Purchasing a life insurance policy is an important decision. After all, the life insurance company you choose to purchase your coverage from will be the company responsible for providing financial protection to your family if you pass away.
Therefore when choosing a life insurance company, a large part of the process should include reviewing the company’s financial strength ratings before committing to a contract. Life insurance company ratings allow you to evaluate the financial stability of a company, providing peace of mind in knowing that should a claim ever arise, your loved ones will receive the financial protection you intended for them.
While financial strength ratings are incredibly beneficial, you may not know how to interpret what you find. For example, how can you tell the difference between an excellent financial rating and a poor one?
Our article will look at life insurance company ratings, including their meaning and how they work. We also put together an up-to-date insurance company rating chart that will provide helpful insight into which life insurance companies are the best and which life insurance companies are the worst based on their financial strength ratings.
What Are Life Insurance Ratings?
Independent rating agencies are responsible for assigning financial strength ratings to insurance companies. Most people will recognize the names AM Best, Moody’s, Standard & Poor’s, and Fitch as they are the largest and oldest organizations that currently rate the financial strength of most insurance providers.
These four rating agencies evaluate the financial health of the insurance companies participating in an evaluation. Companies that choose to be assessed for a potential rating are assigned a grade based on the results of their analysis. It is not required for an insurance company to participate in an evaluation process. However, most companies will opt-in to being evaluated as a high score is a great way to promote their company to potential customers.
The scores typically follow an alphabetic rating scale similar to a report card you would have received in school. For example, letter ratings usually range from a low of “D” to a high of “A.” However, each rating organization’s rating scale and method used to determine the scores vary.
For example, an “A++” is the highest score from AM Best, and an AAA is the highest score available from Standard & Poor’s.
The ratings issued to an insurance company are also the opinion of each individual agency. Therefore, an insurance company may receive different scores from different agencies based on each organization’s rating criteria. However, all rating agencies offer valuable insight into a company’s financial health, allowing you to compare financially strong and weak companies while searching for a life insurance policy.
What Do Life Insurance Ratings Mean?
Life insurance ratings attempt to summarize the financial stability of most US insurance companies. Companies with high scores are considered “financially secure,” meaning they are less likely to default on financial obligations to their policyholders, such as paying out a death claim.
A high rating typically requires a low debt ratio, diverse revenue streams, and large amounts of capital. In addition, high scores indicate that a company can weather both short and long-term financial storms and how likely they can continue to fulfill claims.
Why Are Life Insurance Ratings Important?
Life insurance ratings of insurance companies give you a better indication of which companies are least likely to fail in paying claims on an insurance policy. The last thing you want your loved ones to worry about is a company failing to pay out a death benefits claim.
Policyholders sign contracts with specific requirements and conditions, including paying premiums. In return, the insurance company agrees to pay a death benefit and fulfill any other claims covered by the policy.
Life insurance is purchased in contract periods. Therefore, you want to ensure that the company you choose to purchase your policy will still be around should a claim arise several years later.
Typical contract lengths for term life insurance policies include 10, 20, and 30 years. However, permanent policies such as universal and whole life insurance policies last for life, meaning the insurer may not pay a claim for decades later.
A high financial strength rating should give you peace of mind knowing that a company will likely still be around when it’s time to file a claim.
Who Are the Four Main Rating Agencies?
The four leading financial strength rating agencies include:
- AM Best
- Moody’s Investor Service
- Standard & Poor’s
Along with ratings from these four rating agencies, you may also notice a Comdex ranking for several insurance companies. The Comdex ranking is a composite score of the ratings given by the top four rating agencies.
Ebix is the firm responsible for creating the Comdex rankings. The firm uses software to automatically assign a score on a numerical scale ranging from 1 to 100. A high number indicates a high average of ratings from the top rating agencies.
AM Best is the largest credit rating agency specializing in the insurance industry. The company was founded in 1899, making it the first and the oldest credit rating agency in the world.
Alfred M. Best, the founder of AM Best, launched the company out of a one-room office in NYC. The company now operates in over 100 countries and has regional offices in major cities worldwide.
