Life Insurance Company Financial Strength Guide for 2026

You pay premiums every month with the expectation that your family will receive a death benefit when the time comes. That promise might not be tested for 20, 30, or even 50 years. So how do you know the company behind your policy will still be financially healthy enough to pay? That is exactly what financial strength ratings are designed to answer.

What Financial Strength Ratings Actually Measure

Think of a financial strength rating like a report card for an insurance company. Independent agencies study an insurer’s finances, including its reserves, investment portfolio, management quality, and claims paying history. Then they assign a letter grade.

These ratings do not measure how good a company’s customer service is or how affordable their premiums are. They focus on one question only. Can this company pay its claims?

The money you send in premiums goes into a large pool. Insurance companies invest that pool carefully to grow it over time while keeping enough liquid reserves to cover death benefit payouts. Financial strength ratings evaluate whether a company manages that balance well.

The Major Rating Agencies You Should Know

Several independent organizations issue financial strength ratings. Each one uses a slightly different grading scale, but they all aim to answer the same question about a company’s reliability.

• A.M. Best focuses exclusively on the insurance industry and is considered the gold standard for insurer ratings. Their scale runs from A++ (Superior) down to F (In Liquidation).
• Standard & Poor’s (S&P) rates companies across many industries, including insurance. Their scale goes from AAA (Extremely Strong) down to D (Default).
• Moody’s also rates across industries and uses a scale from Aaa (Exceptional) down to C (Lowest Rated).
• Fitch Ratings operates similarly to S&P, with a scale from AAA down to D.

You do not need to check every single agency. Looking at two or three gives you a solid picture of where a company stands.

How to Read the Ratings

The letter grades can feel confusing at first, but the general pattern is simple. The closer to the top of the alphabet, the stronger the company.

For A.M. Best, which most insurance professionals rely on, here is a general breakdown.

• A++ and A+ (Superior) means the company has an excellent ability to meet its ongoing obligations.
• A and A− (Excellent) means a very strong ability to pay claims.
• B++ and B+ (Good) means a solid ability, though slightly less certainty than an A rated company.
• B and below suggests increasing levels of financial vulnerability.

When we help clients compare policies, we generally recommend looking for carriers rated A− or higher by A.M. Best. That threshold gives you strong confidence that the insurer can deliver on its promises for decades to come.

Why Financial Strength Matters More Than You Think

A life insurance policy is only as good as the company standing behind it. If an insurer becomes financially unstable, several things could happen.

• Your premiums could increase unexpectedly if the company is acquired or restructured.
• Your policy could be transferred to a different carrier you did not choose.
• In extreme cases, benefit payouts could be delayed or reduced.

State guaranty associations do provide a safety net if an insurer fails, covering claims up to certain limits (often $300,000 for life insurance death benefits). But relying on that safety net is like driving without a seatbelt because ambulances exist. It is far better to choose a strong company from the start.

This matters especially for permanent coverage like whole life or final expense policies. Term life insurance might only last 10 to 30 years, but a whole life policy is meant to stay in force your entire lifetime. A 50 year old buying whole life coverage today needs that company to remain strong for potentially 40 or more years.

Our Approach to Carrier Selection

Insurance By Heroes was founded by a former first responder and military spouse, and every member of our team shares a background in public service. That “service first” mindset shapes how we do everything, including how we recommend carriers.

As an independent agency, we are not tied to any single insurance company. We work with many carriers across the industry, which means we can compare financial strength ratings, pricing, underwriting guidelines, and policy features side by side. We apply this same level of care and diligence to every client we serve, regardless of background.

When we sit down with a client, financial strength is one of the first filters we apply. A low premium means nothing if the company behind the policy cannot pay the claim. We treat your family’s protection the way we would treat our own, and that means recommending only carriers with proven financial stability.

How to Check Ratings Yourself

You do not need to be a financial expert to verify an insurance company’s strength. Here are a few straightforward ways to look it up.

• Visit the A.M. Best website and search for the company by name. Many ratings are available for free.
• Ask your insurance agent directly. A good agent will happily share the ratings of any company they recommend.
• Check the insurance company’s own website. Most financially strong insurers proudly display their ratings.
• Look for consistency across multiple rating agencies. A company rated A+ by A.M. Best and AA by S&P gives you extra confidence.

If a company or agent hesitates to share financial strength information, consider that a red flag.

Other Factors to Consider Alongside Ratings

Financial strength is a starting point, not the finish line. Once you have confirmed a carrier’s stability, you should also evaluate other factors before making your decision.

• Product fit. Does the company offer the type of coverage you need? Term, whole life, universal life, and final expense policies each serve different purposes. A 50 year old looking for $10,000 in burial coverage has very different needs than a 35 year old parent seeking $500,000 in term protection.
• Underwriting flexibility. Some highly rated companies have strict health requirements that might exclude you. Others specialize in covering people with pre existing conditions through simplified issue or guaranteed issue products.
• Premium competitiveness. Among equally strong carriers, pricing can vary significantly. Getting quotes from multiple companies through an independent agent is the best way to find the right balance of strength and affordability.
• Claims reputation. How quickly and fairly does the company process claims? Online reviews and state insurance department complaint records can help you gauge this.

The Buying Process and Where Strength Fits In

If you are new to life insurance, here is how the process typically works and where financial strength fits into each step.

• Determine your coverage needs. Figure out how much protection your family requires and what type of policy makes the most sense.
• Get quotes from multiple carriers. An independent agent can pull quotes from many different companies, all pre screened for financial stability.
• Apply for coverage. Depending on the policy, you may answer health questions, complete a phone interview, or take a brief medical exam.
• Underwriting review. The insurance company evaluates your application and assigns a rate class. This process usually takes two to six weeks for fully underwritten policies, though some simplified issue products offer decisions in days.
• Policy delivery. Once approved, you review your policy, pay your first premium, and coverage begins.

Throughout this process, working with an independent agent who has already vetted carriers for financial strength saves you significant time and worry.

Take the Next Step Today

Your family deserves protection backed by a company that will be there when it matters most. Understanding financial strength ratings puts you in a stronger position to make a confident choice.

At Insurance By Heroes, we have already done the homework on carrier stability. Our team compares options from many top rated companies so you can focus on what matters most, protecting the people you love.

Request a free quote today and let us match you with a financially strong carrier that fits your needs and budget. Every family’s situation is different, and because we are independent, we can shop the market on your behalf to find the right fit.