Financial strength ratings
The question is whether they can pay in thirty years. Ratings are how you get at it.
A life insurance policy is a promise that may need honouring decades from now. Financial strength ratings are an independent assessment of whether the company will be able to.
They're free to look up and widely misread, mostly because the scales aren't the same.
Who publishes them
- AM Best — insurance-specific, and the most widely cited in the industry
- S&P Global Ratings
- Moody's
- Fitch Ratings
- KBRA
The scales are not interchangeable
This is the most common error. Each agency has its own scale and its own letters, and a rating from one does not translate to the same letter from another.
AM Best's highest categories are A++ and A+, for example, so an A rating from AM Best sits below its top tier — while an A from another agency occupies a different position on that agency's scale entirely.
Always note which agency issued a rating. A company quoting a letter without saying who gave it is not telling you much.
What a rating actually assesses
Broadly, the insurer's ability to meet its ongoing obligations to policyholders — balance sheet strength, operating performance, business profile and risk management.
It is not an assessment of customer service, claim-handling behaviour, or price. That's what the complaint index is for, and the two are genuinely independent.
When it matters most
- Permanent life insurance you expect to hold for decades
- Annuities, where you're relying on payments over a long period
- Coverage above state guaranty association limits
- Long-term care coverage
- Any policy where you're accumulating cash value
Guaranty associations sit underneath
Every state has guaranty associations that provide a backstop if an insurer fails, up to capped amounts that vary by state and product.
Coverage above those caps is outside the backstop, which is why financial strength matters more the larger your policy. Splitting very large coverage across insurers is a legitimate response.
Worth knowing: most states prohibit insurers and producers from using guaranty association protection to advertise or induce a sale. If someone is selling on that basis, that's a problem in itself.
How to check
Ratings are published on the agencies' own sites, generally free with registration. Your state insurance department also publishes financial information about admitted insurers.
Check the rating and the outlook, and check when it was last affirmed. A rating from several years ago is less informative than a recent one.
Common questions
It depends entirely on who issued it. Each agency has its own scale — AM Best's top categories are A++ and A+, so an A from AM Best sits below its highest tier. Always ask which agency gave the rating.
No. Ratings assess ability to meet obligations, not claim handling or customer service. The NAIC complaint index is the tool for that, and the two are independent.
State guaranty associations provide a backstop up to capped amounts that vary by state and product. Coverage above those caps sits outside it — which is why financial strength matters more the larger your policy.
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This page is general information, not advice about your specific circumstances. A licensed insurance professional can tell you what’s actually available to you.
General information only, not insurance advice. Coverage, availability, and terms vary by insurer and by state, and are subject to underwriting. Quote My Policy LLC is a licensed insurance producer. Nothing here binds coverage.