Evaluating life insurance companies is a vital step in selecting a life insurance policy. Our latest Tenzing Talks video “Understanding Life Insurance Carrier Ratings” highlights how independent rating agencies provide essential insights into a carrier’s financial strength and its ability to fulfill policy obligations over time.

Four major agencies—A.M. Best, Moody’s, Fitch, and S&P Global—use different criteria to assess risk, capital adequacy, and claims-paying ability in evaluating life insurance companies. A high rating from all four can indicate that a carrier is well-positioned to withstand financial pressures, making it a suitable partner in long-term planning.

Beyond letter grades, financial professionals also examine key indicators like surplus capital and risk-based capital (RBC) ratios. These metrics show how much cushion a company maintains beyond what is required to meet its current liabilities. Carriers with strong reserve levels and conservative investment portfolios are often more resilient in uncertain markets.

The video also explains the role of reinsurance in evaluating life insurance companies—where carriers transfer a portion of their risk to a highly rated reinsurer. This practice enhances a carrier’s ability to meet obligations under a range of scenarios and adds another layer of confidence for policyholders and advisors alike.

In the rare case that a carrier fails, state guaranty associations may help policyholders maintain some or all of their policy’s death benefit. These regulatory bodies may pay out a portion of the promised benefit or help restructure the insurer. Although carrier defaults are uncommon, knowing that safeguarding mechanisms are in place supports informed decision-making.

At Tenzing Insurance Strategies, evaluating life insurance companies is part of our broader due care process. We believe a well-informed selection process leads to more suitable policy placements and increased confidence in long-term outcomes.

Watch the video to learn more about the focus and methodology of top rating agencies, as well as other factors to consider when evaluating life insurance companies.