When someone searches for the “worst life insurance companies,” they’re usually trying to avoid making a costly mistake. I get it—life insurance is a significant financial commitment, and choosing the wrong company can lead to denied claims, poor customer service, or financial instability that puts your family’s protection at risk.
For a complete overview, see understanding term life insurance.
After years of helping families navigate the life insurance landscape, I’ve seen firsthand how certain companies consistently disappoint their policyholders. But here’s what most people don’t realize: the “worst” company for one person might actually be perfectly fine for another, depending on their specific needs and circumstances.
Let me walk you through what I’ve learned about identifying problematic life insurance companies and, more importantly, how to find the right coverage for your family’s unique situation.
Red Flags That Identify the Worst Life Insurance Companies
Poor Financial Strength Ratings
The first thing I always check when evaluating any life insurance company is their financial strength ratings. These ratings from agencies like A.M. Best, Standard & Poor’s, and Moody’s tell you whether the company will be around to pay claims 20, 30, or 50 years from now.
Warning signs to avoid:
- A.M. Best ratings below B+ (Good)
- Multiple downgrades in recent years
- Being placed on “watch” status by rating agencies
- No rating at all from major agencies
I’ve seen too many families get burned by companies that looked stable but were actually on shaky financial ground. The extra premium you might pay for a highly-rated company is insurance for your insurance.
Excessive Complaint Ratios
Every state insurance department tracks complaint ratios—how many complaints a company receives relative to their market share. The National Association of Insurance Commissioners (NAIC) publishes this data annually.
What I look for:
- NAIC complaint index above 1.0 (meaning more complaints than expected)
- Patterns of complaints about claim denials
- Consistent issues with customer service
- Regulatory actions or fines
Companies with consistently high complaint ratios often have systemic problems that won’t improve anytime soon.
Aggressive Sales Tactics and Misleading Marketing
Some of the worst life insurance companies rely on high-pressure sales tactics or misleading marketing to sell policies. I’ve encountered companies that:
- Use fear-based marketing about “guaranteed acceptance”
- Make unrealistic promises about returns or benefits
- Pressure prospects to “act now” before rates increase
- Use misleading terms like “free” insurance that isn’t actually free
The TV commercial trap: Many companies that advertise heavily on TV, especially during daytime hours, target vulnerable populations with overpriced, limited-benefit policies. The marketing budget has to come from somewhere—and it’s usually your premium dollars.
Specific Companies to Approach with Caution
While I won’t label any company as definitively “worst” (since individual experiences vary), certain companies consistently appear on complaint lists and receive poor ratings from industry experts.
Globe Life and Liberty National
These companies, which are part of the same corporate family, frequently appear on worst life insurance company lists due to:
- High complaint ratios
- Aggressive sales practices
- Limited benefit policies marketed as comprehensive coverage
- Difficulty reaching customer service
My experience: I’ve helped several clients replace Globe Life policies with better coverage at lower costs.
Colonial Penn
While Colonial Penn markets heavily to seniors with their “guaranteed acceptance” whole life insurance, the reality is often disappointing:
- Extremely limited coverage amounts
- High premiums relative to benefits
- Graded death benefit (limited payouts in first years)
- Better options available for most applicants
Certain Final Expense Companies
Some smaller final expense companies engage in questionable practices:
- Door-to-door sales targeting elderly prospects
- Policies that don’t build cash value as promised
- Claims processing delays
- Limited customer service options
What Makes a Life Insurance Company “Bad”
Understanding what creates a bad experience helps you avoid these companies entirely.
Claims Processing Problems
The worst life insurance companies often have issues with:
- Slow claims processing (taking months instead of weeks)
- Looking for reasons to deny valid claims
- Requiring excessive documentation
- Poor communication with beneficiaries during difficult times
Why this matters: Your family shouldn’t have to fight for benefits during an already stressful time. A company’s claims-paying reputation is crucial.
Inadequate Customer Service
Poor customer service shows up as:
- Long hold times when calling
- Difficulty reaching knowledgeable representatives
- Inconsistent information from different agents
- Online portals that don’t work properly
- Unresponsive to written inquiries
Unstable Financial Condition
Companies in financial trouble exhibit:
- Declining surplus (financial reserves)
- Repeated downgrades from rating agencies
- Regulatory intervention or oversight
- Selling blocks of policies to other companies
- Suspending new policy sales
How to Research Life Insurance Companies Before Buying
Check Financial Strength Ratings
I always recommend looking up ratings from multiple agencies:
A.M. Best ratings to target:
- A++ or A+ (Superior)
- A or A- (Excellent)
- Avoid anything below B+ (Good)
Standard & Poor’s ratings:
- AAA to AA (Very Strong)
- A+ to A- (Strong)
- BBB+ to BBB- (Good)
Review Complaint Data
The NAIC’s complaint database lets you compare companies. Look for:
- Overall complaint index
- Specific complaint categories
- Trends over multiple years
- State-specific data if available
Research Company History
Red flags in company history:
- Recent mergers or acquisitions
- Leadership turnover
- Regulatory actions or fines
- Changes in business focus
- Selling large blocks of policies
Talk to Current Policyholders
If possible, find people who actually own policies with the company you’re considering. Ask about:
- Ease of premium payments
- Customer service experiences
- Any problems with policy changes
- Overall satisfaction
Better Alternatives to Problematic Companies
Instead of risking your family’s financial security with questionable companies, consider these generally well-regarded insurers:
Top-Rated Term Life Companies
Mutual of Omaha: Consistently high ratings and reasonable premiums AIG (Corebridge): Strong financial position and competitive rates Prudential: Long history and excellent financial strength Lincoln Financial: Good customer service and stable ratings
Reliable Whole Life Providers
Northwestern Mutual: Excellent dividend history and strong financials MassMutual: High ratings and good customer satisfaction Guardian Life: Strong mutual company with good policyholder treatment Penn Mutual: Competitive rates with solid financial strength
Quality Final Expense Options
Rather than falling for aggressive marketing from questionable companies, consider:
- Mutual of Omaha’s final expense products
- Transamerica’s simplified issue policies
- AIG’s (Corebridge) guaranteed issue options
- Local mutual companies in your area
The Importance of Working with an Independent Agent
Here’s something most people don’t realize: working with an independent insurance agent can protect you from the worst life insurance companies entirely.
