Financial ratings for life insurance companies are important because they tell you how likely a company is to pay out a death benefit if something happens to you.
Rating agencies assist policyholders by assessing a letter grade based on each insurance company’s financial strength and claims-paying ability.
Each agency has a different insurance rating system, but ratings are based on factors such as a company’s financial holdings and how much it collects in premiums compared with how much it’s paying out in claims.
Insurance Rating Companies
Many insurance buyers would assume that either the Better Business Bureau or Consumer Reports would have adequate information on the best insurance companies.
However, life insurance ratings are generated by one of the independent rating agencies.
Rating agencies typically assign life insurance companies one of nine to 16 long-term financial strength ratings, the highest of which mean that the company is likely to pay out future claims.
We will be providing you with a comprehensive guide to understanding each of the independent rating agencies that evaluate the life insurance industry.
It’s important to review these ratings before buying a policy to make sure you choose a company with a solid financial foundation.
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AM Best Life Insurance Ratings
AM Best Life Insurance RatingsA.M. Best was started in 1899 and is located in Oldwick, New Jersey. A.M. Best is the only rating agency specializing solely in the insurance industry.
A.M. Best ratings of insurance companies focus on a carrier’s claims-paying ability and the credit quality of its obligations.
The U.S. Securities and Exchange Commission (SEC) and the National Association of Insurance Commissioners (NAIC) have designated the AM Best as a nationally recognized rating company.
A.M. Best ratings for insurance companies provide a letter grade on their rating scale and a detailed future outlook projection. They assess insurance companies with an outlook of either positive, negative, or stable.
A.M. Best also features an opinion based on a comprehensive quantitative and qualitative evaluation of a company’s balance sheet strength, operating performance, and business profile.
AM Best rating scale
A.M. Best ratings have a rating scale that assigns a letter grade from A++ to F to life insurance companies that subscribe to their interactive rating service.
We advise our clients to always select companies rated between A++ and A- when buying coverage for their family.
- A++ and A+ (Superior) These grades are assigned to companies that have, in their opinion, a superior ability to meet their ongoing obligations to policyholders.
- A and A- (Excellent) These grades are assigned to companies that can meet their ongoing obligations to policyholders.
For more information about any insurance company’s current ratings, please visit the AM Best rating lookup.
Moody’s Investor Services
Moody’s Investor ServicesMoody’s Investors Services was started in 1909 and provided annual ratings and reviews of each insurance company’s financial strength and ability to repay claims.
Moody’s is among the largest credit rating agencies in the world.
For many years, Moody’s has been a respected source for their analysis of the financial strength of banks, money markets, bond funds, and insurance carriers.
Moody’s Investors Service is primarily known as a credit ranking agency that offers Insurance Financial Strength Ratings.
moody’s insurance ratings scale
Moody’s assigns an analytical team to assess an insurance company’s creditworthiness and assigns it with a letter rating.
A review committee also approves this rating to ensure consistency across all ratings.
Here’s how Moody’s ratings scale can help you when choosing your life insurance provider.
Moody’s rates companies’ financial strength based on their ability to repay short and long-term debts.
Moody’s defines short-term debts as obligations that are due for repayment in under one year.
Moody’s long-term ratings are based on an insurance carrier’s credit risk of fixed-income obligations.
The ratings reflect the possibility that a life insurance benefit payout will not be paid out as promised.
Moody’s short-term ratings range from P-1 to NP (best to worst) and Aaa to C for long-term ratings.
Standard & Poor’s Insurance Ratings
Standard & Poor’s Insurance RatingsStandard & Poor’s is a highly reputable insurance rating organization that has been around for over 150 years.
Like Moody’s, Standard & Poor’s ratings are used by financial investors to measure a company’s overall financial strength.
So, S&P rates insurance companies on how likely they are to honor their debts and obligations.
This information is helpful for investors, risk managers, lenders, and when buying an insurance policy.
A good S&P rating indicates that the insurance carrier is financially stable and will pay a claim on your life insurance policy when you eventually die.
Standard & Poor’s (S&P) ratings System
Here’s what you need to know about the S&P rating system and how it can help you assess insurance companies.
Standard & Poor’s ratings are issued in letter grades from “AAA” to “D. (best to worst)
Life insurance companies know that a good S&P rating will help them attract new policyholders. So, they work hard every year for a AAA rating because these ratings are regularly reassessed.
