How to check a life insurance company rating?

Five major independent insurance ratings companies analyze almost all the insurance companies:

• A.M. Best Company
• Duff & Phelps Credit Rating Co.
• Moody’s Investors Service
• Standard & Poor’s Insurance Rating Services
• Weiss Research

Each of these ratings services has its strong and weak points, and the ratings are not all consistent. But they all do basically the same thing:

• Analyze the financial strength of insurance companies
• Evaluate the stability of insurance companies
• Make judgments about the reliability of insurance companies

Most professionals feel strongly that you should not purchase a life insurance policy from a company until you check out its rating.

When selecting an insurance company, get the ratings on several from at least two ratings companies. The ratings systems vary: An A from Weiss, for example, is the second-best rating a company can receive. Only an A+ is better. But an A from Standard & Poor’s is much farther down the list. It’s sixth, behind AAA, AA+, AA, AA-, and A+. Quite a difference.

Even if you can equate the scales, the ratings of the ratings companies differ from one another. For example, Best may offer an insurance company its top rating (AAA), while Moody’s gives the company its fourth-highest rating (Aa3). So how can you judge?

You can check Consumer Reports magazine. The magazine evaluates the different life insurance companies and uses a rating system that averages all the other systems to make its determinations. You can get a copy of Consumer Reports at your local library or check its Web site at www.consumerreports.com.