Life Insurance Rating Methodology

After performing a comprehensive analysis of more than 34 life insurance companies — from large companies and marketplaces like Ethos and Fidelity Life to smaller players like Bestow Life Insurance — we created a proprietary scoring system to quantify our research. We use this rating system to score each provider against industry standards based on key criteria, and we regularly monitor our database to ensure our content remains current.

A survey of 1,000 consumers with life insurance helped our research team better understand what policyholders are looking for in a provider. In this category of insurance even more than others, we found that consumers want to have a great deal of trust in their provider.

We focus on these four key categories when scoring life insurance companies:

• Brand Trust
• Coverage
• Availability and Ease of Use
• Riders

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Factors We Use To Score Life Insurance Companies

To research life insurance companies, we carefully analyze each company using methods that closely mimic the authentic consumer shopping process. We rate providers on four key categories, applying more weight to crucial aspects like financial strength and coverage options. We add together the points a company earns in each category for a total score out of a possible 100%, converted to a simplified rating out of five stars. 

Brand Trust (40%)

Not just any company is worthy of your trust when it comes to financially taking care of your loved ones’ needs after you pass away. When shopping for a life insurance provider, we recommend consumers consider a provider’s reputation and whether it has the financial staying power to pay large claims decades into the future. To evaluate brand trust, we focus on each provider’s customer satisfaction and financial strength according to third-party industry ratings.

• Customer satisfaction: We quantify each provider’s customer satisfaction using J.D. Power’s most recent Individual Life Insurance Study. In addition, we look at the share of complaints filed with state regulators proportional to company size, according to the National Association of Insurance Commissioners (NAIC). Life insurance companies scored more points for higher J.D. Power scores and fewer complaints than expected, for a possible total of 20%.
• Financial strength: It is important for life insurance companies to have the financial stability to pay claims today and into the future. We determine each provider’s financial strength rating based on its AM Best rating. Providers can score up to 20% for financial strength by getting an A++ or A+ score from AM Best.

Coverage (33%)

Life insurance coverage takes many forms. There are affordable, temporary policies; policies that don’t require a medical exam; permanent policies with an investment component to help you save for retirement; and many more. Because each customer has unique coverage needs, it’s advantageous for a life insurer to offer a varied portfolio of plan types. We score providers on whether they offer term life, permanent life and no-exam life insurance, as well as how many options they provide in total.

• Term life: This type of insurance provides coverage for a limited amount of time and has no opportunity for cash value accumulation. It is one of the most common and affordable types of life insurance, and we award 9% to carriers that offer it. Providers earn up to an additional 11% for having four or more term options, terms over 30 years, conversion options, and generous age cut-offs and coverage limits. In total, a company can earn 20% in this subcategory. 
• Permanent life: Permanent life insurance is valuable for those who want long-term coverage or the opportunity to build cash value. Offering permanent life insurance policies is worth 5%.
• No-exam life: Some life insurance policies do not require a medical exam, allowing those with a poor health history or pre-existing conditions to find coverage. Offering no-exam life insurance of any kind is worth 5% in our review standards.
• Number of plans: Life insurance can serve various needs, like covering a large debt, paying end-of-life fees or supplementing retirement savings. The more plans a provider offers, the more likely it is customers will find a policy that fits their unique needs. We award up to 3% to each provider based on how many plans they offer, with a baseline of 10 or more plans as the highest amount.

Availability and Ease of Use (19%)

In this category, we rate life insurance companies on how easy it is for customers to interact with representatives and apply for beneficiaries to file a claim. We consider a provider’s communication channels, application process and claims process.

• Communication channels (10%): While some shoppers may want to handle company communication online, others may prefer to have the complexities of life insurance explained by a real human. We award 4% each for having phone availability and an online customer portal, plus 1 point each for email and live chat.
• Application process (7%): We analyze each provider’s application process, favoring the modern convenience of online interactions. Having the option to purchase or get a quote online results in 7%, whereas only offering quotes without a purchase option is 6%. Companies that only allow quotes or policy purchase by speaking to an agent receive 5%.  
• Claims process (2%): Because the policy’s beneficiary — not the insured — is responsible for filing a claim for a death benefit, it’s important the process is as easy as possible. We award 2% for having multiple claims communication channels or only 1 point for having a single channel or using an underwriting company, which may add additional steps to the process.

Riders (8%)

Life insurance riders offer extra coverage for your policy at an additional fee. The more riders a provider offers, the more choice the consumer has. We award providers up to 8% for offering up to 11 or more riders. A company without riders or a lack of transparency surrounding its offerings online is awarded 5%.

Note: If a provider is not rated by one or more of the third-party organizations and review aggregators, it is not scored for that portion of the category. The score is compared to a lesser maximum point value and then converted to a scale of 100. For example, Provider A is not rated with J.D. Power and earns 80 points across all categories. Its total score is 70 out of 80, which we convert to 87.5%.

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We created this methodology for researching and ranking life insurance providers to make the complexities and opaqueness of the insurance industry accessible to customers like you. It is designed to help you understand the pros and cons of major players in the industry and find the best life insurance provider for your needs.

Whether you want the best whole life insurance or hope to skip a medical exam, we use this scoring system to help you compare your options. We also comprehensively review each provider, discussing its coverage options, customer experience and brand trust metrics.

AM Best disclaimer

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