AM Best has compiled ratings and reports on over 16,000 insurance companies focusing on providing accurate, timely, and comprehensive information to consumers on the creditworthiness of insurance companies.
The AM Best rating scale is the most used rating scale when it comes to viewing the financial strength of a life insurance company. It has been commonly referred to as the gold standard of life insurance company ratings. Therefore most life insurance companies will only seek a rating from AM Best and not the rating from other organizations.
Fitch Ratings Inc. is another top credit rating agency. The company was founded in 1914 as the Fitch Publishing Company. As with AM Best, Moody’s, and Standard & Poor’s, Fitch Ratings is a Nationally Recognized Statistical Rating Organization (NRSRO).
NRSROs are selected by the US Securities and Exchange Commission (SEC). The organization started using its credit ratings scale in 1924 and has analyzed the financial strength of over 20,000 entities.
Moody’s Investor Service
Moody’s Investor Service provides investors with powerful insights for making smarter decisions. The company relies on the latest technologies, including artificial intelligence (AI), to make sense of economic conditions and risk factors.
Along with analyzing investment opportunities, Moody ranks the financial strength of life insurance companies. The company was founded in 1909 and continues to provide financial ratings each quarter.
Standard & Poor’s
S&P Global Ratings is a credit rating agency that publishes financial research and analysis. As with Moody’s Investor Service, Standard & Poor’s ratings cover stocks and bonds along with life insurance financial ratings.
The history of S&P Global goes back to 1860. Henry Varnum Poor published the History of Railroads and Canals in the US. The book provided details about the finances of US railroad companies. Future publications expanded to cover other industries.
S&P employs over 1,500 credit analysts to provide data on most life insurance companies and investment opportunities.
How Are Life Insurance Ratings Determined?
Life insurance rating companies use different approaches for determining financial ratings. The following will summarize each of the top four independent financial rating organizations’ rating scales and what each rating represents.
AM Best Rating Scale
The AM Best rating scale includes the following Financial Strength Ratings (FSR):
|Rating Categories||Rating Symbols||Rating Notches||Rating Definitions|
|Superior||A+||A++||Superior ability to meet ongoing insurance obligations|
|Excellent||A||A-||Excellent ability to meet ongoing insurance obligations|
|Good||B+||B++||Good ability to meet ongoing insurance obligations|
|Fair||B||B-||Fair ability to meet ongoing insurance obligations; vulnerable to adverse changes in underwriting and economic conditions|
|Marginal||C+||C++||Marginal ability to meet ongoing insurance obligations; vulnerable to adverse changes in underwriting and economic conditions|
|Weak||C||C-||Weak ability to meet ongoing insurance obligations; very vulnerable to adverse changes in underwriting and economic conditions|
|Poor||D||–||Poor ability to meet ongoing insurance obligations; extremely vulnerable to adverse changes in underwriting and economic conditions|
An “A++” or “A+” rating is given to companies with a superior ability to meet their insurance obligations. Life insurance companies with an “A” rating have an excellent ability to meet financial obligations.
The trouble starts with the “B” rating, which indicates a fair ability to meet obligations. Companies with a “B” rating are vulnerable to changes in economic conditions.
AM Best is the only rating agency that specializes solely in the insurance industry. Moody’s, S&P, and Fitch analyze companies from a variety of industries.
You can view the latest ratings on the AM Best website. The website lists a variety of information for each life insurance company rated by AM Best. You can review the age of the company, the financial size, and the history of the company. Financial statistics are also available for the past five years.
