Life Insurance Company Ratings: What Really Matters

Life Insurance Company Ratings

We've discussed life insurance company ratings a couple of times from an informational point of view. Today I want to discuss the topic from a practical point a view (i.e. what's the overall benefit to the end user?).

Some companies would have you believe that their top tier rating means only they have the ability to weather economic downturns and that everyone else is headed into receivership. I used to work for a career mutual where the inference was always “buy from us because we're well rated.” And in 2008 when my career company was the only one in the industry to be upgraded twice by two of the major credit rating agencies and increase its dividend interest rate, you'd better believe that we sang this news from the roof tops (in fact, I will have the full page Wall Street Journal ad Guardian took out just to gloat about these accomplishments).

But does it really matter? In 2008 (and let's be honest every year following) we those (now) Guardian agents had no problem brandying about the news of the company's financial success. But it's not like others who didn't fare as well have gone the way of Shenandoah Life (which is actually still alive and well).

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The Methodology Behind “Average” Rate of Return

The Methodology Behind Average Rate of Return

When someone quotes the rate of return on a specific investment or quotes average returns on an index to support a theory behind achieving similar results in their investment, do you actually know what exactly they are talking about?  Further more, what is the probability that you will in fact end up with what everyone else is quoting as “average?”  The old joking definition of Statistics is: generally everyone; specifically no one.  And this seems to be  pretty fitting for a novice skill level in probability and statistics.  However, once we get a little more technical, and employ a few more mathematical techniques, we start to explore what purpose these numbers really serve.  We'll explore some useful applications of these figures in this post.

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