Life insurance is useless if an insurance company can’t pay out the death benefit when you die. But how do you know if an insurer is financially stable?
Weiss Ratings is a rating and research agency that provides information about an insurance company’s financial background. We recommend using Weiss Ratings, along with other reliable reviews and research, to make a more informed choice when buying life insurance.
Life insurance terms you should know
Beneficiaries: The people you name on your life insurance policy to receive the lump sum of money — also known as the death benefit — when you die.
Cash value: The portion of a permanent life insurance policy’s monetary value that grows tax-deferred over the life of the policy.
Death benefit: The amount of money the life insurance company will pay your beneficiaries when you die.
Face amount: The dollar amount, or death benefit, your beneficiaries receive if you die while your life insurance policy is active.
Insured: The person who is covered by the insurance policy.
Policy: The legal document that includes the terms and conditions of your life insurance contract.
Policyholder: The person who owns an insurance policy. Usually, this is the same person as the insured.
Permanent life insurance: A type of life insurance that lasts for the rest of your life and usually includes a cash value account.
Premium: The amount you pay your insurance company to keep your coverage active. Premiums are typically paid monthly or annually.
Riders: Add-ons to a life insurance policy that provide more robust coverage, sometimes for an extra cost.
Term life insurance: A life insurance policy that lasts for a set number of years before it expires. If you die before the term is up, your beneficiaries receive a death benefit.
Underwriting: The process where an insurance company evaluates the risk of insuring you and determines your final rate.
What is Weiss Ratings?
Weiss Ratings is a financial rating agency that assesses the financial viability of insurance companies and other institutions. Its analysis helps buyers purchase policies from trustworthy insurance companies in good financial health.
Weiss Ratings can be used alongside ratings awarded by Fitch Ratings, Standard & Poor’s (S&P), and Moody’s, when deciding among insurance companies.
Weiss safety ratings
Weiss provides two different types of ratings: investment ratings, which don’t apply to insurance companies, and safety ratings, which do.
Safety ratings provide information similar to a credit report, showing financial dependability and payment history. The higher the grade an insurance company is awarded, the more likely it is to remain in good financial standing during an economic downturn.
Rating criteria
Insurance companies are awarded a final rating after a thorough review of their financial health. Each insurer is evaluated based on publicly available data, financial statements provided to state insurance commissioners, and supplemental information provided to Weiss Ratings.
All of the data is consolidated into separate indexes for a final rating. These indexes analyze the following:
Capital index: Determines whether an insurer is sensitive to market forces and can withstand negative economic conditions.
Investment safety index: Evaluates the quality and liquidity of an insurer’s investment portfolio.
Profitability index: Measures an insurer’s operating efficiency and profitability.
Liquidity index: Assesses an insurer’s ability to meet its financial obligations to policyholders.
Stability index: Analyzes whether or not an insurer can consistently retain its financial well-being.
If an insurance company receives a lower or higher rating on any of the above indexes, it will impact its overall score.
Weiss scoring guidelines
Weiss assigns an insurance company’s safety ratings on a grading scale, rating from A to F — A being the highest possible rating and F being the lowest. Occasionally, Weiss will assign an insurance company a U (unrated) grade if they have not been evaluated by Weiss. Ratings can also receive a plus sign or minus sign to indicate they are in an upper or lower tier.
Weiss grade | Grade meaning |
|---|---|
A | Excellent. The highest possible grade — the company is in outstanding financial health regardless of the economic climate. |
B | Good. Satisfactory financial health and likely to remain so in the long term. |
C | Fair. Satisfactory financial health, but may not be able to withstand an unfavorable economic climate. |
D | Weak. The insurer’s financial health may hinder its ability to fulfill policy obligations. |
E | Very weak. Unreliable, even in a positive economic climate. |
F | Failed. The insurer is either dissolved, liquidated, undergoing rehabilitation, or under the supervision of a regulatory authority. |
U | Unrated. No grade because the insurer’s profits were too low or data wasn’t readily available. |
How Policygenius uses Weiss Ratings
Policygenius uses ratings from third-party agencies to evaluate and determine the best life insurance companies out there.
Weiss is just one of many rating agencies we consult to determine an insurer’s financial health, consumer confidence, and customer satisfaction. Learn more about our ratings methodology or reach out to a licensed Policygenius broker for free to learn more.
