bit by helping you learn about your options.

	Pros	Cons
Online Insurance Marketplaces	Lots of options to choose fromCan get personalized help in finding the right plan	Sellers might be biased and offer a plan that’s not right for you
Affordable Care Act Marketplaces	Might qualify for subsidies to lower costCan find out if you’re eligible for Medicaid/ CHIP/ other low-cost insurance optionsGuaranteed coverage for essentials	Can only enroll at certain times of year or after certain eventsCosts can be high if you don’t qualify for subsidies
Short-term Health Insurance	Low cost	Doesn’t cover essentialsDoesn’t cover pregnancy Doesn’t cover pre-existing conditionsMight not available in your state
Through a Spouse or Domestic Partner	Low cost	Not available for single peopleMight have to pay more than your spouse/partner for coverage
Freelancers Union or Other Associations	Might be able to get lower rates through a group plan	Might not have as many options available

1. Online Insurance Marketplaces

Insurance marketplaces (also known as “brokers”) are for-profit companies that sell Affordable Care Act (ACA) exchange plans and non-ACA plans. It provides you with more information and assistance than going through the ACA exchange on your own. There’s no cost to use an online marketplace; instead, it gets a kickback from the insurance companies when it sells you an insurance plan.

That kickback can be up to an average of $20/month depending on where you live, according to the Kaiser Family Foundation. That’s not chump change so brokers might present you with biased estimates. When you’re working with a broker, it’s important to ask them whether they’re presenting you with all of the options available on the Affordable Care Act marketplace, and if not, why not.

PolicyGenius

PolicyGenius is one of the largest and easiest-to-use online insurance marketplaces. In addition to health insurance, you can also get quotes for life insurance, homeowners insurance, auto insurance, renters insurance, disability insurance, and more.

To learn about insurance plans that might be right for you, choose the type of insurance you’re looking for on the homepage. Then, enter your zip code, county, and email address to see the list of plans and carriers available to you.

eHealth

eHealth offers health insurance plans from over 180 companies. It’s also heavily focused toward Medicare and can help you figure out your options for this unique health insurance program. To see an immediate list of insurance plan options, select the type of insurance you’re shopping for and enter your zip code.

HealthMarkets.com

Speaking to a live agent can help you better understand which plan is right for you. But if you’re not ready to take that step, HealthMarkets offers a short survey instead. Once you’ve completed the survey, it compares your responses to multiple plan coverages and generates a “FitScore” for each plan that’s tailored to you. The FitScore can help you easily see which insurance plan fits your needs the best.

2. Affordable Care Act Marketplace

The Affordable Care Act is the biggest government initiative in recent years that tries to address how people — including freelancers — get affordable health insurance. The ACA created a central health insurance marketplace that’s run by either your state government or the federal government, depending on where you live.

Your options on the ACA marketplace are graded according to a set of metal tiers:

Plan tier	2020 average premium¹	Insurance company pays…	You pay…
Bronze	$331	60%	40%
Silver	$442	70%	30%
Gold	$462	80%	20%
Platinum	$501	90%	10%

¹This is a nationwide average for the cheapest plan at each tier level.

It’s important to note two things here: first, the cost varies widely across the country. For example, the cheapest Bronze plan for one person costs an average of $219 in Rhode Island, but $552 in West Virginia.

Second, these numbers might shock you. If you’re a four-person family in West Virginia, for example, paying $2,208 per month on health insurance might seem like the opposite of affordable, and it is.

But one of the best features of the ACA is that depending on your income, you might qualify for subsidies that’ll help bring your actual cost down to an affordable level. You’re also notified if you qualify for Medicaid, CHIP, or other free or low-cost health insurance options.

To sign up for an ACA plan you’ll need to wait until the open enrollment period each November through December for plans that start in the new year. If you have a “qualifying life event” (see below), you can also sign up at any time:

If you lose your existing coverage (e.g. if you lost your job)
If you have a change in your household (e.g. getting married)
If you move to a new area
If you have a big income change, become a member of a tribe or become a U.S. citizen, leave AmeriCorps service, or leave jail or prison

3. Short-Term Health Insurance

Short-term health insurance plans are different from ACA plans because they’re not as tightly regulated. For example, they generally don’t cover preventative healthcare like annual doctor’s visits, pregnancy care, or prescription drugs.

They also come with high deductibles and carriers impose dollar limits for payouts. This type of plan is best as a temporary stop-gap measure for protection, if you get really sick or have a major accident while you’re in-between better insurance plans.

In fact, these plans are so consumer-unfriendly that they’re banned or heavily regulated in many states. Short-term health insurance plans are usually around 20% of the cost of a low-level Bronze plan, according to one Kaiser Family Foundation survey. But remember: if you need to see a doctor, it might cost you a lot more than if you purchased a full health care plan from the ACA marketplace or another source.

4. Through a Spouse or Domestic Partner

Not everyone has this option, but if you do, it’s generally the best way to get insured as a freelancer. Employers can provide health insurance at affordable rates for their employees, and often, their employee’s family members, too.

You might have to pay an additional fee to be included on your spouse or partner’s plan. But it’ll usually be much cheaper than finding your own plan through a broker or the ACA exchange without a subsidy. If you’re not married but you’re in a partnership you can check with your partner’s employer to see what’s required to qualify as a “domestic partner” for insurance purposes.

5. Freelancers Union or Associations

Professional associations can often get similar discounts that employers receive. The Freelancers Union (an unofficial union), for example, offers options for health insurance, vision insurance, and dental insurance for freelancers.

Like so many other insurance-related rates, the actual cost of these plans depends on where you live. The Freelancers Union doesn’t charge a membership fee, but other organizations do. If so, you’ll need to weigh the cost of a membership fee against any potential savings you might get from buying health insurance through an association.

Finding the Best Health Insurance for You

The biggest factor to consider when shopping for health insurance plans as a freelancer is what your needs are.

For example, if you’re trying to start a family, you’ll want to avoid short-term health insurance plans that don’t cover pregnancy expenses. If you have a chronic illness and need health care more frequently, choosing a “cheap” Bronze health insurance plan can actually cost you more over the long run because these plans offer minimal coverage.

It’s not always easy to know what kind of health services you’ll need in the upcoming year. Some events, like a major car accident, can’t be planned. But if you focus on the kind of health services you need today, and compare multiple health insurance plans from different carriers, you’ll find there are many health insurance options for freelancers.