Fitch Rating Scale
Fitch issues the Fitch Insurer Financial Strength (IFS) Rating for over 200 life insurance companies of all sizes. The company has rated close to 85% of the entire life insurance industry using the following alphabetic scale:
|Fitch Ratings||Credit Quality||Rating Definitions|
|AAA||Highest credit quality||AAA ratings are assigned to companies that are viewed as having the lowest expectation of default risk. They are assigned only in cases of exceptionally strong capacity for payment of financial commitments. This capacity is highly unlikely to be adversely affected by foreseeable events.|
|AA||Very high credit quality||AA ratings are assigned to companies that are viewed as having a very low expectation of default risk. They indicate a very strong capacity for payment of financial commitments. This capacity is not significantly vulnerable to foreseeable events.|
|A||High credit quality||A ratings are assigned to companies that are viewed as having a low expectation of default risk. The capacity for payment of financial commitments is considered strong. This capacity may, nevertheless, be more vulnerable to adverse business or economic conditions than is the case for higher ratings.|
|BBB||Good credit quality||BBB’ ratings indicate that expectations of default risk are currently low. The capacity for payment of financial commitments is considered adequate, but adverse business or economic conditions are more likely to impair this capacity.|
|BB||Speculative||BB’ ratings indicate an elevated vulnerability to default risk, particularly in the event of adverse changes in business or economic conditions over time; however, business or financial flexibility exists that supports the servicing of financial commitments.|
|B||Highly speculative||B’ ratings indicate that material default risk is present, but a limited margin of safety remains. Financial commitments are currently being met; however, capacity for continued payment is vulnerable to deterioration in the business and economic environment.|
|CCC||Substantial credit risk||Very low margin for safety. Default is a real possibility.|
|CC||Very high levels of credit risk||Default of some kind appears probable.|
|C||Near default||A default or default-like process has begun, or the issuer is in standstill, or for a closed funding vehicle, payment capacity is irrevocably impaired.|
|RD||Restricted default||RD’ ratings indicate an issuer that in Fitch’s opinion has experienced an uncured payment default or distressed debt exchange on a bond, loan or other material financial obligation, but has not entered into bankruptcy filings, administration, receivership, liquidation, or other formal winding-up procedure, and has not otherwise ceased operating.|
|D||Default||D’ ratings indicate an issuer that in Fitch’s opinion has entered into bankruptcy filings, administration, receivership, liquidation or other formal winding-up procedure or that has otherwise ceased business.|
A complete definition of Fitch ratings can be viewed by visiting the following link that will take you to their website.
Life insurance companies with a “AAA” rating from Fitch have the lowest expectation of default risk. These companies have an exceptionally strong ability to fulfill financial obligations.
Fitch ratings from “AA” to “CCC” may include a (+) or (-) modifier. For example, “AA” ratings include “AA+”, “AA”, and “AA-”.
Companies with “AA” ratings have a very low default risk and a very strong capacity to repay financial commitments.
“A” ratings, including A+, A, and A-, are given to companies with low default risk. However, a company with an “A-” rating may also be vulnerable to changing economic conditions or adverse business decisions. An “A-” rating from Fitch is comparable to a “B” rating from AM Best.
Moody’s Rating Scale
Moody’s rating scale includes ratings for long-term investments, short-term investments, and banks. Life insurance company ratings use the rating scale for long-term and short-term investments, which includes the following rankings:
|Moody’s Ratings||Rating Definitions|
|Aaa||Obligations rated Aaa are judged to be of the highest quality, with minimal risk.|
|Aa||Obligations rated Aa are judged to be of high quality and are subject to very low credit risk.|
|A||Obligations rated A are considered upper-medium-grade and are subject to low credit risk.|
|Baa||Obligations rated Baa are subject to moderate credit risk. They are considered medium-grade and as such may possess speculative characteristics.|
|Ba||Obligations rated Ba are judged to have speculative elements and are subject to substantial credit risk.|
|B||Obligations rated B are considered speculative and are subject to high credit risk.|
|Caa||Obligations rated Caa are judged to be of poor standing and are subject to very high credit risk.|
|Ca||Obligations rated Ca are highly speculative and are likely in, or very near, default, with some prospect of recovery in principal and interest.|
|C||Obligations rated C are the lowest-rated class of bonds and are typically in default, with little prospect for recovery of principal and interest.|
A complete definition of Moody’s long-term rating scale can be viewed by visiting the following link that will take you to their website.
An “Aaa” rank indicates that a company should have no problem meeting its financial obligations. The company’s finances are of the highest quality and provide minimal risk.
New York Life and Northwestern Mutual are examples of two life insurance companies with “Aaa” ratings from Moody’s.
