It may not seem important now, but it will matter when you – or your family – needs it most. This article will help you understand:

What are six traits most top life insurance companies share?

All large, nationally-known insurers may seem alike, but they aren’t. Some insurance companies are more financially sound than others. Some are easier to work with. Some are more likely to provide the specific features you need. But only a handful of companies can offer you most of those advantages. How can you find an insurance company that does? There are objective metrics and factors you can use:

  • High Financial Strength Ratings
    Independent companies rate the financial strength of insurance companies to ensure their ability to meet obligations.1
  • High customer satisfaction scores
    here are customer surveys and reviews that can tell you how satisfied others are with a company’s services.
  • Low customer complaints
    State regulators and private organizations collect and publish data on customer complaints.
  • Product selection and customization
    Some companies focus on term insurance, while others offer both term and permanent with a variety of optional riders that can tailor a policy to your needs.
  • Policyholder dividends
    Some insurance companies pay a dividend on the cash value of their permanent policies, and others don’t.2
  • Direct underwriting
    Some companies issue their own policies, while others act as a middleman.

1. Why high financial strength ratings matter.

One of the main emotional benefits of having life insurance is that it helps provide a level of certainty in a world that is anything but certain. The more assurance you have that the company will be there when your family needs a payout years down the road, the more confident you’re likely to feel.

Financial strength ratings are an objective way to evaluate that. Look for a company with a rating of at least “Superior” (A+) from A.M. Best , a “Very Strong” (AA-) from Standard & Poor’s, or an “Excellent” (Aa1) from Moody’s. As an example, here are Guardian’s FSRs 3:

Agency       Guardian Financial Strength   Outlook
A.M.Best A++ (Superior - highest of 15 ratings)
Upgraded in November 2008 from A+  
Fitch AA++ (Very Strong - 2nd highest of 21 ratings) 
Upgraded in October 2007 from AA 
Moody's  Aa2 (Excellent - 3rd highest of 21 ratings)
Since 2003
S&P AA+ (Very Strong - 2nd highest of 22 ratings)
Upgraded in July 2008 from AA 

*Guardian's ratings profile has been strong across all rating agencies over the last 10+ years

2. Why customer satisfaction scores matter

Customer satisfaction is important for every industry – especially when it comes to life insurance. It’s a complex product, and you want to buy from a company that works hard to ensure that you understand what you’re getting.

High customer satisfaction scores can be a good indicator of that. There are sources for online reviews, but some are more reliable than others. Many in the industry consider J.D. Power & Associates to be the best source of insurance satisfaction data because they conduct an annual customer satisfaction survey of more than 5,000 U.S. life insurance policyholders.

3. Why low customer complaints matter

When do people get mad enough about an insurance company to lodge a formal complaint? More often than not, it’s after a problem with a claim. Of course, you won’t be the one filing a claim for your life insurance policy – but your family might.

For their sake, you should avoid companies with a reputation for generating a large volume of complaints. The Better Business Bureau (BBB) collects information about complaints which can be accessed online. The National Association of Insurance Commissioners (NAIC) also collects data about complaints with state regulators.

4. Why product selection and customization matter

Even if you’re getting a term life policy, you should look for a company that offers both term and permanent policies. Why? Because your needs could change in a few years and you might decide you need a permanent life policy.

If you get a term policy with a conversion rider4, you’ll have an opportunity to convert to a permanent policy. If you’re looking for a more personalized whole life or universal life policy, you’ll want to look at companies that offer a variety of features and riders (e.g., cost-of-living adjustment rider, accelerated death benefit rider) so that you and your agent can tailor a policy to all your needs. For example, Guardian provides convertible term and permanent polices, and even issues policies to help cover people with certain kinds of pre-existing conditions, such as certain cancers, heart disease, even HIV.

5. Why policyholder dividends matter

Some life insurance companies are publicly-traded companies, and others are mutual companies. What’s the difference?

A public company is owned by the people and organizations that buy shares in the company. A mutual insurance company is owned “mutually” by its policyholders, who can receive dividend payments. For example, when you purchase a whole life policy from Guardian Life Insurance, you may get paid a dividend on the cash value portion of your policy. This can help further build the cash value portion of your policy.5

6. Why direct underwriting matters

Some companies act as middlemen who sell policies from another insurer, and this can add costs to your premiums. Just as concerning, it can add a layer of bureaucracy if you decide to change your policy – or down the road when your family needs a to collect a death benefit. It can be less hassle to consider a company that underwrites its own polices, like Guardian.

Once you’ve narrowed your search down to a few top insurers, what’s next?

After you’ve identified a short list of insurers with traits that are important to you, it’s time to get a policy that fits your needs.

Do that by speaking with an experienced financial representative or broker who will listen to your needs and dig deep to learn about your life situation. Once they understand that, they can evaluate how much coverage you should consider then guide you through the various plans, riders and provisions that may best fit your needs.

How do you find such a professional? Ask a friend or colleague for a recommendation. Or, we can put you in touch with a Guardian financial representative.

If you are an employee, taking advantage of your benefits at work can be an affordable way to get the financial protection you want for yourself and your family. Contact your HR department to review your benefit details and determine how much life insurance is available to you. Your employer may provide life insurance as a benefit, or you may opt to pay for additional life insurance through payroll deductions.

Learn more about how to buy life insurance.

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Frequently asked questions about life insurance companies

How are life insurance companies rated?

Life insurance companies are highly regulated to ensure their solvency so that they can pay their obligations to policyholders. In addition, independent ratings agencies such as A.M. Best, Standard & Poor’s, and Moody’s evaluate their financial positions and issue financial strength ratings

Are there meaningful differences among the big national life insurance companies?

The largest insurers are financially sound and can provide a range of permanent and term life insurance products to fit most needs. Even so, some are more financially sound than others, some have a reputation for providing better customer service, and some tend to have fewer customer complaints, which can indicate that they are easier to work with and may provide a higher quality customer experience.

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Financial information concerning Guardian as of December 31, 2019, on a statutory basis: Admitted Assets = $62.2 Billion; Liabilities = $54.6 Billion (including $46.5 Billion of Reserves); and Surplus = $7.6 Billion.

2 Dividends are not guaranteed. They are declared annually by Guardian’s Board of Directors.

3 Ratings are as of 12/2019 and are subject to change.

4 Riders may incur an additional cost or premium. Riders may not be available in all states.

5 Some whole life polices do not have cash values in the first two years of the policy and don’t pay a dividend until the policy’s third year. Talk to your financial representative and refer to your individual whole life policy illustration for more information