Choose a life insurance company by checking its financial strength ratings from AM Best, S&P or Moody’s, reviewing its NAIC complaint index, and confirming it offers the policy type, riders and conversion options you need. Then compare quotes from several insurers, since underwriting and pricing differ, and consider customer service and claims support.
How to Choose a Life Insurance Company: Start With the Basics
A life insurance policy can last decades. Experian points out that term coverage can run up to 30 years and permanent coverage to age 99, so the company you choose needs to be around, and willing to pay, long after you sign. Knowing how to choose a life insurance company comes down to a few checks: financial strength, complaint history, product fit, underwriting, price and service.
No single factor settles the decision. USAA calls financial strength one of the most important factors, but also stresses comparing products and service. Use the steps below to build a short list, then compare quotes on the same coverage.
1. Check Financial Strength Ratings
Independent rating agencies grade an insurer’s ability to meet its obligations, including paying claims. The main agencies for life insurers are AM Best, S&P Global Ratings, Moody’s and Fitch. Each uses its own methodology and letter scale, so compare grades within the same agency rather than across agencies.
AM Best is the agency most often cited for insurers. According to Policygenius, its financial strength scale looks like this:
| AM Best rating | Category | What it means |
|---|---|---|
| A++, A+ | Superior | Superior ability to meet ongoing insurance obligations |
| A, A- | Excellent | Excellent ability to meet ongoing insurance obligations |
| B++, B+ | Good | Good ability to meet ongoing insurance obligations |
| B, B- | Fair | Fair ability; vulnerable to adverse underwriting and economic changes |
| C++, C+ | Marginal | Marginal ability; vulnerable to adverse changes |
| C, C- | Weak | Weak ability; very vulnerable to adverse changes |
| D | Poor | Poor ability; extremely vulnerable to adverse changes |
Policygenius says it only offers policies from insurers rated A- or better, a useful benchmark for consumers. USAA notes the major agencies generally grade from A to D, with plus and minus signs showing where a rating falls within a category. Check the rating of the specific company that will issue your policy, since large groups may have several subsidiaries.
2. Review the NAIC Complaint Index
Financial strength tells you whether a company can pay. Complaint data hints at how it treats customers. The National Association of Insurance Commissioners (NAIC) publishes complaint information you can search by company, and Experian explains that the median Company Complaint Index score is 1. A score above 1 means more complaints than expected for the insurer’s size; below 1 means fewer.
The Indiana Department of Insurance, which publishes its own state index, gives a clear example: an index of 0.50 means a company’s share of complaints is half its share of business, while 2.00 means twice its share. Indiana also advises weighing the index alongside cost, agent service, claims handling and financial stability. Look at the specific line of business, such as individual life, and at several years of data instead of one.
3. Make Sure the Products Fit Your Needs
An excellent company is the wrong choice if it does not sell what you need. Experian suggests looking for an insurer that offers term, whole and universal life, which gives you room to adjust coverage later. Consider:
- Term lengths available: Does the insurer offer the length that matches your mortgage and children’s ages?
- Coverage amounts: Some insurers cap how much they will issue online or without an exam.
- Permanent options: Whole life and universal life differ in guarantees, flexibility and cost; our term vs. whole life guide explains the main differences.
4. Compare Riders and Conversion Options
USAA advises comparing riders, exclusions and fees, since they can differ even between two 20-year or two 30-year level term policies. Common riders include waiver of premium, accelerated death benefit, child term riders and return of premium, though availability and cost vary by insurer and state.
A conversion option deserves special attention. According to Experian, a convertible term policy can be changed to permanent coverage without a new medical exam, which is valuable if your health declines. Ask how long the conversion window lasts, until what age, and which permanent products you can convert into.
5. Understand the Underwriting
Insurers weigh health, age, tobacco use, hobbies and other factors differently. Experian notes that premium guidelines vary by insurer, and if one company declines you or quotes a high price, another may offer better terms. Experian also suggests asking your state insurance department or broker whether carriers in your area use credit information in pricing.
Ask each insurer whether it offers accelerated or no-exam underwriting for your age and coverage amount, how long decisions usually take, and how it treats any conditions you have. An independent agent who works with several carriers can often point you to companies known for favorable underwriting in your situation.
6. Weigh Customer Service and Claims Support
Your beneficiaries will be the ones dealing with the insurer at the hardest moment. Experian and USAA both suggest reviewing customer satisfaction research, such as J.D. Power’s annual individual life insurance study, alongside NAIC data. USAA also suggests asking how the insurer supports beneficiaries through survivorship services, whether you will have a dedicated agent, and how easy it is to manage the policy online.
Life Insurance Company Checklist
| Check | What to look for | Where to find it |
|---|---|---|
| Financial strength | Strong ratings, such as A- or better from AM Best | AM Best, S&P, Moody’s, Fitch, insurer website |
| Complaints | Complaint index near or below 1 over several years | NAIC consumer database, state insurance department |
| Products | Policy type, term lengths and amounts you need | Insurer website, agent |
| Riders | Riders you want, with clear costs and exclusions | Policy illustration, agent |
| Conversion | Conversion window length and eligible products | Policy contract, agent |
| Underwriting | Exam requirements, decision time, treatment of your health | Insurer, independent agent |
| Price | Competitive quote for the same coverage and term | Several insurers or a broker |
| Service | Satisfaction research, online tools, beneficiary support | J.D. Power, NAIC, reviews |
| Licensing | Insurer and agent licensed in your state | State insurance department |
Bottom Line
To choose a life insurance company, start with insurers that hold strong financial strength ratings, then narrow the list using NAIC complaint data, product and rider fit, conversion options, underwriting and service. Get quotes on identical coverage from several companies, since pricing differs widely. Products, riders and rules vary by state and insurer, so confirm details in the policy and talk with a licensed agent before you buy.
Frequently asked questions
What is a good AM Best rating for a life insurance company?
AM Best ratings of A++ and A+ are labeled Superior, and A and A- are labeled Excellent. Policygenius, for example, only offers policies from insurers rated A- or better. Ratings below that range indicate weaker ability to meet obligations, so many shoppers stick to the A range or higher.
How do I check complaints against a life insurance company?
Use the NAIC consumer complaint database, which lets you search insurers by name and view their complaint index. A score of 1 is the median; above 1 means more complaints than expected for the company’s size. Many state insurance departments also publish their own complaint data.
Does it matter which life insurance company I choose?
Yes. Policies can last decades, so financial strength matters for paying future claims. Insurers also differ in underwriting, pricing, riders, conversion options and service. Two companies can quote very different prices for the same person, which is why comparing several insurers is worthwhile.
Is it better to buy life insurance from an agent or online?
Both can work. Buying online directly from an insurer can be fast and simple for straightforward needs. An independent agent can compare several insurers and help if you have health conditions or complex goals. Whichever route you choose, confirm the insurer and agent are licensed in your state.
Read also
You may also search for: term vs. whole life, Mutual of Omaha review, no medical exam life insurance
This article is for general information only and is not insurance, financial or legal advice. Rates, products and rules vary by age, health, state and insurer. Compare quotes and speak with a licensed agent before buying a policy. Sources: A.M. Best: What It Means | Policygenius, How to Choose a Life Insurance Company | Experian, What to look for when choosing a life insurance provider | USAA, IDOI: Complaint Index | Indiana Department of Insurance.
