Ratings Methodology for Life Insurance Company Reviews

Policygenius offers editorially independent reviews of life insurance carriers. Look what we take into account to help you make the right choice.

Tim Torres

By

Tim Torres

Published November 25, 2020|3 min read

Table of Contents

Editorial disclosure

Policygenius provides in-depth reviews on the life insurance companies we work with to help you find the right option:

We also review life insurance companies we don’t carry, including Globe Life, State Farm, and others.

Categories

For our life insurance reviews, we focus on each company’s recommended term life product. Generally, we guide shoppers towards choosing term life policies over all others, both for their affordability and convenience. Term life policies often have the best value and flexibility for people in need of life insurance.That’s why we’ve decided to focus our reviews entirely around those offerings.

As for permanent life policies such as whole life and universal life? They’re usually more complicated and more expensive for most people. You will find information on these other products in our reviews, but we don’t factor them into the scoring.

We rate each carrier in five different categories on a scale of 1 (lowest) to 10 (highest). These individual category scores are averaged for a final overall rating out of 10.

If there aren’t enough factors within a category to score on, then that category is removed and the remaining categories are averaged for the final score. For example, if a company doesn’t have a sufficient number of reviews from third-party customer ratings sites, then the Third-Party Ratings category won’t figure into the final average.

The categories are:

Cost

For reviews of our partner carriers, we base sample rates on a certain applicant profile: a male non-smoker in California, who qualifies for a Preferred class, applying for a 20-year, $500,000 term life insurance policy.

We then compare the average monthly premium costs for each eligible age group to the overall industry average, pulled from internal Policygenius data that's based on the costs of policies from our partner companies, including AIG, Banner, Brighthouse, Lincoln, and others.

Remember that your individual monthly costs will vary by your chosen company, coverage amount, health class, length of term, and state. And not all policies are available in all states. In general, however, the lower the monthly costs, the better the score for that company in our review.

Confidence

After Cost, the next question we tackle is Will the company be able to pay out beneficiaries?

To find that out, we look at how major financial rating institutions score insurance companies. Then we base our scores on their ratings.

Here are the agencies we look at for our Confidence score:

These company ratings are normalized and scored out of 10. For example, Standard & Poor’s, or S&P, rates companies on scale of AAA (the best possible rating) to D (the lowest rating). We assign numbers to those letter grades, and then average the ratings from each institution for the final score.

Third-Party Ratings

This is based on satisfaction scores from consumer sentiment institutions, third-party review sites, and complaints to state insurance boards.

The factors we look at for our customer score include:

  • Better Business Bureau rating - This non-profit groupscores companies a letter grade based on the clarity of their policies, truth in advertising, and whether they can resolve complaints.

  • Consumers Advocate rating - A third-party review site that evaluates companies and assigns a numerical score based on policy options, reputation, and other elements.

  • Consumer Affairs overall satisfaction rating - A third-party review site that allows consumers to directly rate and write reviews of companies. The reviews and ratings are then averaged into a final numerical score.

  • National Association of Insurance Commissioners (NAIC) - Complaints submitted to state insurance boards for individual life insurance policies as measured by the National Complaint Index Report.

Policy Details

Next, we look at the coverage details of each company’s premier term life policy. Do they offer multiple term lengths? Are the face amounts reasonable? Is temporary coverage available? The more flexibility there is for customers, the better we rate the life insurance carrier.

In other words, companies with a wide range of coverage options receive higher scores.

Here are some of factors we look at for our Policy Option score:

  • Term length availability - Simply, more term lengths means more flexibility for policyholders. A company with 10-, 15-, 20-, 25-, 30-year term lengths will have a higher score than a company with only 10-, 20-, and 30-year terms.

  • Temporary coverage options - Not all companies offer temporary coverage between when an application is submitted and when the policy starts. Companies that offer coverage during this time period receive a higher score.

  • Starting face amount - The lower the starting coverage amount, the higher the score.

  • Maximum face amount - Similarly, the higher the maximum coverage amount, the better the score.

  • Rate reconsideration - If you become healthier after you start a policy, you may want the option to lower your rates. Companies that offer to recalculate monthly rates after a year are awarded more points. And they gain even more if they pay for your medical exam or allow for more than one reconsideration during your policy’s lifetime.

Ease of Application

How convenient is it to start a policy with a company?

The factors we look at for our ease of application score include:

  • Average turnaround time for a policy to become active - The quicker the policy becomes active, the better the score.

  • Average underwriting speed - Same as above, except with the speed of the underwriting process, which decides whether or not an applicant is approved.

  • Instant decision - If a company offers an instant decision policy that provides a decision within 24 hours or less, they will receive a higher score.

  • Is there a no-medical exam option? - More life insurance carriers are offering customers policies that don’t require medical exams. That’s more and more important these days, and that means more points for those carriers.

  • Can you renew a term without a medical exam? - If policyholders can renew a term life plan without having to schedule a medical appointment, they get more points.

  • Rate reconsideration options - Not all companies offer rate reconsideration. If they do, they receive a higher score, and extra points if they pay for the medical exam and allow for reconsideration more than once.

Policygenius offers insurance policies from many of the nation's top insurers, who pay us a commission for our services. However, all editorial choices are made independently.