(Yahoo!Finance) - Ranking insurance companies is an inherently difficult process. On one hand, all insurance companies pay out significant amounts of money in claims every year, protecting clients from major losses in their lives.
On the other hand, insurance companies are for-profit businesses. This incentivizes them to deny claims when allowable. Thus, every insurance company will have both supporters and detractors, generally in the form of those who received payouts or had their claims denied.
Yet, there are some objective standards by which life insurance companies can be evaluated, including A.M. Best Ratings, customer reviews, level of complaints to the Better Business Bureau and claims-paying history. Using these as guideposts, here's a list of some of the best and worst companies for life insurance.
Best: New York Life
New York Life is the largest mutual life insurance company in the United States, and it ranked #67 on the Fortune 500 list for 2021. With a history running over 175 years, the company is an institution in the life insurance industry, and it carries the very best A++ rating for financial strength from A.M. Best.
U.S. News and World Report ranks the company #1 overall in terms of whole life insurance. The company is a premium life insurance provider though, meaning you should generally expect to pay more for your policies.
Best: Northwestern Mutual
Northwestern Mutual also carries the top-tier financial strength rating of A++ from A.M. Best, in addition to other ratings agencies like Moody's and Fitch. The company reports that 97% of its customers kept their policies with the firm in 2021, which is an admirable vote of confidence from its user base.
The company ranks 90th in the Fortune 500, demonstrating its financial success and status among America's most premier companies.
Best: State Farm
In the most recent J.D. Power ranking of life insurance companies, issued in Oct. 2021, State Farm ranked #1 among individual life insurance providers, with a score of 822. This put them just ahead of competitors Nationwide and Northwestern Mutual, with scores of 813 and 807, respectively.
The J.D. Power study is based on responses from 4,625 individual life insurance customers and measures performance and customer satisfaction in five key areas: price, product offerings, statements, interaction and communication.
Worst: Transamerica
The J.D. Power life insurance study identifies not only the best companies in the U.S., but also the worst. Of the 21 companies surveyed in the 2021 edition, Transamerica ranked #19, with a score of 747. This falls well below even the study's average score of 776.
Consumers ding the company repeatedly on Better Business Bureau reviews, citing poor communication and difficulty in canceling. The average review score there is 1.07 stars out of 5. Even though the company has been in business for 101 years, it is not accredited by the Better Business Bureau, which gives it a B rating.
Worst: AIG
AIG is one of the biggest and most well-known names in the insurance industry, but it's also known for its ignominious $150 billion bailout in the financial crisis of 2008. The company isn't accredited by the Better Business Bureau and currently sports an F ranking from the BBB.
Customers on the BBB website give it a ranking of 1.02 stars out of 5, although there are only 51 reviews available. J.D. Power ranks the company #20 out of 21, with only Brighthouse Financial faring worse.
Worst: Brighthouse Financial
Brighthouse Financial spun off from MetLife on Aug. 4, 2017, and it now trades as its own independent company under the stock symbol BHF. As its own company, Brighthouse Financial doesn't fare very well in the J.D. Power customer survey of life insurance companies, finishing dead last with a score of 714.
Brighthouse is also not BBB accredited, although it does carry an A+ financial strength rating that doesn't incorporate the 185 customer complaints on the BBB website.
By John Csiszar
