Life insurance is a more complex insurance product than the name implies. Most people assume the policy is as simple as "I die and the policy pays X amount of money." In reality, consumers can choose between whole and term life policies, with variations on each. Some life insurance policies are equity-generating vehicles, in that the holder can borrow money against the value of the policy. Consequently, the health and scope of the company behind a policy is as important to consider as the terms of the policy itself. Who are some of the big players in the life insurance game and just how big are they?
Blue Cross and Blue Shield
These are two of the most familiar names in the insurance industry. The appropriate name for the entity is actually, "Blue Cross and Blue Shield Association," which refers to 29 separate health insurance organizations. Blue Cross, which has been in operation since 1929, was originally developed to provide insurance policies covering hospital services only. Blue Shield, founded in 1939, initially covered services provided by doctors. The two merged their associations in 1982. Now Blue Cross Blue Shield writes some form of life and health-related insurance products in every state. The company also administers the Medicare system in a number of those states while providing insurance coverage to state government employees as well as to federal employees via a nationwide option of the Federal Employees Health Benefit Plan.
Although the phrase is no longer used in the company's advertising, most Americans over 40 know, "Get a piece of the rock," as a tag line for Prudential. Today Prudential insurance is written by subsidiaries of Prudential Financial Inc., a Fortune 500 company that also manages investments and provides financial products and services including annuities, mutual and pension funds, life insurance, asset management, real estate services, and securities brokerage. Founded in Newark, New Jersey in 1875 to sell burial insurance, the company's "Rock of Gibraltar" logo is now one of the world's most recognized corporate symbols. Now a joint stock company, PRU has been traded on the New York Stock Exchange since December 31, 2001. (Aetna purchased Prudential HealthCare in 1999 for $1 billion.)
Founded in 1852 in Hartford, Connecticut to write fire insurance, Aetna has grown into a Fortune 100 diversified health insurance company offering a wide range of products including medical, dental, pharmaceutical, life, long-term care, and disability plans among others. Coverage is primarily offered by Aetna through employer-paid insurance and benefit programs and through Medicare. In March 2008, approximately 17.4 million Americans carried some form of Aetna medical insurance. By mid-year 2009 the company took in premiums totaling $14 billion and paid out $11.9 billion in reimbursements for health care.
In researching your life insurance options, do your homework on the financial scope and wherewithal of the company underwriting the product. Older, better established companies with a solid financial position are your best option in life insurance coverage since they will be much more likely to have the money to pay the promised benefit -- hopefully many, many years after the policy was originally issued.