What Is an AM Best Rating for Life Insurance?

When you buy a 20- or 30-year term life insurance policy, you are making an agreement that depends on the insurance company still being financially sound years or decades from now. An AM Best financial strength rating gives you a standardized, third-party way to evaluate that long-term reliability before you commit to a carrier.

AM Best has been rating insurance companies since 1906. It is the most widely referenced source for insurance company financial health in the United States, and state regulators, advisors, and comparison tools routinely reference AM Best ratings as part of carrier evaluation.

What AM Best Ratings Mean

AM Best assigns Financial Strength Ratings (FSRs) that express its assessment of an insurance company's ability to meet its ongoing insurance obligations.

The rating scale:

For consumers buying term life insurance, the practical range to look for is A- and above. Carriers in this range have been assessed as having excellent or superior ability to meet their long-term obligations.

Why Financial Strength Matters for Term Life Insurance

A term life insurance policy is a long-term financial commitment. A 30-year policy purchased today will be active until the insured person is older — and the carrier must continue paying claims for the full duration.

Short-term products (auto insurance, homeowners insurance) are renewed annually. If a carrier becomes financially unstable, you can switch at renewal without significant disruption.

Life insurance does not work that way. Switching carriers after you are older and have experienced health changes can be significantly more expensive or, in some cases, not possible at the same coverage amount and rate class. The carrier you choose today needs to remain financially viable for the full term.

An AM Best rating is not a guarantee. No rating agency can guarantee a company's future solvency. But it provides a standardized, third-party assessment based on the carrier's current financial profile, business model, and reserves — giving you a meaningful starting point before making a 20- or 30-year commitment.

How AM Best Ratings Are Determined

AM Best evaluates insurance companies based on a combination of factors:

Balance sheet strength — the quality and adequacy of the carrier's reserves relative to its obligations

Operating performance — earnings consistency, profitability, and the ability to maintain financial strength under varying market conditions

Business profile — market position, diversification, and risk management practices

Enterprise risk management — the carrier's systems for identifying and managing financial and operational risk

AM Best conducts ongoing monitoring and may revise ratings as a carrier's financial position changes. Always check the current rating at the time you are comparing policies — a rating from years ago may not reflect the carrier's current profile.

Where to Find AM Best Ratings

AM Best ratings are publicly accessible:

• ambest.com allows free lookups of insurer ratings by carrier name
• Many state insurance department websites reference carrier financial strength ratings
• Insurance comparison advisors typically disclose the AM Best rating of carriers they represent

When comparing carriers for a term life policy, checking the AM Best rating takes less than a minute and provides meaningful information about the carrier's long-term financial profile.

AM Best vs. Other Rating Agencies

AM Best is the most specialized rating agency for insurance companies. Other agencies also rate certain large insurers:

For insurance-specific evaluation, AM Best is typically the primary reference. The other agencies may rate large insurance holding companies or conglomerates but do not typically rate every individual insurance carrier at the operating company level.

Financial Strength and State Guaranty Protections

Even with a strong AM Best rating, it is worth knowing that if an insurance company fails, your state's Life and Health Guaranty Association provides a layer of protection for policyholders — typically up to $300,000 to $500,000 in death benefits, depending on the state.

This protection exists specifically for licensed, admitted carriers. It is one more reason why choosing a carrier that is licensed in your state and maintains a strong AM Best rating is the most complete approach to carrier selection.

For more on how the regulatory and protection framework works, see our guide to how life insurance companies are regulated.

How FindInsureWise Considers Financial Strength

At FindInsureWise, we compare term life insurance from major, financially established carriers. Financial strength is a baseline criterion — we prioritize carriers with AM Best ratings of A- or better for the solutions we recommend to families.

Beyond the AM Best rating, we also consider:

• Available riders — especially comprehensive living benefit coverage for critical, chronic, and terminal illness
• Underwriting flexibility — including exam-free or lab-free options for eligible applicants
• Claims-paying track record — carrier reputation for processing claims fairly and efficiently
• Premium competitiveness — cost relative to coverage and rider quality

A high AM Best rating combined with comprehensive living benefit riders and competitive premiums represents the combination most valuable for working families buying 20- or 30-year term coverage.

Frequently Asked Questions

What is a good AM Best rating for life insurance?

A- (Excellent) or above is generally considered a strong starting point for life insurance. Carriers rated A++, A+, A, or A- have been assessed as having excellent to superior financial strength. Ratings below A- indicate greater uncertainty about long-term financial stability.

Does a high AM Best rating mean my claims will be paid?

An AM Best rating reflects the agency's assessment of a carrier's financial strength — not a guarantee that any specific claim will be paid. However, carriers with higher ratings have been evaluated as having stronger financial resources to back their policy obligations over time.

Do all life insurance companies have AM Best ratings?

Not all. Smaller or newer carriers may not be rated by AM Best. Major national carriers that serve most of the U.S. term life market typically maintain AM Best ratings. If a carrier you are considering is not rated, that is worth researching before committing.

Can an AM Best rating change?

Yes. AM Best monitors carriers on an ongoing basis and may revise ratings — up or down — as a company's financial profile changes. Check the current rating at the time you are comparing policies, not a rating from years ago.

Is AM Best the only rating I should look at?

AM Best is the most important for insurance-specific evaluation. You can also check the NAIC complaint index, which measures customer complaint volume relative to market share — a useful complement to financial strength ratings for assessing a carrier's service and claims track record.

For more questions about choosing a life insurance carrier, visit our FAQ page.

Bottom Line

AM Best financial strength ratings give you a standardized way to evaluate whether a life insurance carrier has the resources to meet its long-term obligations — including paying a claim 20 or 30 years from now.

For term life insurance, look for carriers with A- or better. That is the starting point for financial stability, not the only factor, but a meaningful one given the long-term nature of life insurance commitments.

A carrier with a strong AM Best rating, comprehensive living benefit riders, and competitive premiums represents the combination worth prioritizing when comparing term life insurance options for your family.