Life Insurance
Insurance 101
Live Chat
Sign In
Apply Now
Life Insurance

What You Should Know About Life Insurance Ratings Agencies

By Sarah Li Cain Mar 10, 2020

In this article

A.M. Best



Standard & Poor’s

How Can I Use Rating Agencies to Find The Right Coverage?

Shopping around for life insurance?

Aside from thinking about how much life insurance you need and whether term life insurance is right for you, another thing to look for is the insurer’s reputation. 

Good news: Reputable ratings agencies do the hard work of analyzing whether an insurer has the financial ability to pay out your policy. These agencies, in other words, can show you whether the issuer of your policy is legit. Plus, there are regulatory structures in place to help safeguard your life insurance policy.

If you think about it, scouring ratings is probably something you already do regularly. You may have looked on websites like Edmunds before buying a new car, or read a Sephora review before plopping down $20 for lipstick. 

When it comes to life insurance, third-party agencies dig deep to evaluate carriers’ financial strength. That includes looking at how well a company is doing in terms of its funding, management of assets and how much risk it might carry. 

“Insurance companies are mandated by law to set aside cash reserves for the coverage they provide,” says Walter Bowen, a managing partner at Modern Woodmen of America, an organization that helps provide life insurance and retirement planning services. “Ratings help to show whether a company is financially sound because a even if a company has been around a long time, it doesn’t really mean much if you can get a payout.”

Although each rating agency uses different formulas to analyze its findings, these ratings can be a key way to compare carriers.

Ratings aren’t a guarantee of financial strength, but they can be an important indicator. 

A.M. Best

A.M. Best is a global credit rating agency; it’s been around since 1899, making it one of the oldest rating agencies. One of the reasons A.M. Best is so well known that it offered the first reports of fire insurance losses attributed to the 1906 San Francisco earthquake and fire.

While there are several other independent rating agencies out there, A.M. Best is one of the most touted and respected in the life insurance industry. It stands out not only for its longevity but for its specialization: It is the only ratings agency that solely rates insurance.

A.M. Best looks at an insurance company’s financial strength in order to assign credit ratings, much like your credit score. These financial strength ratings represent a company’s ability to meet their contractual obligations to the people they insure. It takes into account factors such as enterprise risk management, financial performance, operating performance and company profile. 

“Since the actual payout of a life insurance policy may occur far in the future, credit agency ratings help a customer determine whether it’s likely the company will be able to make good on its contract,” says Patrick Kelley, a licensed life insurance and annuity agent with Symmetry Financial Group. “Obviously, the higher the rating, the better.” 

A.M. Best ratings range from D (“Poor”) to A++ (“Superior”). 

Full disclosure: Fabric offers term life insurance policies that are backed by Vantis Life, a Penn Mutual company. A.M. Best has given Vantis Life a score of A+ (“Superior”).


Founded in 1913, Fitch operates in more than 30 countries and is considered a global leader in financial information services. The rating agency does a full analysis of a company’s credit profile and updates its ratings each year.

Factors that Fitch looks at when evaluating companies include financial earnings and performance, reserve capacity and catastrophe risk. The two categories of ratings are investment and non-investment grade—the former being companies that are more stable, the latter being companies that are more prone to changes in the economy.

Granted, Fitch doesn’t necessarily evaluate companies as insurers. Rather, it looks specifically at a company’s credit rating—is it able to meet its financial obligations (such as repayment of insurance claims)? Still, the higher the rating, the more likely the company has enough cash reserves to pay out your claim. 

Ratings for investment grade companies range from BBB- to AAA and ones for non-investment grade companies range from D to BB+.


In 1900, John Moody launched his paper publication Moody’s Manual of Industrial and Miscellaneous Securities. Initially the publication provided information on various stocks and bonds but after the crash the company decided to widen its coverage, assessing the creditworthiness of corporations and government entities. 

According to Moody’s, their rating system looks at insurance companies in terms of whether an insurance company can repay a policyholder's claims in a timely manner.

It can seem a bit confusing to navigate Moody’s rating system since it uses both letters and numbers. Ranging from C to Aaa, the important thing to note is that the more A’s you see, the better the rating. There are also numbers that can indicate its ranking.

Here are the rankings from the highest to lowest:

  • Aaa

  • Aa1 

  • Aa2 

  • Aa3 

  • A1

  •  A2 

  • A3 

  • Baa1

  • Baa2

  • Baa3 

  • Ba1 

  • Ba2 

  • Ba3

  • B1 

  • B2 

  • B3 

  • Caa1 

  • Caa2 

  • Caa3 

  • Ca 

  • C

Standard & Poor’s

Founded by a father and son duo in 1860, Standard & Poor’s operates in 28 countries and boasts over one million ratings assigned to various organizations. The company started as the Standard Statistics Co. and merged with another company, Poor’s Publishing in 1941.

Like most of the other ratings agencies, Standard & Poor’s rates a company’s creditworthiness (not specifically its status as an insurer, since these ratings are for all sorts of companies) by using letter grades.

