Life insurance ratings & methodology for reviews

We designed our life insurance reviews to help you compare the highest-rated companies without spending hours of your own time doing research.

Our ratings methodology combines four subfactors — price, customer experience, transparency, and financial strength — into a single policycentral rating on a scale from 1 to 5, rounded to the nearest tenth of a decimal.

To ensure we’re comparing apples to apples, we convert these four subfactor ratings into t-scores and z-scores before combining them into a weighted composite rating.

Here are the four subfactors we use to calculate our overall policycentral ratings for life insurance reviews.

Price rating

We categorize each life insurance company on a 1-to-5 price rating scale, based on our industry-leading rate data published every month in the policycentral Life Insurance Price Index. Specifically, we use the average monthly premium cost for 35-year-old female non-smokers with a Preferred health classification and a $1 million, 20-year term life insurance policy. 

The price rating accounts for 35% of the company’s overall rating — unless we don’t have rate data for the company, in which case we leave their price rating blank, and don’t factor it into the company’s overall rating.

Customer experience rating

There are many third-party customer satisfaction ratings for life insurance companies, including J.D. Power surveys, Better Business Bureau scores, and Trustpilot reviews. But our customer experience rating at policycentral is based on a single, firsthand source of truth: the NAIC’s (National Association of Insurance Commissioners) National Complaint Index Report. 

This searchable database assigns each insurance company an index score by dividing its share of complaints by its share of premiums in the U.S. market. The industry average score is 1.00, meaning a company with a score of 2.00 gets twice as many customer complaints as one would expect for a company of its size of the company.

Our customer experience rating accounts for 20% of the company’s overall rating — unless the NAIC doesn’t provide an index score for the company, in which case we leave their customer experience rating blank, and don ’t factor it into the company’s overall rating.

Transparency rating

With so many terms, products, and companies to choose from, life insurance can be confusing. At Policygenius, we value companies who are transparent about their offerings, rates, financial strength, and ways to get in touch for help.

Our transparency rating accounts for 20% of the company’s overall rating, and awards points for each of the following details available on the company’s website.

Transparency factors	Points
Phone support	1 point
Email support	1 point
Online support center	1 point
Live chat or chatbot support	2 points
Term length options	1 point
Minimum and maximum coverage amounts	1 point
Financial strength ratings	2 points
Average rates (before quote estimate)	2 points

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Financial strength rating

For this subfactor, we average scores from the “Big Three” credit-rating agencies: AM Best, S&P Global Ratings, and Moody’s Investor Services (other rating agencies include Fitch and Weiss Ratings). Each of these ratings is designed to predict whether a company has the financial stability to withstand a major economic downturn like the financial crisis of 2008; highly rated companies are expected to survive even historically bad economic conditions, while low-scoring companies may not.

Our financial strength rating accounts for 25% of the company’s overall rating. If the company hasn’t been rated by one or more of the Big Three credit-rating agencies, we omit the missing rating and average the remaining ratings.

Points	AM Best	S&P Global Ratings	Moody’s
10	A++	AAA	Aaa
9	A+	AA+	Aa1
8	A	AA	Aa2
7	A-	AA-	Aa3
6	B++	A+	A1
5	B+	A	A2
4	B	A-	A3
3	B-	BBB+	Baa1
2	C++, C+	BBB	Baa2
1	C, C-	BBB-	Baa3

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Overall policycentral rating

Finally, after converting each subfactor rating into t-scores and z-scores, we combine all four into a single, weighted composite policycentral rating between 1 and 5 — rounded to the nearest tenth of a decimal.

What is AM Best?

AM Best is a global credit rating agency that focuses exclusively on the insurance industry; they score insurance companies based on financial strength, i.e., whether they can survive unstable economic situations. The AM Best rating scale ranges from A++ (Superior) to D (Poor).

AM Best is a trustworthy source for gauging your provider’s financial strength. policycentral only offers policies from life insurance companies that have an AM Best rating of A- (Excellent) or better. However, even if your insurer goes bankrupt, there are regulations to ensure your policy is honored.

How AM Best determines its ratings

To set a company's rating, AM Best compiles and analyzes public and proprietary financial information and data, including:

• Balance sheet strength:  A company’s cash on hand (liquidity), how efficiently the company generates earnings (quality of capital), quality and appropriateness of reinsurance programs, and more

• Business profile: Including market position, management quality, and distribution channels for the company’s products

• Enterprise risk management (ERM): Analysis of risk management framework and capability relative to the insurer’s risk profile

• Operating performance: Stability, diversity, and sustainability of the company’s earnings sources, plus relationship between earnings and liability

Insurance companies that receive high ratings generally have strong and predictable cash flows; competitive advantages in branding and customer experience; and diverse earnings and revenue streams, among other factors.

A committee determines the final AM Best rating to ensure consistency and objectivity. AM Best regularly reviews and updates the ratings as new data becomes available.