What is A.M. Best Ratings and Why Should You Care?

by Jeff Rose on August 17, 2016 · 0 comments

AM-Best-best-ratings Insurance Company ScaleEveryone asks “What is A.M. Best ratings?”, a question that only A.M. Best knows the answer to.

A.M. Best provides thorough ratings for clients and consumers alike to know which insurance companies are the best.

Depending on the rating, you’ll be able to determine which insurance company is best for you.

A.M. Best provides a way for each company to see just where they rank with consumers and helps them know just what they have to do to correct their mistakes.

Finding out what is A.M. Best ratings for insurance companies is the first step towards getting a secure policy for you and your family.

How Does A.M. Best Insurance Ratings Scale Work?

For a professional company, using a basic method of grading insurance companies has proven to be an effective and helpful tactic. Here’s how the A.M. Best Insurance ratings scale works:

  • A++, A+, A, and A- all identify the top insurance companies. Receiving an A for the company shows how financially strong they are, how capable a company is of guaranteeing your policy and keeping it secure.
  • B++, B+, B, and B- ratings rank companies as good for those who can’t afford what higher ranked companies offer their services for. With a B ranking you can depend on the company to provide a secure policy for affordable rates and rely on them to help your family get the help they need once you’re gone. For client’s knowing that your family has something to fall back on during difficult times is a welcome relief.
  • C++ and C+ are the only two scores for the C category, indicating an average insurance company. No bells or whistles attached, just a straightforward policy with straightforward premiums, a great choice for the first time you buy life insurance.
  • A ‘D’ rank is only reserved for companies that fall below A.M. Best’s minimum standards, an E rank means the company is under state supervision, and an F rank is only for companies going into liquidation. Any rating below a C shows how unreliable the company with in the industry.

It’s obviously important to understand the ratings scale of the insurance company before buying your life insurance.

A.B. Best Ratings For Insurance Companies

Now you have an understanding of what is A.M. Best ratings and how they work. A visit to the A.M. Best website is the perfect choice when looking for an insurance company. A company’s ranking shows just how dependable they are and if you’re getting all the benefits you should be for what you’ll pay in premiums. “What is A.M. Best ratings” is a question best asked when beginning to search for a policy, a question that can make your search easier and more simpler than you originally thought.

Why it Matter?

Sure, it’s nice to find a company with an A+ rating, but does it matter? How does it impact you or your life insurance policy?

These ratings are a good indicator on how much you can trust your insurance company. If a company doesn’t have good financial strength, there is always a chance that the company could go bankrupt and your policy wouldn’t be paid out, which is a terrible turn of events.

There is no way to predict the future or what could happen to a company, but rating systems give us more direction that completely guessing. The A.M. Best ratings give you an idea of the past and stability of a company without you having to do the research yourself. Unless you’re really connected with the insurance industry, you probably don’t know which insurance companies have been around the longest or which ones have experienced financial problems in the past.

Because life insurance is such an important purchase, it’s vital that the company that you choose is going to be around for hundreds of years to come. Life insurance gives you and your loved ones the peace of mind and financial coverage that they need in case something tragic were to happen.

About A.M. Best

So, what makes this one rating company special? They aren’t the only rating company out there, but they are the most notable and most widely used. A.M. Best is one of the oldest and most established rating companies in the world. They were established in 1899 with the goal of reporting financial stability of insurance companies. They currently have ratings for companies that are in more than 80 different countries across the world.

To quote A.M. Best, their rating system “. . . is an independent opinion of an insurer’s financial strength and ability to meet its ongoing insurance policy and contractual obligations.  It is based on a comprehensive quantitative and qualitative evaluation of a company’s balance sheet, strength, operating performance and business profile.” Aside from giving the companies a letter grade on their scale, the rating company also includes an outlook projection. They give them an outlook of either positive, negative, or stable. While these are just guesses, with A.M. Best they have research and previous information to base their outlooks on.

When you start looking for a life insurance policy (or any other kind of insurance policy), it’s important that you look at the company’s A.M. Best rating. While their rating shouldn’t be the determining factor in your decision, it’s important to know that you’re buying a policy from a reputable company.

A faulty insurance company shouldn’t keep you from getting the coverage that you and your loved ones deserve. Don’t be one of the countless stories of a family that suffers the loss of a family member, and then learns that they have thousands of dollars of debt and no way to pay for it.

 

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