An “Aa” ranking is also positive and includes three levels – Aa1, Aa2, and Aa3. These scores are given to companies with very low credit risk.
The “A” ranking is given to companies with upper-medium-grade finances and low credit risk. It also includes three levels – A1, A2, and A3.
Companies with ratings of “Baa” or lower are considered risky and at greater risk of default. A score of “Baa” is comparable to an “A-” rating from Fitch and a “B” rating from AM Best.
Standard & Poor’s Rating Scale
Standard & Poor’s ratings focus on the claims-paying ability of the leading insurance companies that request and pay for a rating. Here is how the alphabetic rating scale works:
|Standard and Poor’s Ratings||Rating Definitions|
|AAA||Extremely strong capacity to meet financial commitments.|
|AA||Very strong capacity to meet financial commitments.|
|A||Strong capacity to meet financial commitments, but somewhat susceptible to economic conditions and changes in circumstances.|
|BBB||Adequate capacity to meet financial commitments, but more subject to adverse economic conditions.|
|BB||Less vulnerable in the near-term but faces major ongoing uncertainties to adverse business, financial and economic conditions.|
|B||More vulnerable to adverse business, financial and economic conditions but currently has the capacity to meet financial commitments.|
|CCC||Currently vulnerable and dependent on favorable business, financial and economic conditions to meet financial commitments.|
|CC||Highly vulnerable; default has not yet occurred, but is expected to be a virtual certainty.|
|C||Currently highly vulnerable to non-payment, and ultimate recovery is expected to be lower than that of higher rated obligations.|
|D||Payment default on a financial commitment or breach of an imputed promise; also used when a bankruptcy petition has been filed.|
A complete definition of the Standard and Poor’s rating scale can be viewed by visiting the following link that will take you to their website.
Companies with the “AAA” rating from S&P have the strongest finances. They are the least likely to default. Companies with “AA” and “A” rating also have strong finances and should pose very little risk when buying an insurance policy. However, companies with an “A” rating are more susceptible to changes in the economy.
An “A” rating from S&P is comparable to a “Baa” rating from Moody’s, an “A-” rating from Fitch, and a “B” rating from AM Best.
The Comdex score is based on the average ratings of the four main rating agencies. A company with high ratings from AM Best and the other leading agencies also receives a high Comdex rank.
The rankings are based on a scale of 1 to 100. Comdex only analyzes companies that have received financial ratings from at least two major rating agencies.
The Comdex rank is a composite of how the company stacked up against other companies in the rankings from each of the main rating agencies. For example, a company with a Comdex rank of 85 scores 85% higher than all other life insurance companies.
Life Insurance Company Ratings Chart for 2022
The below table represents the financial strength ratings of over 100 top-rated life insurance companies. By default, the table lists the companies with the highest ratings based on their Comdex ratings. However, to quickly locate a specific company’s financial ratings, the table offers a search feature where you can enter the name of the life insurance company.