Sometimes an insurance company’s credit rating will be downgraded because of an economic downturn, too narrow of a business focus, debt issues, the current business climate, and new regulatory changes.
If your insurance carrier is rated highly by S&P, you can take comfort in knowing that it is currently financially sound.
Call us or visit the Standard and Poor’s insurance rating website for complete details on any insurance company.
Fitch Ratings Scale
Fitch Ratings ScaleFitch was started in 1913 and is headquartered in New York City.
Fitch Ratings is part of the Fitch Group and is currently owned by the Hearst Corporation.
In addition to providing credit ratings for insurance companies, Fitch also conducts market research crucial to both investors and financial professionals.
The Fitch Group utilizes different criteria for a rating of life insurance carriers. Fitch’s criteria include management style, economic trends, and the past performance of a particular insurance company.
These ratings are assembled by qualified financial specialists who use essential criteria to evaluate an insurance company’s creditworthiness.
Fitch Ratings was the first rating company to develop the “AAA” to “D” financial rating scale.
Fitch ratings can also be divided into both long-term and short-term ratings.
Fitch’s short-term ratings range from F1 to D (best to worst) and AAA to D for its long-term ratings (best to worst).
Rating organizations help policyholders evaluate the financial stability of a life insurance company.
Moreover, insurance companies realize that their annual rating will directly affect how many new life insurance policies will be issued each year.
Weiss Insurance Ratings
Weiss Insurance RatingsWeiss Ratings is part of Weiss Group, LLC and was started in 1971.
Weiss holds the honor of being the first insurance rating organization to issue independent financial strength ratings for both life and health insurers.
Weiss annually publishes its strongest to weakest insurance companies using an A to F grading scale.
Weis has the most robust list for companies with a “B+” or better rating. Companies that are rated strong are believed to have a low probability of failure.
Insurers rated weak have a “D+” or lower rating and are believed to be financially vulnerable and should be avoided when selecting a new policy.
Weiss ratings offer an easy-to-understand way for consumers to evaluate the financial standing of any insurance company.
To find out more about using Weiss Ratings, you can visit the Weiss Rating’s website.
Comdex Score
A life insurance company has a Comdex rating provided to you by EbixExchange.
EbixExchange has created a composite index, which takes the average percentile of the different carrier’s financial strength ratings assigned by four primary rating services, A.M. Best, Standard & Poor’s, Moody’s, and Fitch.
An insurance company needs to have at least two ratings from the major rating agencies to have a Comdex rating.
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Highest Rated Life Insurance Companies
The best life insurance companies provide policies that fit your financial needs with excellent customer service, along with the highest financial ratings.
These third-party rating agencies perform extensive analysis to determine each insurer’s financial strength and claims-paying ability.
You will probably be in a relationship with your insurance company for many years, and you want to be confident in your choice.
A high rating is not a guarantee of financial strength, but it can be considered a reliable indicator of how a company will perform in the future.
We have compiled a list of America’s highest-rated life insurance companies.
You can also request a financial strength report directly from A.M Best, Moody’s, Standard and Poor’s, and Fitch.
Feel free to request a more detailed report from us here at Affordable Life USA.
Here are the highest-rated life insurance companies by the four major rating agencies and their overall Comdex score.
Insurance Company Ratings Chart
| COMPANY | BBB | AM Best | JD Power |
|---|---|---|---|
| AIG | A+ | A | 718 |
| AXA Equitable | A+ | A+ | 752 |
| Banner Life | A+ | A+ | N/A |
| Brighthouse | A+ | A+ | N/A |
| Guardian Life | A+ | A++ | 760 |
| John Hancock | A+ | A+ | 739 |
| Lincoln Financial | A+ | A+ | 744 |
| Mass Mutual | A+ | A++ | 780 |
| Metlife | B- | A+ | 780 |
| Mutual of Omaha | A+ | A+ | 766 |
| Nationwide | A+ | A+ | 806 |
| Pacific Life | A+ | A+ | N/A |
| Principal Financial | A+ | A+ | 774 |
| Protective | A+ | A+ | 742 |
| Prudential | A | A+ | 770 |
| SBLI | A+ | A+ | N/A |
| Transamerica | A+ | A+ | 720 |
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Affordable Life USA is a leading independent insurance agency offering comprehensive life insurance solutions to clients nationwide.
Eric Van Haaften, LUTCF
1-877-249-1358
