How do I find out how a company invests money when I buy life insurance?

Question

I'm shopping for life insurance but I want to be socially responsible. I seem to get the run around when I ask this question is life insurers. Can anyone help?

Answer 1

Do you mean you are wondering if the insurance company is financially stable? If so, you can search online and check the company's insurance ratings from AM Best.

If you mean how do they invest your money, then you are going to be in for a big shocker. In life insurance, if the life policy builds savings, otherwise known as "cash value', the money you put into a life policy is technically not yours. When you make an insurance payment, you are paying what is known as "premium." Your premium is paid for two things, which is life insurance itself and the cash value. The life insurance policy is yours, but the cash value isn't. If you wanted to take money from the cash value, you have to borrow it and pay loan interest on it. If you die someday, the cash value is kept by the insurance company.

Don't confuse insurance with investments. When you send a check to an insurance company, you are paying a "premium." When you send a check to an investment company or a financial institution (such as a bank), you are "saving" or "investing" your money.

My suggestion to you is get term insurance if you need life insurance. Term insurance doesn't build any savings or cash value just as car insurance doesn't build cash value either. At the same time, consider opening a retirement account such as a Roth IRA and invest into mutual funds.

Answer 2

They invest for return. You should do the same.

Answer 3

If its a public company, you can read their annual and quarterly reports.

Answer 4

I'm guessing you're saying that you want to be sure the company is not investing in anything that contradicts your social, moral, and political views. I would think getting that kind of information without being a customer is nearly impossible. If it's a mutual company, that info would be available at annual meetings to policyholders. If it's not...good luck!! You might be able to go to a few websites and read mission statements and company profiles to see if they'll give you a hint.

If I were a betting man, I would bet that ALL insurance companies are going to invest in whatever industries that will give them the largest R.O.I. Chances are....these are not the industries you think are the most "socially responsible".