|Insurance Co.||State||AM Best||S&P||Moody’s||Fitch||Comdex|
|New York Life||NY||A++||AA+||Aaa||AAA||100|
|Teachers Insurance Assn||NY||A++||AA+||Aa1||AAA||99|
|TIAA-CREF Life Ins Co||NY||A++||AA+||Aa1||AAA||99|
|USAA Life Ins Co||TX||A++||AA+||Aa1||99|
|C.M. Life Ins Co||CT||A++||AA+||Aa3||AA+||98|
|Guardian Life Ins Co||NY||A++||AA+||Aa2||AA+||98|
|Knights of Columbus||CT||A+||AA+||98|
|MML Bay State Life Ins Co||CT||A++||AA+||Aa3||AA+||98|
|State Farm Life Ins Co||IL||A++||AA||Aa1||98|
|CSI Life Ins Co||NE||A+||AA||97|
|Sun Life & Health Ins Co||MI||A+||AA||97|
|American United Life Ins Co||IN||A+||AA-||96|
|Columbus Life Ins Co||OH||A+||AA-||Aa3||AA||96|
|Golden Rule Ins Co||IN||A+||AA-||96|
|Integrity Life Ins Co||OH||A+||AA-||Aa3||AA||96|
|Lafayette Life Ins Co||OH||A+||AA-||AA||96|
|Minnesota Life Ins Co||MN||A+||AA-||Aa3||AA||96|
|National Integrity Life Ins Co||NY||A+||AA-||Aa3||AA||96|
|Securian Life Ins Co||MN||A+||AA-||Aa3||AA||96|
|State Life Ins Co||IN||A+||AA-||96|
|Western & Southern Life Ins Co||OH||A+||AA-||Aa3||AA||96|
|Metropolitan Life Ins Co||NY||A+||AA-||Aa3||AA-||95|
|Allianz Life Ins Co||MN||A+||AA||A1||94|
|Banner Life Ins Co||MD||A+||AA-||AA-||94|
|First Reliance Standard Life||NY||A++||A+||93|
|Penn Mutual Life Ins Co||PA||A+||A+||Aa3||AA-||93|
|Primerica Life Ins Co||TN||A+||AA-||A1||93|
|West Coast Life Ins Co||NE||A+||AA-||A1||AA-||93|
|Great American Life Ins Co||OH||A+||A+||Aa3||92|
|HCC Life Ins Co||IN||A++||A+||AA-||92|
|RiverSource Life Ins Co||MN||A+||A+||Aa3||92|
|Fidelity Investments Life Ins||UT||A+||A+||91|
|Vantis Life Ins Co||CT||A+||A||Aa3||AA-||91|
|Life Ins Co of the Southwest||TX||A+||A+||A1||90|
|Mutual of Omaha Ins Co||NE||A+||A+||A1||90|
|National Life Ins Co||VT||A+||A+||A1||AA||90|
|Nationwide Life Ins Co||OH||A+||A+||A1||90|
|Principal Life Ins Co||IA||A+||A+||A1||AA-||90|
|Texas Life Ins Co||TX||A+||A+||90|
|Wilcac Life Ins Co||IL||A+||A+||90|
|Cincinnati Life Ins Co||OH||A+||A+||A+||88|
|Midland National Life Ins Co||IA||A+||A+||A+||88|
|North American Co||IA||A+||A+||A+||88|
|Reliance Standard Life Ins Co||IL||A++||A+||A2||88|
|Liberty National Life Ins Co||NE||A||AA-||A1||A+||84|
|American Income Life Ins Co||IN||A||AA-||A+||83|
|Globe Life And Acc Ins Co||NE||A||AA-||A+||83|
|Equitable Finl Life Ins Co||NY||A||A+||A1||81|
|Everlake Life Ins Co||IL||A+||BBB w-||81|
|Modern Woodmen of America||IL||A||81|
|Standard Ins Co||OR||A||A+||A1||81|
|Transamerica Life Ins Co||IA||A||A+||A1||81|
|Zurich American Life Ins Co||IL||A+||A||A3||81|
|CMFG Life Ins Co||IA||A||A+||A2||79|
|MEMBERS Life Ins Co||IA||A||A+||A2||79|
|Symetra Life Ins Co||IA||A||A||A1||79|
|Ameritas Life Ins Corp.||NE||A||A+||78|
|Connecticut General Life Ins||CT||A||A||A2||A+||78|
|Dearborn Life Ins Co||IL||A||A+||78|
|First Penn-Pacific Life Ins Co||IN||A||A-||A1||A+||78|
|ReliaStar Life Ins Co||MN||A||A+||A2||A||78|
|AGC Life Ins Co||MO||A||A+||77|
|American Family Life Ins Co||WI||A||A+||77|
|Aetna Life Ins Co||CT||A||A-||A2||A+||76|
|Brighthouse Life Ins Co||DE||A||A+||A3||A||76|
|Cigna Health & Life Ins Co||CT||A||A||A2||76|
|Horace Mann Life Ins Co||IL||A||A||A2||A||76|
|Jackson National Life Ins Co||MI||A||A||A2||A||76|
|New England Life Ins Co||MA||A||A+||A3||A||76|
|American National Ins Co||TX||A||A||A||75|
|Commonwealth Annuity & Life||MA||A||A-||A2||A||75|
|First Allmerica Financial Life||MA||A||A-||A2||A||75|
