Introduction

Digging up data on life insurance companies

Life insurance is a tricky topic for reviewers. Even outspoken review sources like ConsumerReports.org -- which usually shows no qualms about pointing out the best and worst things you can buy -- don't recommend any one life insurer over another. But when we scoured financial and customer-complaint data, a few excellent life insurance companies rose to the top. As might be expected, a few stinkers emerged as well.

To find life insurance companies that promise to stick around over the long haul, we analyzed financial ratings from five sources: A.M. Best, Fitch Ratings, Moody's, Standard & Poor's and Weiss Ratings (which is once again independent after buying back its bank and insurance company rating business from TheStreet.com in 2010). We give the most weight to life insurance ratings from Weiss: It doesn't take payments from the insurance companies it rates, and ConsumerReports.org says its ratings are stricter than the others.

To see which insurance companies make their customers happiest, we mined the National Association of Insurance Commissioners' (NAIC) database of customer complaints and checked company ratings at the Better Business Bureau. A report by the American Association for Justice (AAJ), a trial lawyers' group, picks the worst insurance companies based on lawsuits.

Worst life insurance companies

You'll find plenty of household names on the AAJ report for life insurance. Some of these, like Allstate and State Farm, don't get many customer complaints to state insurance regulators, for their size. But some do: Unum, one of AAJ's 10 worst insurance companies, also attracts a lot of customer complaints (six times more than the national median per individual life insurance policy).

Still, no life insurance company gets ratings as dismal as Conseco. It's named one of AAJ's 10 worst and one of Weiss's 10 financially weakest insurance companies, and its life insurance arm has a lot of customer complaints upheld (deemed the company's fault) for its size at NAIC -- eight times the national median. Several complain about account service (premium notices, billing, etc.) or say that Conseco delayed or denied their insurance claims.

In 2002, Conseco filed for Chapter 11 bankruptcy, the third-biggest bankruptcy in U.S. history at the time. In 2010, Conseco got a new name (CNO Financial Group), but it's still on Weiss's 10-weakest list. So is its subsidiary, Colonial Penn, which has used Ed McMahon and Alex Trebek to pitch its "guaranteed acceptance life insurance" on TV commercials, but has more than double the national median in customer complaints upheld by state insurance regulators.

Conseco/Colonial Penn earns a grade of A+ with the Better Business Bureau, despite 193 customer complaints in three years (they've all been resolved or administratively closed). Clearly, it pays to check with more than one source when you're considering a life insurance company.