"INSURANCE CAN'T GUARANTEE A LIFE FREE OF ACCIDENT OR MISFORTUNE, BUT IT CAN HELP POLICYHOLDERS COPE WITH THE FINANCIAL CONSEQUENCES OF UNPREDICTABLE EVENTS"

INSURANCE MIGHT SEEM COMPLICATED and difficult to understand, but it's really very simple. It's all about pooling resources. When you buy insurance, your premium payments go into a large 'pool' of funds, from which claims are paid. Because there are more people contributing to this pool than there are people making claims, there should always be enough to help those who need it, even when the claims are for serious accidents or illnesses ­requiring large lump-sum payments. Meanwhile, insurance companies also take out insurance-with 'reinsurers'-to make sure they can meet their promises to their policyholders. Annual premiums are set according to how much money the insurance company thinks it will need to cover the cost of claims, and make a profit, in the year ahead. Your premium reflects the likelihood of your making a claim. The more likely that is, the higher your premium will be.

Look at the Quality of the Company

An insurance policy is only as good as the company that backs it. You want to know for certain that the company that issues your policy will be around to service it and eventually pay the death claim.

Who can you trust ?

Independent ratings and what they mean.

Ever Wondered About the 'financial rating' information at the end of insurance company correspondence:

How important is it and what does it tell you?

We all like to know that the company we're dealing with is well regarded and reputable. But apart from what you hear or are told, how do you really know? That's where ratings come in. A number of high-profile companies conduct independent evaluations of companies operating in the financial services industry-including insurers ­providing a means of bench-marking financial strength and dependability.

A.M. Best is one of the leading providers of insurance ratings worldwide, with over 100 years' experience of the insurance industry. Their Financial Strength Rating (FSR) is an assessment of an insurer's ability to meet its obligations to policyholders. The 'secure' ratings are A++, A+ (superior), A, A-(excellent) and B++, B+ (good). In recent years, these ratings have become an increasingly important factor in consumers' decisions to purchase insurance.

For more information, go to:
www.web.ambest.com/home
www.spglobal.com/ratings/en/
www.canstar.com.au