|Forethought Life Ins Co||IN||A||A-||A2||A||75|
|Mutual Trust Life Ins Co||IL||A||A||74|
|Pacific Guardian Life Ins Co||HI||A||A||74|
|Pan-American Life Ins Co||LA||A||A||74|
|First Unum Life Ins Co||NY||A||A||A3||A-||73|
|Paul Revere Life Ins Co||MA||A||A||A3||A-||73|
|Provident Life & Accident||TN||A||A||A3||A-||73|
|Unum Life Ins Co of America||ME||A||A||A3||A-||73|
|Bankers Life & Casualty Co||IL||A||A-||A3||A-||71|
|Colonial Penn Life Ins Co||PA||A||A-||A3||A-||71|
|National Western Life Ins Co||CO||A||A-||71|
|Reliable Life Ins Co||MO||A||A-||A-||71|
|Washington National Ins Co||IN||A||A-||A3||A-||71|
|Ohio National Life Ins Co||OH||A||Baa1||A-||70|
|Fidelity & Guaranty Life Ins Co||IA||A-||A-||A-||60|
|Aspida Life Ins Co||CA||A-||A-||59|
|Gleaner Life Ins Society||MI||A-||A-||59|
|Life of the South Ins Co||GA||A-||A-||59|
|Shenandoah Life Ins Co||VA||A-||A-||59|
|Southern Financial Life Ins Co||KY||A-||A-||59|
|United Heritage Life Ins Co||ID||A-||A-||59|
|American Equity Investment Life Ins Co||IA||A-||A-||A2||58|
|Security Benefit Life Ins Co||KS||A-||A-||A-||58|
|American Memorial Life Ins Co||SD||A-||A||54|
|Humana Ins Co of Kentucky||KY||A-||A||54|
|Eagle Life Ins Co||IA||A-||A-||51|
|Baltimore Life Ins Co||MD||B++||49|
|Delaware Life Ins Co||DE||A-||BBB+||49|
|Talcott Resolution Life Ins Co||CT||B++||BBB||Baa3||47|
|EquiTrust Life Ins Co||IL||B++||BBB+||39|
|Assurity Life Ins Co||NE||A-|
|Auto Club Life Ins Co||MI||A|
|Auto-Owners Life Ins Co||MI||A+|
|Chesapeake Life Ins Co||OK||A|
|Combined Ins Co of America||IL||A+|
|COUNTRY Life Ins Co||IL||A+|
|Encova Life Ins Co||OH||A-|
|Gerber Life Ins Co||NY||A|
|Grange Life Ins Co||OH||B++|
|Great Western Ins Co||IA||A|
|Guarantee Trust Life Ins Co||IL||A-|
|Illinois Mutual Life Ins Co||IL||A-|
|Lincoln Heritage Life Ins Co||IL||A-|
|Lumico Life Ins Co||MO||A|
|Physicians Mutual Ins Co||NE||A|
|Sagicor Life Ins Co|
All ratings shown are current as of August 1, 2022
Insurance Company Rating Scale Guide
Should You Choose a Life Insurance Company Based On Financial Strength Ratings?
Financial strength ratings help evaluate the dependability of a company and should be considered when choosing a life insurance company and their life insurance plans.
There are over 500 life insurance companies in the United States, with a vast majority having financially strong ratings, so you should have no problem finding a financially secure insurance company.
While financial strength is just one of many factors to consider when choosing a life insurance company, there are also many additional factors, such as product availability, underwriting features, policy features, cost, etc.
However, if a life insurance company checks all the boxes in all departments but has a bad financial strength rating, you may want to avoid that company.
How to Choose a Life Insurance Company
Choosing a life insurance company requires you to look at a variety of details, including:
- Financial ratings
- Policy types
- Life insurance options
- Death benefit amounts
- Available policy riders
- Application process
- Estimated cost
Along with financial ratings, you need to consider the type of policy that you want. Common options include term life and whole life insurance.
You also need to pay attention to coverage options. Life insurance policies include a variety of coverage choices, including different maximum death benefit amounts and policy riders.
