When people ask us about a life insurance company's "rating", they are really asking us "how financially strong is this company?". With the economy the way it is today, it's natural to want peace of mind that the life insurance company you choose will be there for you when you need them.
There are 4 major independent ratings agencies most of us have heard of: A.M. Best, Standard and Poor's, Fitch and Moody. They all give ratings for life insurance companies.
However, in the life insurance industry, there's one ratings bureau we use as the benchmark for financial strength. That ratings company is AM Best.
The top AM Best life insurance ratings a company can receive is A++, A+, A, A-. These are all very strong financial ratings. Anything with a B or below, we wouldn't recommend using.
A++ (Superior Financial Strength)
A+ (Superior Financial Strength)
A (Excellent Financial Strength)
A- (Excellent Financial Strength)
B++ and B+ (Good Financial Stength)
At Rootfin, we only quote "A-" or better rated life insurance companies and we have access to over 60 "A-" or better life insurance companies.
Here are the AM Best life insurance company ratings of some of the biggest life insurers on the market (These rating are accurate as of June 2012):
American General A
Banner Life A+
Fidelity Life A-
ING Reliastar A
John Hancock A+
Minnesota Life A+
Mutual of Omaha A+
On top of these life insurance company ratings, it's important to know this: In the history of life insurance, there has NEVER been a claim that went unpaid due to insolvency or the inability of a carrier to pay a death claim.
If a life insurance company gets in trouble financially or just decides to exit the market, they are absorbed by another life insurance company. If you have a policy with a company that gets acquired by another company, your benefits and premiums are still guaranteed, just by a different company.
So while the life insurance company rating IS important, history tells us it's not as important as we make it out to be. If you have a life insurance policy in force and god forbid something happens, your life insurance will pay out no matter what the life insurance company's financial position is. Obviously we want to avoid using a company that will ever be in that position.
Bottom line. Stick with an A- or better AM Best rated life insurance company.