Insurance stocks are intriguing but often overlooked investments. These companies offer stable income and growth potential. Not only that, but their ability to weather economic downturns and protect against the erosive effect of inflation can make them an excellent addition to your portfolio.

Three insurance stocks to buy this month are Aflac (AFL -0.27%), Kinsale Capital (KNSL -0.15%), and Goosehead Insurance (GSHD -1.80%). These three companies provide exposure to different aspects of the industry and offer consistency and stellar growth potential. Here's why.

1. Aflac has stellar capital management

The pandemic sent shockwaves through the economy. Life insurers experienced a surge in pandemic-related claims, resulting in unprecedented payouts that put pressure on their bottom lines.

Moreover, insurers have dealt with historically low interest rates over the last decade, which makes generating meaningful income from investments more difficult. These challenges revealed which insurers could navigate these treacherous waters best. Aflac is one company that has proven its worth.

Aflac provides life insurance and supplemental health insurance for millions across the U.S. and Japan. Despite challenging conditions, the life insurer has a long history of growing its dividend payout. Aflac's dividend yield is 2.2%, and the company has raised its dividend payout every year since 1983. Its stable dividend history is a testament to its solid business and commitment to managing its balance sheet.

Aflac emerged as a stronger company coming out of the pandemic. Since 2021, its stock price is up 84% -- far outpacing the SPDR S&P Insurance ETF, which gained 33% in the same time. The price jump was influenced, in part, by Aflac seeing lower claims costs. Last year, benefits and claims expenses dropped 13% year over year and 22% from 2020. This positive development continued this year, with claims costs down another 11% year over year. 

Aflac recently rolled out new products in Japan and benefits from higher interest rates. This year, its net investment income increased by 5.5% and should continue to benefit as it reinvests its cash flows into higher-yielding investments. Its strong capital position and tailwinds to the business make Aflac a solid income stock to add to your portfolio today.

2. Kinsale Capital leverages its expertise and competitive moat to crush the competition

Kinsale Capital operates in a world of hard-to-place risks. It writes policies in the niche industry of excess and surplus (E&S) insurance, covering policies traditional insurers shy away from. Unlike its conventional counterparts, Kinsale operates in a less stringent regulatory environment, which lends it pricing power and flexibility over what risks it will cover.

Kinsale's management team has decades of experience in the industry and used this expertise to create its proprietary platform. This platform leverages its data and knowledge to analyze trends and determine what to cover and how much to charge for that coverage, giving Kinsale a strong competitive moat.

The results have been stellar. Kinsale boasts industry-beating profitability going back years. We can see this track record of success through its combined ratio. When analyzing insurance companies, the combined ratio is a crucial metric you need to know. This ratio divides the claims costs plus expenses by the premiums collected. A 100% ratio means an insurer breaks even, so a lower ratio indicates more profitable policies. Over the last seven years, Kinsale's combined ratio of 81% is head and shoulders above its competition.

Kinsale is a well-run insurer with a top-notch management team and a track record of weighing risks and rewards for writing policies -- making it an excellent insurance stock with stellar growth to add to your portfolio today.

3. Goosehead Insurance is well-positioned for long-term margin expansion

Goosehead Insurance is an up-and-coming insurance broker that also displayed stellar growth. The company initially started out selling policies from its corporate office. Since then, it has leveraged its expertise to expand operations through its franchise-based model.

Its growth has been remarkable. Since 2018, Goosehead's franchise count has grown from 646 to 2,125. The company also showed a solid ability to replicate its corporate success with franchisees. Since 2020, premiums from its franchises have grown 49%, outpacing its corporate channel's 32% growth rate. 

The stock price is up 104% this year and trades at a lofty valuation of 61 times forward earnings. However, the price tag may be justified given its potential for long-term profit margin expansion. That's because even though some franchises wither away, others flourish and grow. As thriving franchises renew agreements, Goosehead's royalties go from 20% to 50%. This profit-sharing agreement gives Goosehead excellent long-term growth potential from its highest performers, who leverage Goosehead's platform -- creating a win-win for it and its franchisees.

Goosehead is a rapidly growing insurance broker with a well-laid-out plan to scale up and expand margins, making it an excellent stock with long-term growth potential that you can buy today.