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Getting to know: Standard & Poor’s

Standard & Poor’s is the oldest insurance rating agency, with 150 years of company history and a presence in 28 countries around the world. Looking over an insurance rating agency’s assessment can help you separate the higher rated insurance providers from less strong choices.

Get to know Standard & Poor's

When shopping for life insurance, you’ll frequently see companies or agencies refer to the rating of the insurer issuing the policy. An insurer’s rating is just as important a factor as the amount of coverage you buy, the term length of a policy, and how much you’re paying. Suffice to say, you should pay close attention to what the rating is.

Here, we explain how to use Standard & Poor ratings to help you choose the right policy for you as well as what other ratings you should consider.

Why life insurance company ratings matter

Once you start crossing off adulthood milestones like marriage, kids, and homeownership, insurance should be a priority. Fortunately, especially in the age of the Internet, you’ve got plenty of sources to help you learn which insurance providers are top of their class.

An insurance rating agency like Standard & Poor’s can offer unbiased insight into how an insurer compares to the industry, and is considered an indicator of a company’s financial strength and ability to meet its financial obligations. For example, one report from Standard & Poor’s said that, as of May 31, 2018, the average credit quality for life insurers was ‘A+.’ If one of the insurance providers on your shortlist has a higher rating than the others, that might be a sign to promote them to the top of your list.

The reason an insurer’s financial outlook is important is that you are purchasing something you may not need for a long time to come. You should choose a policy offered by a company that is financially viable today and that has a history of financial strength. The opinions of the ratings agencies can help you evaluate how likely it may be that a company will be able to pay out on your policy should your beneficiaries need it.

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The story behind Standard & Poor’s

At the ripe old age of 150 and with a presence in 28 countries around the world, Standard & Poor’s is one of the most experienced credit rating agencies. They currently have more than 1 million ratings assigned to different governments, corporations, finance entities, and others. Not bad for a company that got its start working with the railroad.

H.V and H.W. Poor Co. was founded by a father-son pair in 1860, publishing guidebooks on the finances of US railroad companies. Standard Statistics Bureau was established in 1906, and launched a small stock market index in 1923, tracking 90 stocks by 1926. The two companies merged in 1941 and expanded to become one of the most prominent financial ratings companies in the world.

Besides issuing credit ratings to companies and governments, Standard & Poor’s also publishes several stock market indices, such as the S&P 500 (which grew from that tiny index back in 1923). If you’re investing money or pursuing insurance to help protect your family’s financial future, you need to know about S&P.

How Standard & Poor’s reports on financial strength

Standard & Poor’s uses letter grades to indicate a company’s creditworthiness. Use these guidelines to understand a company’s ranking:

  • Extra letters signify higher ranking. AAA is a higher rating than A, and BBB is higher than BB (but any A level is better than a B or C-level rating).
  • Standard & Poor’s ratings from AA to CCC can come with a plus (+) or minus (-). These mean the company in question is close to the top or bottom within that rating category (so AA+ is higher than AA).
  • AAA through BBB ratings are considered “Investment Grade.” Anything lower is considered “Speculative Grade,” and the farther you go down, the more vulnerable the company may be to adverse business or financial conditions.

The full range of rating options is:

  • AAA
  • AA+, AA, AA-
  • A+, A, A-
  • BBB+, BBB, BBB-
  • BB+, BB, BB-
  • B+, B, B-
  • CCC+, CCC, CCC-
  • CC
  • C
  • D

MassMutual’s Standard & Poor’s rating

As of June 4, 2018, MassMutual holds a rating of AA+ for both financial strength and issuer credit. That means MassMutual’s rating is the second highest of 21 ratings. This indicates “Very strong capacity to meet financial commitments.”

Other ratings and reviews to consider

I’ll admit to being on the meticulous side when it comes to checking out a business. (My more freewheeling friends have called me picky before.) I like to check out a restaurant’s menu online the day before I visit, and I read online reviews for just about anything, including playgrounds near me.

Okay, so reading up on playgrounds might be overkill if all the kid needs are swings and a slide to be happy. Doing your homework on insurance is another matter. Life insurance, disability insurance, and other policies help protect my family’s financial well-being in the event that we need to weather some of the most stressful scenarios imaginable, like serious illness or even a death. As far as I’m concerned, it’s almost impossible to be too thorough in understanding the best options for my family.

The top rating agencies

A.M. Best is one of the most respected ratings agencies in the life insurance industry. It is the only agency that solely rates insurance. MassMutual, which issues all policies sold by Haven Life, has an A++ rating from A.M. Best.* That’s their highest rating available.

Moody’s Investors Service and Fitch Ratings are two other major insurance rating agencies that assign a grade to a company’s creditworthiness. Their scoring systems are similar, but not identical, to Standard & Poor’s. Learn the distinctions so you understand what the rating means, and look for companies with similarly high ratings across S&P, Moody’s and Fitch — known as the Big Three agencies.