You may also want to consider the application process. If you prefer a simplified application process, you can focus on life insurance carriers that offer online applications and no-medical exam options.
The cost of life insurance can vary significantly from one life insurance company to the next, which is why you should obtain multiple life insurance quotes before selecting an insurer.
How to Buy Life Insurance
Buying life insurance is a major decision. Use the following steps to ensure that you obtain the right coverage at the right price:
- Calculate how much coverage you need
- Determine what type of insurance you need
- Compare life insurance quotes
- Research the life insurance company
- Apply for life insurance
You may also want to think about your budget. Before you compare prices and coverage options, think about how much you can afford to pay each month.
1. How Much Coverage Do You Need?
The amount of coverage you need helps determine the type of policy that works best for you. There are also multiple methods for determining how much life insurance you need. A popular method is to multiply your annual income by ten.
For example, if you earn $80,000 per year, your family may be more financially secure with $800,000 in coverage. Keep in mind that this coverage may come from multiple policies instead of a single life insurance product.
You can also consider your financial obligations. You may want to provide enough for your loved ones to cover the mortgage on your home and any other major debts.
2. Determine What Type of Insurance You Need
The type of insurance you need may depend on your age, health, financial responsibilities, and existing coverage. Common types of life insurance include:
- Term life insurance
- Universal life insurance
- Whole life insurance
- Variable life insurance
- Indexed universal life insurance
- Guaranteed issue life insurance
- Simplified issue life insurance
Term life insurance products often include term lengths of up to 30 years. Many adults use term life insurance to cover specific periods of their life, such as the life of a mortgage or their children’s college years.
Whole life insurance products typically include coverage until the end of your life. There are also different types of whole life insurance to suit different situations, such as guaranteed issue life insurance for those with pre-existing medical conditions.
3. Compare Life Insurance Quotes
After choosing the type of insurance that you want, obtain a life insurance price quote. Most life insurance companies offer quotes directly from their websites or through third-party websites.
Obtaining quotes from several insurance companies allows you to shop around for the best value. Keep in mind that a life insurance quote is typically just an estimate. The price may change during the underwriting process. However, you have the chance to review the terms of the contract before signing or submitting your first premium payment.
4. Research the Life Insurance Company
Learn more about the life insurance companies that you receive quotes from. Along with the price estimate, you need to consider the security and reliability of the company. This is when you should look at the financial ratings of companies.
Financial strength ratings help you verify the financial integrity of a company. Use this information to narrow your options before applying for life insurance.
5. Apply for Life Insurance
The next step for buying life insurance is to complete the application process. You may need to complete the application online or over the phone with a sales agent.
The process varies from one company to the next. Sometimes you need to work with an insurance broker or insurance agent while other times you can apply directly through the company’s website.
The application process may also require a medical exam. However, no medical exam options with streamlined underwriting are available for those in good health. While the typical underwriting process may take up to eight weeks, accelerated underwriting can take hours or days to complete.
Do All Life Insurance Companies Have Insurance Ratings?
Not all insurance life insurance companies have financial strength ratings. For example, a newly established company will likely go without ratings simply because they are too new.
Most insurance rating agencies release financial ratings on an annual basis. As a result, a new insurance company that did not appear in the most recent ratings may appear in the updates released in the following year.
Subsidiaries of larger insurance companies do not always receive separate financial ratings. For example, Prudential owns the Assurance Life Insurance Company, which does not have its own ratings. So instead, you would need to look at Prudential’s financial strength ratings as the parent company.
Financial strength ratings are also entirely optional. No life insurance company is required to go through a rating review. So if you find a company with no ratings, it is likely they opted out of being assessed for a rating review.
Should You Stay Away from a Company That Doesn’t Have a Rating?
You do not need to stay away from companies that lack insurance ratings. Not having a rating is not always a negative. As mentioned, newer companies and subsidiaries of larger companies may not have ratings.
Any life insurance company that has been around for more than a few years likely has ratings from at least one of the top rating agencies. If the company is older and has no ratings, it may not be large enough for the rating agencies to be aware of its services. In this situation, you may want to consider going with a more established company.
