For many Americans, life insurance is something that they’ll buy “one day.” But unfortunately, 30% of American households still remain uninsured.
If you’ve decided not to be in the 30%, congratulations! But purchasing insurance can be complicated. You may have noticed the A.M. best rating scale. But how does it work?
This system makes it easier for consumers to understand which insurance company is the best for them. Here’s how:
The A.M. Best Rating Scale
Buying insurance is a big decision. You need a company that you can trust in the event that you need to make a claim. For this reason, consumers should be able to check the reputation and financial stability of their insurance companies.
The A.M. best rating scale is the best way to do this.
A.M. Best has been providing policyholders with a way to check the financial strength different life insurance companies in countries around the world.
A.M. best provides in-depth reports about the financials of each company. This includes information that indicates whether your insurance company will be able to pay out any claims.
A Report Card for Your Insurance Company
The A.M. best rating scale is different from many other rating agencies, as it has been rating products in the insurance industry for a long time. The rating process considers many different factors, including:
- The company’s business profile
- The financial performance
- Its balance sheet
- Its management style
- A comprehensive comparison to competitors
A.M. Best also provides insurance news and analysis. This helps you keep up to date with global insurance news and important industry information.
How does the A.M. Best Rating Scale Work?
The A.M. best rating scale allows each company to see where they’re ranking with customers. It also shows them what they need to do to correct any mistakes.
A.M. Best was established in 1899 and has been reporting the financial stability of insurance companies around the world. The scale is independent and analyzes whether each insurance company will be able to meet its contractual obligations.
The ranking is based on a qualitative and quantitative evaluation of each company. It includes both a letter grade and outlook projection.
Before you purchase a policy, you should check the rating of the insurance company:
A++ A+ A A-
These are all the best insurance companies. An “A” rating or better shows that the company is financially strong and able to guarantee your policy.
B++ B+ B B-
These are companies that are still great, but can’t afford to offer the same services as higher ranked companies. A “B” ranking or above means that you’ll be getting affordable rates and a secure policy. It also means you can rely on the company to pay out once you’re gone.
These ratings both indicate that the insurance company is average. You won’t receive any special bells or whistles, but you will get a standard policy with standard premiums. This is a good choice for first-time life insurance buyers.
D E F
Ratings below “C” are bad news. A “D” ranking shows that the company falls below A.M. Best’s minimum standards. “E” rankings show that the company is currently under state supervision. “F” means that the company is going into liquidation.
Why Does the Ranking Matter?
It sounds great to choose a company that has a rating of “A+”, but why does it matter? How will it impact your family or your policy?
These ratings are an indication of the trustworthiness of an insurance company. Companies that aren’t financially strong have a higher chance of going bankrupt. That means that your policy wouldn’t be paid out and you would have to get a new one- often at an older age and in worse health.
While there’s no way for us to predict what will happen to an insurance company in the future, the A.M. Best rating scale can give you some direction. By checking the ratings carefully, you’ll have an idea of a company’s past, and their current stability- without needing to research each company yourself.
Life insurance is one of the most important purchases you will make. For that reason, it’s vital that you choose a company that will be around for many years to come.
The main point of life insurance is to give both you and your family financial coverage and peace of mind in the event that you pass away. If an insurance company looks unlikely to be able to do this, you can decide to choose a competitor with a better rating.
Can an Insurance Company’s A.M. Best Rating Fall?
It sure can.
Insurance companies know that the ratings issued by A.M. Best are serious, and a downgrade can mean a subsequent loss in consumer confidence. Rating decreases are also likely to impact the company’s attractiveness to investors.
But it is possible for even the companies with the highest ratings to fall. Reasons this could happen include:
- A reduction in their financial reserves
- A large number of paid claims
- A change in their management or structure
- A change in the marketplace
This is why it’s a good idea to pay attention to the outlook provided by A.M. Best. This shows how each company is expected to perform in the future and should impact your decision.
List of Life Insurance Companies with the Top A.M. Best Ratings
Top Quote Life Insurance works with only the life insurance companies that offer an (A) or better A.M. Best Rating. We feel that choosing anyone one of these companies from our list will be a safe choice when deciding on life insurance coverage.
|Life Insurance Company||A.M. Best Rating|
|Mutual of Omaha||A+|
|North American Co||A+|
As you can see, there are many well-known insurance companies rated “A” or better that you can choose from.
Once you’ve found a shortlist of companies with excellent ratings on the A.M. best rating scale, you can look at other factors.
These factors will include customer satisfaction, reviews, value for price policy inclusions, and customer service.
Remember, while there are many different things to consider when purchasing life insurance, the best thing you can do is purchase as soon as you can.
If you need help narrowing down your options, begin by entering your information in the quote box on the top right of this page.
You can also read our top 10 tips for finding cheap insurance to choose the right company for you.
Don’t forget: you can always get in touch for more information!