What customers have to say

Taking some time to learn how other customers feel about their insurance provider is another smart step.

  1. Review your family’s circumstances and insurance needs. Try to find reviews and customer testimonials from people in a similar life stage and family situation, so you’re looking at as close a comparison as possible.
  2. Read customer reviews so you know how real people feel about their experience. Third-party review sites like Trustpilot and Consumer Affairs are a great source for useful reviews.
  3. Compare quotes and benefits on policies. Once you’ve identified the top insurance providers you might like to work with, learn what they can offer you. Get price quotes from at least two or three companies so you know you’re getting a good rate. Read through policies to understand what’s covered and to make a claim if you need one.

Using Standard & Poor’s ratings when choosing an issuer for your policy

Looking over an insurance rating agency’s assessment can help you separate the highly rated insurance providers from less strong choices. The rating is the quickest way to get an important indicator of a company’s financial strength. If you want to look deeper, agencies like Standard & Poor’s may also publish articles that contain even more information on their expert analysis of what the company’s financial strength might look in coming years.

You’re already thinking about life insurance. You can take a page out of a financial rating expert’s book and check a company’s rating before taking out an insurance policy. Ratings are something you’ll come across in the life insurance buying process. Company ratings are a key detail that will help you choose an issuing company to work with to help protect your family.

We have your back (and MassMutual has ours)

The Haven Term policy is issued by MassMutual, an industry leader with over 160 years of experience.

Why Haven Life

Jessica Sillers is a writer who specializes in financial services, business, and parenting. She lives near Washington, D.C. with her family.

Financial strength ratings are as of June 7, 2019: A.M. Best Company: A++ (Superior; top category of 15); Fitch Ratings: AA+ (Very Strong; second category of 21); Moody’s Investors Service: Aa3 (High Quality; fourth category of 21); Standard & Poor’s: AA+ (Very Strong, second category of 21). Ratings are for MassMutual (Springfield, MA 01111) and its subsidiaries, C.M. Life Insurance Co. and MML Bay State Life Insurance Co. (Enfield, CT 06082). Ratings are subject to change.

Chelsea Brennan

About Chelsea Brennan

Chelsea Brennan is the founder of Smart Money Mamas, a personal finance blog that focuses on family finance, investing, and reducing money stress. Chelsea is an ex-hedge fund investor whose work has appeared in a wide array of publications, including Forbes, Business Insider, and more.

Read more by Chelsea Brennan

Our editorial policy

Haven Life is a customer-centric life insurance agency that’s backed and wholly owned by Massachusetts Mutual Life Insurance Company (MassMutual). We believe navigating decisions about life insurance, your personal finances and overall wellness can be refreshingly simple.

Our editorial policy

Haven Life is a customer centric life insurance agency that’s backed and wholly owned by Massachusetts Mutual Life Insurance Company (MassMutual). We believe navigating decisions about life insurance, your personal finances and overall wellness can be refreshingly simple.

Our content is created for educational purposes only. Haven Life does not endorse the companies, products, services or strategies discussed here, but we hope they can make your life a little less hard if they are a fit for your situation.

Haven Life is not authorized to give tax, legal or investment advice. This material is not intended to provide, and should not be relied on for tax, legal, or investment advice. Individuals are encouraged to seed advice from their own tax or legal counsel.

Our disclosures

Haven Term is a Term Life Insurance Policy (DTC and ICC17DTC in certain states, including NC) issued by Massachusetts Mutual Life Insurance Company (MassMutual), Springfield, MA 01111-0001 and offered exclusively through Haven Life Insurance Agency, LLC. In NY, Haven Term is DTC-NY 1017. In CA, Haven Term is DTC-CA 042017. Haven Term Simplified is a Simplified Issue Term Life Insurance Policy (ICC19PCM-SI 0819 in certain states, including NC) issued by the C.M. Life Insurance Company, Enfield, CT 06082. Policy and rider form numbers and features may vary by state and may not be available in all states. Our Agency license number in California is OK71922 and in Arkansas 100139527.

MassMutual is rated by A.M. Best Company as A++ (Superior; Top category of 15). The rating is as of Aril 1, 2020 and is subject to change. MassMutual has received different ratings from other rating agencies.

Haven Life Plus (Plus) is the marketing name for the Plus rider, which is included as part of the Haven Term policy and offers access to additional services and benefits at no cost or at a discount. The rider is not available in every state and is subject to change at any time. Neither Haven Life nor MassMutual are responsible for the provision of the benefits and services made accessible under the Plus Rider, which are provided by third party vendors (partners). For more information about Haven Life Plus, please visit: https://havenlife.com/plus.html

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