The questions surrounding life insurance seem endless.
Do you need it at all? If so, how much? Then, what kind of policy?
And even if you wade through all of those, you're not necessarily done. If you do need life insurance and have figured out how much and what kind, you still face the question of which company to buy from.
That question once turned primarily on price. The prospect that the company might go under and take your money with it was a minor consideration. Life insurance company failures were relatively rare and generally confined to small, less well-known companies.
Company failures are still relatively rare, but in the current environment of economic uncertainty, the possibility can no longer be overlooked. This is especially true if you are planning to buy a policy -- or an annuity -- where you pay a big upfront premium and get the benefits many years down the road.
So today you need to look not only for the best deal for your dollar but also for the company that is most likely to hold up its end of the bargain.
In addition, products and services are changing rapidly. New types of insurance are coming on the market, many of them quite appealing but also untried and with actual benefits uncertain.
"The situation in the industry is like an egg cracking open. There are a whole lot of new developments going on that will benefit consumers in the future, but right now are still embryonic. It is a situation that is not ideal for consumers," said Mary Malgoire, a fee-only financial planner in Bethesda.
Whom can you rely on for help? "Basically, it's you," said J. Robert Hunter of the National Insurance Consumer Organization (NICO) in Alexandria.
Although insurance is regulated in every state, only a few state insurance departments do much to help consumers, Hunter noted.
A report issued recently by the Consumer Insurance Interest Group (CIIG), a coalition of industry and consumer groups (including NICO), found no state insurance office that could be considered a model. Those in Delaware, Florida, Kansas, New York and Texas do the best job, but even they have weaknesses, the study found.
Maryland and Virginia are about in the middle of the pack, meaning they are a little help, but not much. The District, one of five that did not respond to the study, is "grossly understaffed and under-funded" and is "incapable of doing much of anything," Hunter said. CIIG found signs that things are improving, and members expressed optimism that insurance regulators are becoming more responsive to consumers, but at the moment don't count on them for much.
Hunter recalled a trip to Ohio not long ago, during which he called the state's regulators for price and solvency information. All they could tell him, he said, was that "if I could tell them the name of the company, they could tell me whether it was licensed" to do business in Ohio. Nothing else.
You can turn to private experts for help. These include insurance salespeople, financial planners and others who make it their business to know the ins and outs of the industry.
Independent insurance agents note that they represent a number of companies and thus are well-positioned to look over the market and help you pick the best policy. That is true, and if there is an agent you know and trust, he or she can be very helpful. Remember, however, that insurance agents get commissions on what they sell. Hunter warned, "Don't go to an agent and say, 'Take me, I'm yours.' "
Some financial planners also get commissions, so if you go to a planner, make sure you understand how he or she is compensated.
For data on the safety and soundness of individual companies, there are a number of rating services that publish regular evaluations. Among these are A.M. Best Co. of Oldwick, N.J., Standard & Poor's Insurance Rating Services and Moody's Investor Services Inc., both in New York, and Duff & Phelps Inc. of Chicago. Their rating lists are often available in public libraries and insurance offices, and most insurers will tell you what they are rated if you ask them.
One bright spot is the amount of literature now coming onto the market about insurance. Books, pamphlets and guides are packing the bookstore and library shelves, many of them containing much useful information.
A readable general guide to all types of insurance is Ralph Nader and Wesley Smith's "Winning the Insurance Game." It's available in bookstores, but because it lists for $24.95 you might try the library first.
Consumers Union, publisher of Consumer Reports magazine, has "Life Insurance: How to Buy the Right Policy From the Right Company at the Right Price." It's also in bookstores, or you can order it from CU for $11.95 at 1-800-325-5525.
NICO publishes "How to Save Money on Life Insurance." It costs $11.95 and can be ordered from NICO at 121 North Payne St., Alexandria, Va. 22314.