Financial ratings of life insurance companies analyze the risks that could affect their long-term survival. Before you make a decision about your life insurance, you should be aware of the financial ratings of the companies you are considering. If your beneficiary needs to file a claim many years from now, will your life insurance company be able to pay the claim?

There are several large rating services that analyze life insurance companies' financial strength. The oldest of these is A.M. Best, established in 1899. Other rating services include Standard and Poor's and Fitch Ratings.

The financial rating services all use different letter grades for their ratings. A general rule of thumb used by some advisors is to select a company within the top four ratings. Going any further down the list exposes yourself to unnecessary risk. That's because the top-rated companies happen to have the best and most competitive products anyways.

For a competitive analysis of the top rated companies, see our list of Top 10 Premium Life Insurance Companies. We extend this analysis to the top four ratings classifications in our list of Top 15 Life Insurance Companies.

A.M. Best

A Best Financial Ratings Strength is an independent opinion, based on a comprehensive quantitative and qualitative evaluation, of a company's balance sheet strength, operating performance and business profile. The rating process uses specific methodologies designed to address the life and health insurance industry. The top four ratings are A++ (Superior), A+ (Superior), A (Excellent), and A- (Excellent).

Standard and Poor's

A Standard and Poor's Insurer Financial Ratings Strength is a current opinion of the financial security characteristics of an insurance organization with respect to its ability to pay under its insurance policies and contracts in accordance with their terms. This opinion does not take into account deductibles, surrender or cancellation penalties, timeliness of payment, nor the likelihood of the use of a defense such as fraud to deny claims. The top four ratings are AAA (Extremely Strong), AA (Very Strong), A (Strong), and BBB (Good).

Fitch Ratings

A Fitch Ratings Insurer Financial Ratings Strength (IFS Rating) provides an opinion as to the financial strength of an insurance organization, and its financial capacity to meet obligations to policyholders and contractholders on a timely basis. The IFS Rating does not address the willingness of an insurance organization's management to honor its company's obligations, nor does the IFS Rating address the quality of an insurer's claims handling services. The top four ratings are AAA (Exceptionally Strong), AA+ (Very Strong), AA (Very Strong), and AA- (Very Strong).