How Can You Check a Life Insurance Company’s Financial Strength Ratings?
Many life insurance companies proudly display their financial strength ratings on their websites and promotional materials. In addition, the official website of each rating agency also shows the latest ratings and financial scores.
You can also perform an internet search for a specific company’s ratings, such as “Brighthouse financial insurance rating.” The first page of search results should provide links to the latest ratings from the four leading agencies.
Who are the Best Life Insurance Companies?
The best life insurance company will not necessarily be the best company for everyone. Many factors should go into choosing a life insurance company, and financial ratings are only one part of the process. Life insurance ratings should never be the sole reason to choose a company.
However, to help aid in your search to find who the best life insurance companies are outside of their financial ratings, organizations such as AM Best can utilize their data from assessing the financial strengths of hundreds of companies to provide valuable insights as to which companies are the largest as well as which have sold the most life insurance policies.
Use the tables below to help search for the best life insurance companies.
Top 10 Largest Life Insurance Companies
Ranked by 2021 admitted assets.
|Rank||Insurance Co.||State||AM Best Rating||Comdex||Total Assets|
|#2||MetLife Ins Companies||NY||A+||95||$461,437,117|
|#3||New York Life Group||NY||A++||100||$392,916,326|
|#4||Massachusetts Mutual Life Group||MA||A++||98||$365,446,331|
|#6||AIG Life & Retirement Group||MO||A||80||$345,824,628|
|#7||Northwestern Mutual Group||WI||A++||100||$334,756,177|
|#8||Lincoln Financial Group||IN||A+||90||$334,508,148|
|#9||Jackson National Group||MI||A||76||$321,914,245|
|#10||John Hancock Life Insurance Group||MA||A+||93||$309,176,249|
Top 10 Term Life Insurance Companies
Ranked by 2020 term life business issued.
|Rank||Insurance Co.||State||AM Best Rating||Comdex||Term Life Issued|
|#1||Northwestern Mutual Group||WI||A++||100||$122,908,181|
|#3||Lincoln Financial Group||IN||A+||90||$92,769,142|
|#4||State Farm Life Group||IL||A++||98||$88,538,912|
|#5||Principal Financial Group||IA||A+||90||$64,260,866|
|#6||New York Life Group||NY||A++||100||$63,229,568|
|#7||Protective Life Group||AL||A+||94||$56,546,713|
|#8||AIG Life & Retirement Group||MO||A||80||$55,099,701|
|#9||Legal & General America Group||MD||A+||94||$52,787,597|
|#10||Prudential of America Group||NJ||A+||94||$50,891,504|
Top 10 Whole Life Insurance Companies
Ranked by 2020 whole life business issued.
|Rank||Insurance Co.||State||AM Best Rating||Comdex||Whole Life Issued|
|#1||Northwestern Mutual Group||WI||A++||100||$163,979,291|
|#2||Lincoln Financial Group||IN||A+||90||$105,842,510|
|#3||State Farm Life Group||IL||A++||98||$100,278,830|
|#5||New York Life Group||NY||A++||100||$96,939,747|
|#6||Massachusetts Mutual Life Group||MA||A++||98||$85,606,061|
|#7||Prudential of America Group||NJ||A+||94||$83,370,859|
|#8||Principal Financial Group||IA||A+||90||$68,393,159|
|#9||Protective Life Group||AL||A+||94||$65,465,177|
|#10||AIG Life & Retirement Group||MO||A||80||$62,264,056|
Financial strength ratings are one of several factors that can help you compare life insurance companies. Strong life insurance company ratings indicate that a company is financially secure and able to pay claims.
Understanding financial strength ratings can be a challenge, as each rating agency uses a different scale. An “A” rating from one company may be comparable to a “B” rating from another.
While each rating agency uses a different scale, you can still gain a general idea of a company’s financial strength. If a company receives low ratings from each of the main rating agencies, you may want to consider going with a different insurance company.
In the end, financial strength ratings are just one of many factors that you should pay attention to when selecting a life insurance policy. You should also consider the type of policy, coverage amount, policy riders, and other details to find the best life insurance company based on your specific needs.