Chelsey Tucker graduated with a Bachelor of History degree from Metropolitan State University in 2019. She now writes about insurance with her specialty being life insurance and has been quoted on Help Smart Phone and MEL Magazine.

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Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years. He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like Reviews.com.

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Reviewed by Daniel Walker
Licensed Auto Insurance Agent

UPDATED: Dec 2, 2020

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Aflac vs Great American Life Insurance

Although Aetna and Great American Life Insurance Company (“GALIC”) are both well established and financially stable insurance providers with solid reputations, comparing the two companies is essentially comparing apples and oranges. Aetna and GALIC are very different companies, in that they target largely different markets and offer different types of products and services.

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Who is Aetna?

Founded over 150 years ago, Aetna is one of the nation’s leading providers of medical, pharmacy benefits management, dental, vision, behavioral health, group life, disability and Medicare supplemental health insurance. Medical products include point-of-service (“POS”), preferred provider organization (“PPO”), health maintenance organization (“HMO”) and indemnity benefit plans.

Aetna provides insurance coverage through employers in all 50 states, with products and services targeted at small, medium-sized and large, national companies. Aetna also offers medical insurance and Medicare supplemental health insurance for individual purchase in certain states.

Aetna recently ranked 4th on US News and World Report’s list of the top 25 health insurance companies in the United States. In 2010, Aetna was named the most admired health care insurance company by Fortune magazine.

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Who is GALIC?

GALIC specializes in products and services that are geared towards the needs of retirees, active and retired educators and employees of not-for-profit organizations. GALIC offers traditional and fixed index annuities, Medicare supplemental health insurance, cancer and accidental injury insurance, long-term care insurance and life insurance. Although GALIC offers its products and services largely through employers and credit unions, GALIC does serve individuals and Medicare beneficiaries in certain states.

GALIC is part of a larger group of companies which collectively have been doing business for over a century. GALIC is a subsidiary of Great American Financial Resources, Inc. (“GAFRI”), which is a subsidiary of the holding company, American Financial Group, Inc. (“AFG”). GAFRI, through GALIC and eight other subsidiaries, is the annuity, supplemental and life insurance operation of AFG. A.M. Best has rated the financial strength of GAFRI’s subsidiaries as “excellent” for the last 30 years.

What Do Aetna and GALIC Have in Common?

There are only two products that both Aetna and GALIC offer: life insurance and Medicare supplemental health insurance. However, unlike GALIC, which sells life insurance policies to individuals, Aetna offers life insurance only through employer provided plans. Therefore, comparing the two companies’ life insurance products would not be meaningful.

But a meaningful comparison can be made with respect to Medicare supplemental health insurance because both companies make it available for individual purchase. Further, Medicare supplemental health insurance plans are standardized, meaning that all private insurance companies that offer Medicare supplemental insurance must offer (ironically, by government mandate) the same coverage for the same plan. Therefore, comparing Aetna and GALIC with respect to Medicare supplemental health insurance is comparing apples to apples.

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How Do the Two Companies’ Medicare Supplemental Health Insurance Plans Compare to Each Other?

Medicare supplemental health insurance, or Medigap insurance, is private insurance that supplements Original Medicare by filling in the gaps left by Medicare Part A and Medicare Part B. Medigap insurance covers Medicare coinsurance, co-payments and deductibles that Original Medicare will not pay.

There are 10 Medigap insurance plans labeled A through N. (Plans E, H, I and J are no longer sold). Each plan offers a different combination of benefits. All insurance companies must offer Plan A if they want to offer Medigap insurance at all.

Aetna offers six of the ten Medigap plans: A, B, C, D, F, G and N. GALIC also offers these plans. Below are the monthly premiums for each plan as of January 28, 2012 with coverage beginning February 1, 2012. These premiums are based on the actuarial risk of insuring a 65-year-old, non-smoking male who lives in Dallas, Texas:

Plan Aetna GALIC *
A $146/mo. $123/mo.
B $162/mo. $144/mo.
C $182/mo. $172/mo.
F $189/mo. $179/mo. **
G $137/mo. $152/mo.
N $107/mo. $124/mo.

* GALIC monthly premiums were obtained from a licensed GALIC insurance broker.
** As an aside, note that most people choose Plan F because this plan pays for everything that Medicare will not.

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Why the Difference in Price?

The difference in price for the exact same coverage is the result of each company using one of three different pricing methods:

1. Attained-Age-Rated. Premium is based on the applicant’s age and will increase as the applicant ages;

2. Community-Rated or No-Age Rated. Premium is based on the age of applicants in the same geographical area and will not increase due to age;

3. Issue-Rated. Premium is based on the applicant’s age at the time of purchase and will not increase as the applicant ages. An issue-rated premium will cost more if the applicant purchases the policy at age 70 instead of age 65.

Premiums for all three policies can increase due to inflation and rising health care costs.

Aetna uses the attained-age-rated pricing method to set prices for its Medigap policies. Available research sources do not specify GALIC’s pricing method. A direct inquiry of GALIC may be required.

How Do Aetna and GALIC Compare Financially?

AFG, the grandparent company of GALIC, dwarfs in size to Aetna. In 2010, AFG’s earned $4.5 billion in revenue and reported $32.5 billion in total assets.

In contrast, Aetna earned $34.2 billion in revenue, more than AFG’s total assets, and reported $37.7 billion in total assets in 2010. Further, in 2010, AFG earned $441 million in supplemental health and life insurance premiums; Aetna earned $5.9 billion in supplemental health insurance premiums alone.

But the size of a company is not necessarily proportional to its financial strength. In 2011, the four largest ratings companies, Standard & Poor’s, Moody’s Investor Services, Fitch and A.M. Best, rated the financial outlooks for Aetna and AFG as “stable.”

A “stable” rating means that the company is experiencing stable financial and market trends, and that it is fairly unlikely the company’s rating will change over the next one to three years. Moreover, with respect to their ability to meet ongoing insurance policy and contract obligations, both companies have consistently been rated “excellent” or higher.

Aetna and AFG are both financially secure Fortune 500 insurance companies. In deciding whether to choose one company over the other in terms of buying Medigap insurance, the only issues are price and pricing methods.

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