Why independent agents help:
- They represent multiple carriers, not just one
- They can compare options objectively
- They’re not pressured to sell specific companies’ products
- They know which companies have good claims-paying records
- They can help you avoid problematic insurers
When I work with families, I automatically eliminate companies with poor ratings, high complaint ratios, or questionable business practices. You never even see options from the worst life insurance companies because I’ve already filtered them out.
Questions to Ask Any Agent
Before working with any insurance agent, ask:
- How many companies do you represent?
- Can you show me financial strength ratings for recommended companies?
- What’s your experience with claims from these companies?
- Can you provide references from current clients?
- Are you captive (representing one company) or independent?
What to Do If You Already Have Coverage with a Problematic Company
If you’re reading this and realize you might have coverage with one of the worst life insurance companies, don’t panic. You have options.
Evaluate Your Current Policy
Key questions to ask:
- Is the company financially stable now?
- Are you satisfied with customer service?
- How do current premiums compare to market rates?
- Does the coverage still meet your needs?
Consider a Policy Review
An independent agent can review your existing coverage and compare it to current market options. Sometimes what seemed like a good deal years ago isn’t competitive anymore.
Be Careful with Replacements
Important considerations:
- New policies often have waiting periods
- Your health might have changed since your original application
- Surrender charges might apply to cash value policies
- Contest ability periods restart with new coverage
Never cancel existing coverage until new coverage is approved and in force.
Red Flags When Shopping for Life Insurance
Knowing what to watch out for can help you avoid the worst life insurance companies from the start.
High-Pressure Sales Tactics
Warning signs:
- “This offer expires today”
- Refusing to let you think about it overnight
- Pressuring you to buy during the first meeting
- Claims that rates will increase if you wait
- Unwillingness to provide written information
Too-Good-to-Be-True Promises
Be skeptical of:
- “Guaranteed” high returns
- Claims that policies are “free”
- Promises that premiums will disappear
- Illustrations showing unrealistic performance
- No-exam policies with extremely low rates
Lack of Transparency
Red flags include:
- Refusing to explain how the policy works
- Not providing comparison illustrations
- Avoiding questions about company ratings
- Unwillingness to put promises in writing
- Complicated contracts with unclear terms
- Check financial strength ratings from A.M. Best, Standard & Poor’s, and Moody’s before choosing any life insurance company, avoiding those with ratings below B+ or multiple recent downgrades.
- Research complaint ratios through the NAIC database to identify companies with indexes above 1.0, which indicates more complaints than expected for their market share.
- Avoid companies using aggressive sales tactics like fear-based marketing, unrealistic benefit promises, or high-pressure “act now” messaging that targets vulnerable populations.
- Compare multiple life insurance options rather than accepting the first quote you receive, especially if approached through heavy TV advertising or direct mail campaigns.
- Bring any existing life insurance quotes to an independent agent for review to ensure you’re getting the best coverage and rates for your specific situation.
The Bottom Line on Avoiding Bad Life Insurance Companies
The worst life insurance companies share common characteristics: poor financial strength, high complaint ratios, misleading marketing, and inadequate customer service. But here’s the thing—you can easily avoid these companies by doing your homework and working with a knowledgeable, independent agent.
Remember, life insurance is one of the most important financial products you’ll ever buy. Your family’s financial security depends on the company you choose being around and willing to pay claims when the time comes. Don’t let aggressive marketing or low premiums tempt you into choosing a company that might not deliver when it matters most.
My recommendation: Focus on companies with strong financial ratings (A- or better), reasonable complaint ratios, and a long history of paying claims. Yes, you might pay slightly higher premiums, but the peace of mind is worth every penny.
If you’re currently shopping for life insurance or concerned about your existing coverage, I’d be happy to help you review your options. As an independent agent, I work with multiple top-rated companies and can help you find coverage that protects your family without the risks that come with problematic insurers.
The goal isn’t to find the cheapest policy—it’s to find reliable, affordable coverage from a company that will be there for your family when they need it most.
