How to Buy Stock in Insurance Companies

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Contributor, Benzinga
May 18, 2021

You can’t predict what will happen in life, which is why insurance is so important. Car accidents, natural disasters or even health issues can wreak havoc on your best laid plans.. Even when you’re at your job, both static and variable risks can send you to the hospital, which is the reason people seek the best workers’ compensation insurance.

The insurance industry is also an investment that can help boost your portfolio learn how to buy stock in insurance companies now.

How to Buy Stock in Insurance Companies

  1. Research the insurance company stocks you want to buy.

    It’s always important to dive deep into the financial statements of any company you invest in. it’s also imperative to look at contrasting viewpoints to help ensure a holistic assessment.

    Specifically for the insurance industry, keep an eye on the benchmark interest rate and the factors that can affect it. According to the National Association of Insurance Commissioners, a chronic low-interest rate environment imposes problems for the following reasons:

    Low yield: Insurance companies must generate income through low-risk investments, such as government bonds, since they eventually must pay out for a qualifying event. Low yields hurt returns on these types of investments.
    Unattractive products: Some insurance companies may offer products that are less attractive to clients if the interest rate is too low.
    Liquidity concerns: Not accruing enough funds during challenging times may present a liquidity crunch when insurers must pay for qualifying events.

    Finally, compare the long-term performance of your target insurance stocks. This helps you narrow down your analysis to what you’re seeking for, such as higher growth or stability during economic headwinds.

  2. Decide how many shares to buy.

    Once you have a list of insurance companies you’re interested in, you should then tackle how many shares to purchase. Primarily, this comes down to your risk tolerance as well as your account size. 

    However, the insurance industry typically doesn’t generate exhilarating annual returns. Even the best life insurance stocks, for instance, are slow movers. You may need to buy more shares if you want greater nominal returns.

    Another approach is to consider buying shares of multiple insurance companies. For example, you could mix it up, levering your portfolio to life, health and property casualty insurers. Of course, the downside is that you must actively manage your exposure, particularly if sub sector- or company-specific challenges require protective action.

  3. Choose an online broker.

    In the early days of online brokerages, companies typically earned your business through lower commissions than competing organizations. But in recent years, mobile trading apps pushed to the forefront, armed with distinct business models and conveniences for the retail investor. Today incentivizes such as commission-free trading are commonplace as online brokers adapted to keep pace.

    Your job in choosing a broker is much simpler. Instead of focusing on fees and commissions, your choice platform should align with your lifestyle and schedule. If you’re constantly on-the-go, a mobile app may be the most appropriate. On the other hand, if you anticipate growing in your investment journey, you should choose a full-service platform.

  4. Start practicing with virtual money.

    At this point, you might be tempted to start trading your target insurance companies. But before you do, you may want to practice with virtual money where you receive no penalty for your mistakes.

    For one thing, insurance companies tend to be slow movers so chances are, your investments aren’t going anywhere fast while you practice. Through virtual money, you can learn about the nuances of trading that you can’t get from a textbook. Concepts like the bid-ask spread come alive when you are actually placing trades.

    Best of all, this is an education that will stick with you for life and is applicable to other stocks should you change your industry focus.

  5. Optimize your stock portfolio.

    Like the manager of a sports team, you don’t just keep the same roster on the field. It’s the same with your portfolio.

    For insurance companies or any category, you should have written expectations of your stocks, particularly their returns over a given frame. If certain stocks continue to underperform, it’s time to swap them out for decisive winners.

    Portfolio optimization helps you get into the proper mindset for investing. Mainly, you should never fall in love with your stocks. Instead, you’ve got to be cold and brutal, only allowing companies to be in your portfolio if they meet your performance expectations.

Best Online Stockbrokers

Below is one of the best brokers for your consideration.

Public Insurance Companies

Prudential Financial (NYSE: PRU): The largest insurance company in the U.S., Prudential Financial offers myriad products, including life insurance, annuities, mutual funds and retirement-related investment options. PRU stock also features a dividend yield of 4.74%, although capital gains potential is limited due to the underlying company size.

MetLife (NYSE: MET): Ranked as the second-largest life insurance company in the U.S., MetLife also brings to the table health and accident insurance as well as coverage plans for auto and home. Further, MetLife offers annuity plans, which is relevant as the baby boomer generation retires en masse. Currently, MET stock has a yield of 2.98%.

UnitedHealth Group (NYSE: UNH): As the largest health insurance company by the number of people covered, UnitedHealth Group offers a mix of business stability and capital gains potential. Over the trailing five years, UNH stock delivered nearly 187% returns. However, UnitedHealth doesn’t offer the greatest passive income, with a dividend yield of only 1.37%.

Centene (NYSE: CNC): Some people want to make a difference with their investments and if that’s you, Centene may offer a satisfying investment. As a healthcare insurer specializing in managed care for underprivileged households, CNC stock hits the three components of responsible investing: environmental, social and governance.

Mercury (NYSE: MCY): Contrary to common assumption, auto insurance is not required in every state. But because accidents on the road happen frequently, auto insurers like Mercury enjoy tremendous relevance. Further, investors should consider MCY stock for its generous dividend yield of 4%.

Markel (NYSE: MKL): For individuals and small businesses seeking insurance coverage for unusual risks – such as snowmobile riding or martial arts studios – many turn to Markel. Generally providing stable returns for investors, the biggest drawback is that MKL stock doesn’t pay a dividend.

Stock Movers


TickerCompany±%Buy Stock
PRUPrudential Financial$100.841.18%1.5MBuy/Sell
MKLMarkel Group$1371.710.4%61.9KBuy/Sell
UNHUnitedHealth Group$550.290.36%2.8MBuy/Sell
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TickerCompany±%Buy Stock
MCYMercury General$38.83-0.7%165.1KBuy/Sell
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Session: Dec 7, 2023 4:00PM EST - Dec 8, 2023 3:59PM EST

Profit from Life’s Necessary Expenses

With so much that can go wrong in life, any uncovered event could potentially destroy your finances and all that you’ve worked for. This primal fear alone is enough for millions of Americans to fork over their funds for insurance coverage. And by investing in insurance companies, you can profit from what is essentially a necessary evil.

Frequently Asked Questions


Q. Are insurance companies good stocks?


Generally, yes. If you want stability in your portfolio through exposure to a critical business sector, then insurance companies represent viable investments. But if you’re looking for consistently high growth, this isn’t the space.


Q. Is it safe to invest in private insurance companies?


No investment category is totally safe. One of the greatest risks to insurance firms is the interest rate, not so much whether the company is private or public.