The financial ratings of life insurance companies can be very important because they provide you with useful information about the financial stability of the company you are purchasing from. Because life insurance is a long term contract, it is always important to purchase life insurance policies from a company which shows potential for future stability that is at least as strong as the company's current performance.
Life insurance company ratings are based on the current level of debt of the company, any current or expected transactions, and the expected performance of the company in the near future. Ratings agencies include AM Best, Moody's and Standard & Poors. Some ratings are performed by seasoned analysts, and other are compiled from consumer reviews, so using ratings for more than one ratings company will give you a more complete overview of the insurance company you are researching.
Choosing to purchase your life insurance through a highly rated company could mean the difference between your insurer becoming insolvent in the future or remaining a driving force in the industry for decades to come. From the financial point of view, it makes more sense to put your financial future in the hands of a company that is well-rated, because the policy is an investment, and the security of investments begins with the stability of the company you are investing in.
Insurance company ratings are one of the primary ways consumers have of looking into the financial well-being of a potential insurer. Without those ratings, you would have to perform in-depth research on each company separately, or simply choose a policy and take your chances on the long term outcome.