When you are carrying out online stock trading, it is important to know that there are some stocks that are just right for a particular season.

These life insurance stocks can be great additions to your portfolio in 2016. Insurance companies generate income in two ways - the premiums paid by customers and investing the money that hasn’t yet been paid out. This has caused the present low interest scenario to exert a great deal of pressure on the insurance industry. Valuations have been driven down. In this situation, it would be wise to consider their long-term performance and your own investment goals.

The combined ratio of an insurance company reveals its underwriting profitability. If a company has a combined 100% or lesser ratio, it is usually in a profitable situation. However, a higher ratio need not necessarily indicate unprofitability. Not all insurance companies make their profit from premiums since the average combined ratio of insurance companies taken recently was 97%. As we mentioned before, insurance companies also make money through means other than premium collection. Investing the money is a significant source of their income.

  • MetLife ($MET), the largest life insurer in the United States, is currently cheap. It trades for only 7.8 times forward earnings. This seducing evaluation combines with a substantial dividend, the highest in the list of insurance stocks we have in this list. $MET is known to have a great distribution network and is a very strong brand in the insurance sector.
  • Prudential Financial ($PRU) is as cheap as MetLife, trading for 7.7 times forward earnings. It has a discount to book value of 30%. However, it is one of the largest life insurers in the world and has over $1 trillion in assets. Apart from life insurance, it has also branched out into Retirement and Asset Management, Individual Annuities, and Real Estate.
  • Torchmark ($TMK) has operations in life and health insurance, selling its insurance products through Liberty National, American Income and United American subsidiaries. Its dividend yield may be the lowest we have on this list, but it has a great buyback program which has helped reduce its outstanding shares by over 18% since 2012. It has diverse product offering, low leverage and strong cash flow.
  • Lincoln National Corp ($LNC) is in the life insurance business as well as disability insurance, dental insurance, employer-sponsored retirement, and products such as annuities. It trades for only 6.8 time forward earnings, with growth expectations at an annualized rate of 10% in the next three years. With more diverse businesses than others, Lincoln National earns less than half of its revenue from life insurance accounts.

All these stocks are valued attractively and have product portfolios that are diverse. As interest rates start rising, these will benefit massively.

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