It ranges from D to AAA, with D being the lowest. Keep in mind that you could see up to three letters. The more there are, the higher the ranking. You might also see a plus or minus sign, which can increase or decrease the relative ranking.

How Can I Use Rating Agencies to Find The Right Coverage?

Searching ratings through A.M. Best can provide a strong indicator of a life insurance carrier’s strength, which is important while you’re shopping around. You might also check other places like Trustpilot to find testimonials from actual customers. 

“Since so many people’s retirement and estate plans hinge on life insurance and its unique benefits such as probate avoidance and tax advantages, it’s critically important to choose an insurance carrier that is likely to be around and able to fulfill its obligations when the time comes,” says Kelley.

Finding the right coverage doesn't have to be hard. You’ll just want to make sure that whichever policy you choose, your life insurance company will do what it promises. 

That way, you can feel good knowing that your money is going to a good cause: creating a safety net for your loved ones.

Fabric exists to help young families master their money. Our articles abide by strict editorial standards.

Fabric by Gerber Life exists to help young families master their money. Our articles abide by strict editorial standards.

Information provided is general and educational in nature and is not intended to be, and should not be construed as, financial, legal, or tax advice. Laws of a specific state or laws relevant to a particular situation may affect the applicability, accuracy, or completeness of this information. Federal and state laws and regulations are complex and are subject to change. We make no warranties with regard to the information or results obtained by its use, and disclaim any liability arising out of your use of, or reliance on, the information.

Fabric by Gerber Life offers a mobile experience for people on-the-go who want an easy and fast way to purchase life insurance.

Written by

Sarah Li Cain

Related Posts

Life Insurance

When Not to Get Life Insurance

Life insurance is helpful for a lot of people…but not everyone. In fact, here’s a list of people who shouldn’t bother getting a policy.

By Jessica Sillers
Life Insurance

‘My Life Insurance Costs Four Lattes’: How Much Life Insurance Costs in Real-World Terms

How would life insurance really fit into your budget? Here’s how real quotes compare to actual items you buy through the year.

By Jessica Sillers
Life Insurance

7 Ways to Find Room in Your Budget for College Savings

It’s smart to start saving early for your child’s college education. These tips can put you in control of your family finances to help you get there.

By Jessica Sillers

Fabric Picks

Life Insurance

Why Women Need Life Insurance — But Aren’t Getting It

The life insurance gender gap shows that women are less likely to have the coverage they need than men. Explore reasons and ways to close the gap.

By Jessica Sillers
Life Insurance

What It Means to Surrender a Life Insurance Policy—and How to Know If It’s Right for You

If you have a permanent life insurance policy that has a cash value, you might be considering surrendering your policy as a source of cash. That’s a decision that shouldn’t be taken lightly.

By Jacqui Kenyon
Life Insurance

Types of Life Insurance, as Explained by Mom's Favorite TV Shows

Learning about life insurance doesn’t have to be overwhelming. Here’s how our favorite TV shows help us understand the types of life insurance.

By Jessica Sillers
Fabric by Gerber Life Logo

About Fabric




Download Fabric’s iOS mobile app through the Apple App Store
Download Fabric’s android mobile app through the Google Play app store

© 2023 Gerber Life Agency, LLC

Term Life Insurance Policy Series ICC22 2205-4004 WSA and Accelerated Death Benefit Rider policy series ICC22 2205-2623 WSA (and state variations where applicable) issued by Western-Southern Life Assurance Company, Cincinnati, OH which operates in DC and all states except NY, and distributed by Gerber Life Agency, LLC using Fabric Technologies. Gerber Life Agency, LLC is an affiliate of Gerber Life Insurance Company (est. 1967). All are members of Western & Southern Financial Group (Western & Southern). Issuance of coverage for Term Life Insurance is subject to underwriting review and approval. Please see a copy of the policy for the full terms, conditions and exclusions. Product provisions, availability, definitions and benefits may vary by state. Payment of benefits under the life insurance policy is the obligation of, and is guaranteed by, the issuing company. Guarantees are based on the claims-paying ability of the issuer. Products are backed by the full financial strength of the issuing company.

All sample pricing is based on a 30-year old F in Excellent health for the coverage amount shown and a 10-year term policy, unless otherwise stated. Gerber Life Agency, LLC (GLA) is an insurance agency licensed to sell life insurance products. GLA will receive compensation from Western-Southern Life Assurance Company for such sales. The NAIC Company Code for Western-Southern Life Assurance Company is 92622.

Western-Southern Life Assurance Company's A+ Superior A.M. Best Rating: Superior ability to meet ongoing insurance obligations (second highest of 13 ratings; rating held since June 2009). Ratings are subject to change from time to time. The ratings shown here are correct as of 09/03/2022. For more information about a particular rating or rating agency, please visit the website of the relevant agency.

Plan like a parent. is a trademark of Fabric Technologies, Inc.

Gerber Life is a registered trademark. Used under license from Société des Produits Nestlé S.A. and Gerber Products Company.

In the State of California, Gerber Life Agency, LLC is known as and does business as Gerber Life Insurance Agency, LLC.