How are the top-rated term life insurance companies rated?

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How are the top-rated term life insurance companies rated?

Buying life insurance can seem complicated, to say the least.

There was space for someone to come in and simplify the tangled web of insurers, policies, regulations, and more. That’s what PolicyGenius’ mission is: to help you buy life insurance and feel good about it.

A lot of life insurers have been around for more than a century, which means that some are more prepared for the digital age than others. Since our goal is to help you, the customer, we vet insurers upfront and only work with the nation's top-rated companies.

But what exactly does that mean? How are the top-rated term life insurance companies actually rated?

Here’s an inside look at how PolicyGenius and other parties around the industry rate insurers – and what that means for you.

Financial ratings

The life insurance industry deals with money. A lot of money. So one of the more obvious ways insurers are rated are financially, taking into account the insurer’s financial history and its ability to meet the financial obligations to its policyholders.

That’s important for potential clients to know how financially stable because you’re relying on life insurance companies to be around and pay out death benefits years or even decades from now if needed.

A few of the biggest judges of financial stability are A.M. Best, Fitch Ratings, Moody’s, Standard & Poor’s, and Weiss Ratings. When you’re researching life insurance financial ratings, pay special attention to A.M. Best, since they focus specifically on life insurance companies.

It’s also important to know what criteria each rating company uses when issuing their ratings. Some weight certain factors more heavily than others, and you’ll want to know exactly what a company is being judged on so you know if it meets your personal standards.

Customer service

Like any company with customers, knowing how a life insurance company treats theirs is nice to know. After all, you’re buying life insurance for some peace of mind. You don’t want it to be a headache the entire time.

The Better Business Bureau is a well-known name in consumer feedback that grades companies on a letter grade scale, just like you were back in school. That way you know to gravitate toward an A+ and steer clear of, say, a D. Similarly, J.D. Power uses surveys of customer satisfaction, product quality, and buyer behavior to grade companies.

At PolicyGenius, we have our own five star grading scale regarding customer service, and it’s split into two groups: when you’re applying, and when you’re a customer.

The application process for a particular insurer is judged on how much of a headache it is to submit. The factors involved include:

  • How many steps are involved?

  • How long is the application?

  • Is it primarily online, or are there additional phone calls that need to be made and papers that need to be delivered by mail?

  • How many days (or weeks) is the turnaround time?

Then there’s what happens after you become a customer, and that’s primarily based on what you can do online. After all, it’s 2016, right? You can do almost anything from your phone or computer, so we want you to know if you need to call or mail in forms for changing your payment method or address, updating your beneficiaries, or cancelling your policy.

Rates

Life insurance can be tricky because it prepares you for far into the future – and let’s be honest, most of us don’t think that far ahead. What concerns you in the here and now, however, are the premiums you’ll be paying each month. That’s why we decided to score insurers on policy rates, too.

To do this, we came up with a patented (not really) affordability score. This scores a company on a scale of 1 to 5 – the higher the better – based on the average premiums each insurer has historically offered to healthy 30, 40, and 50-year-olds. This are updated on a regular basis, because rates change, and insurers like to keep us on our toes.

Conditions

For good measure, we also qualify the rates each insurer gives for common health conditions like heart attack, diabetes, high blood pressure, former tobacco use, and more. Since health conditions can raise your rates, we wanted to let you know how insurers rank for people with these conditions.

Excellent means an insurer provides excellent coverage for clients; Good is in the middle, where you likely won’t be seen unfavorably for a condition; and Fair means that you’ll probably be issued a lower health rating (and therefore a higher rate).

Policies

Finally, we come to the policies themselves. While we don’t necessarily rank an insurer based on their policies, we do want to put all of the information regarding an insurer’s term life insurance policies in one place so you can easily compare and see what’s right for you.

What are the coverage amount and terms that are available? Will you get a discount for paying your premiums annually instead of monthly? What riders does the insurer offer? These are the sorts of things you’ll need to know before you can find out what coverage is needed for your family. You should take into account your financial situations – your debt, savings, how much you can afford, and so on – and what special provisions you’ll need (like a child rider).

We also note unique features of a policy. For instance, Pacific Life’s Pacific PRIME Term policy includes a Living Needs Benefit, which offers coverage for chronic and terminal illness, and waived premiums due to disability aren’t deducted from the death benefit like they would be with other insurers and policies. These are the sorts of details that can sway you toward one company over the other.

All of this may seem like a lot, but remember: we want to make things easy on you. That’s why you can find ratings for each company we work with in our Insurance Company Reviews. Everything we just talked about is listed there, ready for you to reference at any point in your research.

And if you want a little help, don’t forget you can call, email, or chat with any of our experts and they’ll guide you to the insurer and policy that’s right for you.