Ratings Methodology for Life Insurance

At NerdWallet, our mission is to provide consumers with clarity for all of life’s financial decisions. We don’t take this responsibility lightly, which is why NerdWallet enforces strict editorial guidelines on each piece of published content. Whether you’re reading an educational article or a product review, you can be sure it’s adhering to NerdWallet’s core principles of objectivity, accurate sourcing, and rigorous fact-checking. Don’t just take our word for it, though — learn about how we make money and how we rate products.

How NerdWallet calculates star ratings for life insurance companies

Our star ratings summarize how each life insurer performs in four key areas that matter for long‑term policyholders: financial strength, customer complaint level, consumer experience features, and website transparency. Each of these categories is scored based on data verified by our team of writers, editors and fact-checkers, and then combined into a single score on a 0 to 5 scale.

We combine the four category scores using the weights listed below and translate the result into a 5‑star scale (to the nearest tenth).

Category	Weight
Financial strength	35%
Customer complaints	35%
Consumer experience	20%
Transparency	10%

Data collection and review process

We collect data points for each insurer from its public-facing websites and from company representatives, public filings, state regulator data and third-party analyses. These data points are then compared against one another and against NerdWallet's standards for good insurance companies to determine a star rating.

Data is collected on a regular basis and reviewed by our editorial team for consistency and accuracy. Final star ratings are presented on a scale of one to five stars, where a one-star score represents "poor" and a five-star score represents "excellent."

The reviews team

The writers, editors, and data journalists behind our life insurance reviews are insurance specialists who have had their work featured by or appear in The Associated Press, The Washington Post, The New York Times, the Chicago-Sun Times, U.S. News & World Report and the Society for Advancing Business Editing and Writing. Each writer and editor follows NerdWallet’s strict guidelines for editorial integrity.

In addition to life insurance, the team covers homeowners insurance, renters insurance and auto insurance.

Category details

Financial strength rating (35%)

Life insurance is a decades‑long promise. One way to gauge a life insurer’s ability to make good on that promise is by looking into its financial strength and credit ratings. Financial strength ratings from AM Best, the leading credit rating agency for the insurance industry, are an important measurement of a life insurance company’s financial stability — or, more specifically, its ability to pay out death benefits to beneficiaries 20 or 30 years down the road.

For our life insurance ratings, we looked at the AM Best financial strength rating of the insurer’s primary underwriting company, which is the entity responsible for approving and paying out claims. If a company has a higher AM Best rating, this means it's better positioned to meet its financial obligations even after an economic downturn or natural disaster. Conversely, companies with a lower AM Best rating may not offer the same level of confidence to policyholders, and therefore are assigned a lower financial strength rating. If a company doesn’t have a financial strength rating with AM Best, then it isn’t eligible for NerdWallet’s overall star rating. For life insurance, our financial strength rating accounts for 35% of our overall rating.

AM Best Rating	Points
A++	5.00
A+	4.50
A	4.25
A-	4.00
B++	3.50
B+	3.00
B	2.50
B-	2.00
C++	1.50
C+	1.00
C	0.50
C-	0.00

NAIC complaints rating (35%)

NerdWallet evaluates consumer complaints using the National Association of Insurance Commissioners (NAIC) Complaint Index for individual life insurance. The NAIC collects complaints submitted by customers to state insurance departments. It then compiles and aggregates this information by company and line of business. You can calculate a company’s complaint index rating yourself by dividing its share of complaints by its share of premiums for a particular line of business.

The index is normalized so the expected complaint index value is always equal to 1.00. Scores below 1.00 indicate fewer-than-expected complaints, while scores above 1.00 indicate more-than-expected complaints from customers. Persistent, above‑expected complaint levels can potentially point to a pattern of customer service issues at key consumer touchpoints, such as claims handling, making this an important consumer experience metric.

To reduce year-to-year volatility, we calculate the three-year average of each life insurer’s NAIC Complaint Index and convert it to a score for NerdWallet’s ratings. We obtain the raw NAIC data annually, aggregate results at the company level, and fact-check these results vigorously before calculating our own NerdWallet complaint ratings. For life insurance, our complaints rating accounts for 35% of the overall star rating.

NAIC Complaints Ratio	Points
0.00 to 0.27	5.0
0.28 to 0.45	4.5
0.46 to 0.80	4.0
0.81 to 1.15	3.5
1.16 to 1.50	3.0
1.51 to 1.85	2.5
1.86 to 2.20	2.0
2.21 to 2.55	1.5
2.56 to 2.90	1.0
2.91 or higher	0.5

Consumer experience rating (20%)

Over the past two decades, the financial services industry has transformed how consumers interact with its products. As a result, consumers have come to expect a seamless digital experience across all of their financial products — be it their individual retirement account or their life insurance policy.

Digital self-service options for getting quotes, filing a claim, policy changes, or customer service interactions are no longer just nice-to-haves, but the expectation of policyholders. By replacing paper forms and processes with their digital equivalent, insurers can reduce unnecessary consumer friction, speed up service, and make it easier for families to act when timing matters.

To rate this category, we verify the following capabilities that make buying, managing, and using your life insurance policy easier.

Subcategory	What we check for	Subcategory weight
Online quotes	Whether a shopper can obtain a term quote online without having to contact an agent first.	50%
Online claims	Whether a beneficiary can start a claim online via web, email, or form.	12.5%
Change beneficiary online	Whether a policyholder can request or complete a beneficiary change online.	12.5%
Communication methods	Number of distinct support channels for life insurance, including phone, email or web form, or chatbot.	25%

Transparency rating (10%)

Clear, public information related to available policy types, term lengths, coverage limits, eligibility and riders — as well as how much it all costs — can help shoppers better understand what they’re applying for before sharing personal data in the application process. We award more credit when key details are easy to find and specific.

To rate this category, we measured two important signals that help shoppers understand what they’re buying before they apply for life insurance.

Subcategory	What we check for	Subcategory weight
Policy details	Clear public information about policy types, term lengths, coverage minimums/maximums, riders/eligibility, and claims steps.	85%
Pricing information	Indicative rates or a quoting flow that surfaces estimated pricing.	15%