Life Insurance Ratings
A life insurance company rating is a measure of that particular company’s financial strength within the market place. Each individual company is ranked by several independent agencies and so there is no bias with regards to who gets a high rating and who doesn’t.
The best known agencies that provide life insurance company ratings include:
- Standard & Poor’s
- Fitch
- A.M Best and Company
- Moody’s Investor Service
All four of the above agencies rate insurance companies in a similar way, the only real difference being the scale they use to score financial strength. Generally speaking though, companies with an A++ (also known as AAA), A+ (AA+) and A (AA) life insurance rating are definitely the top of the bunch with regards to financial stability and long term prospects.
A life insurance rate is the amount an insurance company charges for the provision of a policy. This term is also commonly known as a life insurance premium and is normally paid once a month for a set number of years. Each individual whole life insurance rate and each term life insurance rate is calculated according to a mortality chart. This chart takes factors such as age, gender and the long term use of tobacco into consideration when producing an insurance quote.
For example, an elderly person who has smoked tobacco for the majority of their life will be quoted a much higher life insurance rate than a younger individual who is fit, healthy and who doesn’t smoke. Some mortality charts also take into account your profession, the amount you travel each year and your lifestyle when calculating your specific insurance rate, and this is especially true when applying for life insurance term rates.
As you can see, there is a big difference between life insurance ratings and life insurance rates. Now that you know the difference, you can apply for your policy with confidence.