How ratings can be used to help evaluate your life insurance options

Everyone gets reviewed nowadays, from college professors to rideshare drivers to your employer’s CEO. Your insurance company is no different.

Third-party ratings agencies perform detailed, extensive analysis to determine a life insurance company’s financial strength and claims-paying ability. Choosing the right life insurance policy and provider is a critical part of your grown-up responsibilities, acting as a key step in providing a financial safety net for your loved ones if you were to die. Whether it be from a critical illness or an accidental death, having a life insurance policy in place will help ensure financial stability for your loved ones when you make your departure. It’s important that you do the proper research to identify which life insurance product has the most appropriate death benefit and life insurance rate for your situation.

It’s possible you will be in a relationship with this provider for 10, 20, even 30 years—and as with any other long-term relationship, you want to be confident in your choice of partner. After all, this is who you’ll be trusting to help provide for your beneficiaries’ financial stability. And hey: You’re probably already comparing coverage options, lower vs. higher premiums, what kind of buying experience you want, and more. All that research is for naught if a life insurer doesn’t seem likely to meet its ongoing financial obligations.

So what do these ratings agencies look at when determining their rankings? When looking at life insurance companies, each agency has a different formula. Simply put, each one evaluates life insurance carriers on their financial strength—how well-funded an insurance carrier is, how much risk it carries, and its operating performance. A rating is not a guarantee of financial strength, but it can be considered an indicator.

There are several rating agencies out there – not to mention independent customer review sites like Nerdwallet – but four of them are most frequently touted to represent the quality of life insurance companies. Each of those four – A.M. Best, Fitch, Moody’s and Standard & Poor’s – has its own standards and grading scale for rating insurance companies. A.M. Best is generally the top one touted by insurers, but for the sake of transparency, we’ve included several different sources for ratings in one place.

It’s important to get familiar with the rating agency whose grades when you’re considering the best life insurance for you. Otherwise, the score could give you a false sense of security. For example, A+ is A.M. Best’s second-highest rating, but an A+ is Fitch’s fifth-highest rating.

The ratings organizations themselves may make you pay a fee for the privilege of seeing their ratings. But typically, a life insurance company will list its ratings from these agencies on the company’s website. Either way, we’re happy to do the work for you and offer a starter list of ratings below. We’ve assembled a list of life insurance companies — read on to find out the best life insurance for you.

Note: We begin this list with MassMutual, our parent company, followed by a selection of alphabetized options for you to consider.

MassMutual (Haven Life’s parent company)

Up first is MassMutual, a more than 170-year-old mutual company. A mutual company means it doesn’t have shareholders, and, instead, members and participating policy owners are often described as sharing in the ownership. MassMutual sells a range of protection products including disability insurance, term life insurance, permanent life insurance (including whole and universal), annuities and more.

During the COVID-19 crisis, MassMutual committed more than $3 billion in free life insurance coverage to frontline healthcare workers. Haven Life—which is backed and wholly owned by MassMutual—embodies that same spirit of generosity. Born online, and designed for a generation of digital natives, Haven Life offers an easy online experience for buying affordable term life insurance issued by MassMutual or its subsidiary, C.M. Life, sometimes without requiring a medical exam. (Keep in mind that issuance of the policy or payment of benefits may depend upon the truthfulness of answers given in the application.)

It’s worth noting, by the way, that while not every insurance company or agency has TrustPilot reviews, Haven Life has received a 4.8 out of 5-star review from nearly 1000 customers and counting, as of June 2022.

American International Group (AIG)

Next on our list we have American International Group, Inc. AIG is more than 100 years old, though we swear it doesn’t look a day over 90. The company started providing coverage in 1919 when it was founded by Cornelius Vander Starr, reminding us that more people should be named Cornelius. AIG sells a range of protection products including term life insurance, guaranteed issue whole life insurance, quality of life insurance, universal life insurance and variable universal life insurance.

John Hancock

Named after the prominent American revolutionary patriot, this insurer was actually acquired in 2004 by Canadian firm Manulife. John Hancock is also well known for its Vitality program, which provides customers with rewards in exchange for health-related data like exercise milestones, preventive medicine visits, healthy food purchases and more. The company offers a range of protection products including term life insurance, permanent life insurance, and final expense life insurance.

Mutual of Omaha

The steady cash generated by Mutual of Omaha’s nationwide insurance business allowed the company to financially support the beloved TV nature show “Wild Kingdom” for decades, and it now sponsors several pro golfers. Mutual of Omaha offers a range of financial services and supplements to Medicare. Its protection products include life insurance, long-term care insurance, disability income insurance, critical illness insurance and cancer/heart attack/stroke insurance.

Nationwide

Moving down our list of life insurance companies, we have Nationwide.This company actually started out providing coverage for expenses from auto accidents. Now they offer an insurance policy for just about anything. Nationwide offers, well, a wide range of products and retirement services, banking and borrowing services and more. Its insurance offerings cover categories from automotive to home and even pet insurance (not to mention snowmobile and golf cart insurance!). Its protection products include term life insurance, universal life insurance, whole life insurance and variable life insurance.

Northwestern Mutual

Over 165 years and counting, this Milwaukee-based insurer has expanded its services to include financial planning, private client services and more. Northwestern Mutual offers a range of  protection products including term life insurance, whole life insurance, and universal life insurance.

Prudential

Last on our list of the life insurance companies, we have Prudential. At its founding in 1875, this company was known as “The Widows and Orphans Friendly Society,” and its only product was an insurance policy designed to pay for burial expenses. They’ve expanded their portfolio significantly since then. Its protection products include term life insurance, universal life insurance, variable universal life insurance and indexed universal life insurance.

Remember, this is just an introduction to some ratings of major companies offering life insurance coverage. And these ratings are just one factor to take into account when deciding what to pay (and whom) for a term life insurance policy.

To determine which insurance company is right for you, you’ll want to consider everything from what products they offer to what the experience itself may be like. Price of policy is also an important determining factor because, of course, you want to have affordable coverage.

It’s also worth noting that other third-party groups provide ratings, scores or reviews for life insurers, too. However, they’re not financial strength ratings — they’re usually based primarily on consumers’ experiences or complaints. You can refer to both kinds of ratings when determining which life insurance company is right for you.

Armed with this information, you’ll be in a better position to make an informed decision when choosing the life insurance company to buy your policy from.