How to Compare Life Insurance Ratings

Life insurance offers peace of mind to loved ones in the event of death to the policyholder. Certainly, no amount of money could replace the loss to the family. However, this money can help pay for unexpected expenses and the loss of wages of the policyholder. Few things in life are as important as choosing the right life insurance company. Rating institutions help the consumer do just that.

Life insurance ratings tell the consumer if the company that has underwritten the policy can be trusted to honor their commitment in the event that the policyholder passes away. There are four major financial rating institutions that rank life insurance: Fitch, S&P, Moody's and A.M. Best. Although each rating institution has slightly different ways of rating companies, each can give an accurate picture of which life insurance companies will be there when you need them. Listed below are each institution's ratings from highest to lowest:

• Fitch -  AAA, AA, A, BBB, BB, B, CCC, CC, C


• S&P - AAA, AA, A, BBB, BB, B, CCC, CC, R, NR (not rated)


• Moody's - AAA, AA, A, Baa, Ba, B, Caa, Ca, C


• A.M. Best - A++, A+, A, A-, B++, B+, B, B-, C++, C+, C, C-, D, E, F, S

Ratings in the "A" range are the best and are companies that are very likely to keep its commitment. Ratings in the "B" range are still good, but these companies have issues that should be explored further. Ratings in the "C" level are sub par and these companies should be avoided. Companies that rate below the "C" level have little credibility and may be undergoing federal regulatory scrutiny.