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Insurance stocks can perform consistently throughout stock market cycles. Many investors are currently looking for the best insurance stocks to buy. Even when the economy is in the tank, customers who need your health insurance will still pay your premium. In most states, auto insurance is required. Also, many insurance stocks pay dividends.
There are many different types (or lines) of insurance and investors should know the difference. Some insurance stocks focus on a single line of insurance, while others focus on multiple lines. If you’re new to stock insurance and need a refresher, here’s a quick rundown of each line of insurance.
- Property and casualty (P&C) insurance companies write policies that cover property damage and liability protection. The two most common types of property and casualty insurance are auto and homeowners. It covers damage to covered property and may also cover damage to other property or people caused by the insured. In addition to auto and homeowners insurance, renters and pet insurance are also common types of general insurance.
- Life insurance pays a predetermined beneficiary upon the death of the insured policyholder. Term life insurance is a simple and affordable way to meet your life insurance needs. There are also very complex and expensive forms of life insurance.
- Health insurance helps pay for health care costs. When a person gets hurt or sick, a trip to the doctor can be expensive or sometimes unaffordable. Health insurance is so common that most employers offer it to employees and help pay the premiums.
With the stock market down this year and talk of a recession, insurance stocks may be an option for investors looking to protect their downside. Here are some insurance stocks to think about.
Two best insurance stocks to buy and interest rates
When customers pay their premiums, insurance companies keep those premiums until they need to pay claims. In the meantime, the insurance company can earn interest on the money you have. Most of the time, the insurance company invests the premium money in safe, interest-bearing investments.
With interest rates on the rise, insurance stocks may benefit. If you are interested in insurance stocks, you may want to consider these.
No. 2 American International Group (NYSE: AIG)
AIG is a global insurer operating in more than 70 countries. Underwrites multiple lines of insurance ranging from P&C to life insurance. In addition to its insurance business, AIG offers financial services to its clients. At roughly 5x, AIG stock has one of the lowest P/E ratios of any insurance stock.
No. 1 The Hartford Financial Services Group (NYSE: HIG)
HIG is better known as The Hartford. It offers one of the most comprehensive insurance products in insurance stocks. Write business, personal, P&C, group benefits. In addition, the company offers mutual funds to investors. Hartford shares pays a dividend yield of more than 2%.
Three Best Health Insurance Stocks to Buy
Due to the skyrocketing cost of medical care, health insurance can be very expensive. For the same reason, it is also very necessary. The cost of health insurance premiums may be offset by subsidies from employers or the government. Either way, those offsets help get health insurance premiums in the door for these insurance stocks.
#3 UnitedHealth Group (NYSE: UNG)
UNG is the largest health insurance company in the world, by a wide margin. UnitedHealth covers so many different locations that it is the health insurance provider of choice for many large multinational employers. UnitedHealth Group stock pays a dividend yield of more than 1%.
Anthem No. 2 (NYSE ANTM)
ANTM is another health insurance stock to buy. The company offers its popular Blue Cross/Blue Shield plans in several US states. It also has plans that cover all US states. For customers who qualify, Anthem sells Medicare and Medicaid health insurance plans. The stock has a P/E ratio of almost 20x.
No. 1 Human (NYSE: HUM)
HUM is a leader in Medicare and Medicaid benefits. Your Medicare and Medicaid business writes plans for both individuals and groups. Humana is also a leader in group health insurance for small businesses in the US Humana is a fast-growing insurance company, but it pays a small dividend of less than 1%.
The two best property and casualty actions
Most states in the US require car owners to insure themselves to pay for damages to themselves and others in the event of a car accident. In addition, lenders have an interest in the homes on which they have a mortgage. Those lenders require homeowners insurance to protect those homes.
No. 2 Progressive (NYSE: PGR)
Aside from PGR’s hilarious advertisements, the company is the largest auto insurer in the US and homeowners insurance company as well. As a leader in both, it offers customers a reduced premium for bundling auto and home insurance. progressive has been Growing fast During the last years. As a result, the stock has one of the highest P/E ratios among insurance stocks at 33x.
No. 1 Allstate (NYSE: ALL)
ALL has one of the largest market capitalizations of insurance stocks at over $36 billion. The stock also pays one of the highest dividend yields in the group at over 2.5%. Allstate writes auto and home insurance like the other P&C insurance stocks. It also has a financial services arm that writes life, accident and health insurance.
The two best life insurance stocks to buy
Compared to other insurance stocks, life insurance companies have more time to invest premiums before they have to pay claims. This happens because claims are paid upon the death of the insured. Other lines of insurance pay claims for car accidents, doctor visits, or home damage. Those claims occur much more frequently than in the case of life insurance.
No. 2 MetLife (NYSE: MET)
MET is one of the largest life insurers in the US The company also has a wealth management arm that helps clients with retirement planning and savings. MetLife stock pays a healthy dividend yield of nearly 3%.
No. 1 Prudential Financial (NYSE: PRU)
PRU is an investment manager and financial services. Within its retirement planning branch, it writes life insurance and annuities. In addition, Prudential also provides mutual funds and investment management. the 4.5% stock dividend yield compares favorably to other insurance stocks.
BJ Cook is a longtime stock market nerd. He has held various positions in the world of equity research, earning the right to use the CFA designation in 2014. When he’s not writing for Investment U, you can find him searching for new investment ideas. Outside of the investment community, BJ is a die-hard Cubs fan.