More on Life Insurance
More on Life Insurance
Weiss Ratings assesses an insurance company’s financial health and ability to meet financial obligations.
Published December 15, 2020|3 min read
Table of Contents
Life insurance is an important part of setting up a financial security net for your loved ones — and who you set up that security net with is equally as important. When you're picking an insurer, one of your considerations is how financially sound your insurance company is. If a life insurance company becomes insolvent, they can’t pay out the death benefit to your beneficiaries.
Weiss Ratings is one of the popular rating agencies that provides consumers with information about an insurance company’s financial background. Their grading scale can help you make an informed decision about how reliable a life insurance company is and if they will be around to pay out the death benefit when the time comes.
Weiss Ratings uses an insurance company’s financial data to assign a grade
A high grade by Weiss Ratings means that an insurer is financially sound and can withstand an economic downturn
A low grade assigned by Weiss Ratings means that an insurer is in poor financial health or may not be able to remain financially stable if the economic climate changes
When you’re entrusting a life insurance company with your family’s financial security, you want to be sure that your efforts aren’t wasted if the insurance company isn’t in good enough financial health. An insurer that’s in good financial standing and expected to retain its status regardless of an economic downturn is the most likely to be able to meet its obligations to you, the policyholder. Choosing an insurer with a strong report card from financial ratings agencies ensures that the future of your loved ones’ is in good hands.
Weiss Ratings is a financial ratings agency that assesses the financial viability of insurance companies and other institutions. Their analysis helps buyers purchase policies from reliable insurance companies in good financial health with a higher chance of long-term solvency. The ratings, alongside ratings awarded by Fitch Ratings, Standard & Poor’s (S&P), and Moody’s, help life insurance buyers purchase policies from reliable and financially secure insurance companies.
Weiss provides two different types of ratings: investment ratings, which don’t apply to insurance companies, and safety ratings, which do. The latter provides information that is similar to a credit report. The higher the grade an insurance company is awarded, the likelier it is that they will remain in good financial standing during an economic downturn.
Insurance companies are awarded their final rating after a thorough review of their financial health. Each insurer is evaluated based on publicly available data, financial statements provided to state insurance commissioners, and supplemental information provided to Weiss Ratings.
All of the data is consolidated into separate indexes to designate a final rating. These indexes analyze the following:
Capital index - Determines whether an insurer is sensitive to market forces and can withstand negative economic conditions.
Investment safety index - Evaluates the quality and liquidity of an insurer’s investment portfolio.
Profitability index - Measures an insurer’s operating efficiency and profitability.
Liquidity index - Assesses an insurer’s ability to meet its financial obligations to policyholders.
Stability index - Analyzes whether or not an insurer can consistently retain its financial well-being.
If an insurance company receives a weak rating on any of the above indexes, it will impact their overall score and they’ll receive a lower grade. Likewise, if an insurance company receives strong ratings across the board, they’ll get a higher grade.
Weiss assigns an insurance company’s safety ratings on a grading scale, rating from A to F. A being the highest possible rating, and F being the lowest. Occasionally, Weiss will assign an insurance company a U (unrated) grade if they have not been evaluated by Weiss. Ratings can also receive a plus sign or minus sign to indicate they are in an upper or lower tier.
|WEISS GRADE||GRADE MEANING|
|A||Excellent. The highest possible grade — the company is in outstanding financial health regardless of the economic climate.|
|B||Good. The insurer is in satisfactory financial health and will likely remain so in the long term.|
|C||Fair. The insurer is in satisfactory financial health, but may not be able to withstand an unfavorable economic climate.|
|D||Weak. The insurer's financial health may hinder its ability to fulfill policy obligations.|
|E||Very weak. The insurer is unreliable even in a positive economic climate.|
|F||Failed. The insurer is either dissolved, liquidated, undergoing rehabilitation, or under the supervision of a regulatory authority.|
|U||Unrated. The insurer has not received a grade because its profits were too low or data wasn't readily available.|
Compare the market, right here.
Policygenius saves you up to 40% by comparing the top-rated insurers in one place.
Policygenius uses third-party rating agencies to evaluate and determine the best life insurance companies out there. Weiss is just one of many rating agencies we consult to determine an insurer’s financial health, consumer confidence, and customer satisfaction.
Weiss Ratings agency provides grades for major institutions, such as life insurance companies. Their grades rate a company’s financial strength and ability to sustain their financial health during changing economic climates.
The higher the grade awarded by Weiss, the better a company’s financial health is. An A grade means that the insurer is in excellent financial health and can likely sustain their status during an economic downturn, while an F means that an insurer is unable to meet their financial obligations.
Grades assigned by Weiss Ratings are important when choosing a life insurance policy because they indicate if an insurer is in good enough financial health and likely to pay out the full death benefit to your beneficiaries.