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Understanding Life Insurance Company Ratings

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If someone asked me how many companies sell life insurance in the U.S, I’d probably answer with 100 or 200, but in reality there are over 2,000 life insurance companies currently selling life insurance in America. So how do you pick? Well first you would want to get life insurance quotes and get a list of the best priced companies along with their prices. You may end up with a list of about 10 companies that have the most competitive quotes. Aside from price, and policy features – like the ability to convert a policy from term to permanent, you want to make sure that the company you choose is very strong financially and will be around when you need them to pay your death benefit to your beneficiaries. When you get quotes on our website, you will see the ratings of the company next to the name – you’re likely to see the letter A or A+ next to most companies. But what do these ratings mean? Who gives these ratings? Why Should I trust them? This is what this blog post will cover – an understanding of how life insurance companies are rated. Armed with the ability to pick a financially sound company, you will be able to pick the company that has the best rate for you as well as policy features that you are looking for, and that will be the best life insurance company for you. So let’s delve into the fun and exciting world of understanding life insurance rating agencies.


Who Rates Life Insurance Companies?

There are 4 main rating agencies that rate the financial strength of life insurance carriers. The one you typically see when comparing quotes or on life insurance companies’ websites is A.M Best. Let’s explore all 4 rating agencies.

A.M Best

Founded in 1899 by Alfred M. Best, A.M Best was formed by Alfred after starting as a clerk in the insurance industry at the age of 15. He started a company and created reports on insurance companies. A.M Best has been issuing ratings on insurance companies since 1906. While they don’t provide a warranty or a guarantee, they are known as the premier company in predicting an insurance company’s ability to pay out its future obligations.

 A.M Best reviews a company’s management, balance sheet, and operating performance to determine their financial strength, and issues a report about the company. To make it easier for people to understand the report, A.M Best also issues a rating – indicated by a letter grading system. A++ is the top rating, and the ratings decrease all the way down to an F. Companies rated A++ and A+ are considered Superior, and A+ and A- are considered Excellent. Look for companies rated at least with an Excellent rating of A- or better.

Moody’s, Fitch, and S&P

Moody’s, Fitch and S&P are the three other companies that issue ratings for life insurance companies. Not every insurance company is rated by all agencies, since the insurance company itself needs to request a rating to be rated. Like A.M Best, these companies also use a letter grading system to rate an insurance company.

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Choose a life insurance company that has been in business over 50 years, and has over $2 Billion in assets.


A.M Best Ratings Scale


Secure Vulnerable
A++, A+ (Superior) B, B- (Fair)
A, A- (Excellent) C++, C+ (Marginal)
B++, B+ (Good) C, C- (Weak)
D (Poor)
E (Under Regulatory Supervision)
F (In Liquidation)
S (Suspended)


How Do I Look Up Complaints about a Life Insurance company?

After you have looked up quotes, reviewed the A.M Best rating of a company, you also want to know how a company treats its customers. Since insurance is regulated on a State level, you can find complaints about life insurance companies on your state life insurance website. If you visit the National Association of Insurance Commissioners website, you will see a link on the right hand side that allows you to go directly to your state’s division of insurance website. There you can look up agents as well as get complaint reports on life insurance companies. For example, this is the California Individual Complaint Composite Page. Make sure the company you pick has no more than a few complaints – anything more may be a red flag.

One size fits all does not exist in life insurance. Your individual need will determine the companies you consider – which you can then narrow down by price, policy features and financial ratings.


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Liran Hirschkorn

Liran Hirschkorn is the founder of His mission is to help individuals across the country in finding the best rates on life insurance as well as helping individuals with high risk life insurance.

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