Our Ratings of the Best Life Insurance Companies
- Pacific Life – Best for Variable Universal Life Insurance
- Penn Mutual – Best for Seniors
- Protective – Best for Universal Life Insurance
- AIG – Best for Recreational Marijuana Use
- Mutual of Omaha – Best for Gen x & Millennials
- Transamerica – Best for Reliable Policy Illustrations
- John Hancock – Best for Celebratory Cigar Use
- Lincoln Financial – Great For Estate Planning
- Securian Financial/Minnesota Life – Best For Indexed Universal Life Insurance
- Symetra – Best For Term Life insurance Rates
What Is Life Insurance?
A life insurance policy is an agreement between you and the insurance provider that guarantees the insurer will pay out a death benefit provided you have paid your payments.
The funds are your beneficiaries’ to utilize however they see fit. This frequently entails funding a child’s college education, a mortgage, and regular payments. Having life insurance as a safety net will guarantee that your family can continue living in their house and make the purchases you had budgeted for.
Term and permanent life insurance are the two main categories of life insurance. While term life insurance offers protection for a set amount of time, permanent life insurance, such as whole life insurance or universal life insurance, can offer lifetime coverage.
Best Term Life Insurance Companies
Numerous possibilities are available at affordable rates with term life insurance. To assist you in selecting the best term life insurance policy for your needs, we compared insurance providers based on price, renewability, and conversion possibilities.
| Company | Term life insurance policy name | Minimum face amount | AM Best financial strength rating | Forbes Advisor rating |
|---|---|---|---|---|
| Pacific Life | PL Promise Term | $50,000 | A+ (Superior) |  |
| Principal | Term Life | $200,000 | A+ (Superior) | |
| Protective | Classic Choice Term | $100,000 | A+ (Superior) | |
| Symetra | SwiftTerm | $100,000 | A (Excellent) | |
| Transamerica | Trendsetter Super | $25,000 | A (Excellent) | |
Best Whole Life Insurance Companie
Fixed premium payments and assured increase in cash value are features of whole life insurance, but they come with a price. Based on important parameters including cost competitiveness and each company’s financial stability, we were able to determine which whole life insurance providers were the best.
| Company | AM Best financial strength rating | Forbes Advisor rating for whole life insurance |
|---|---|---|
| Northwestern Mutual | A++ (Superior) | |
| Ohio National | A (Excellent) |  |
| State Farm | A++ (Superior) | |
| Penn Mutual | A+ (Superior) |  |
| Guardian | A++ (Superior) |  |
Best Universal Life Insurance Companies
Within specific bounds, universal life insurance allows for premium adjustments and provides growth potential for the cash value. Based on important criteria including cost competitiveness and the accuracy of the company’s policy illustrations, we were able to determine which universal life insurance providers were the best.
| Company | AM Best financial strength rating | Forbes Advisor rating for universal life insurance |
|---|---|---|
| Protective | A+ (Superior) | |
| Prudential | A+ (Superior) | |
| Equitable | A (Excellent | |
| Guardian | A++ (Superior) | |
| Mutual of Omaha | A+ (Superior) | |
| Corebridge Financial | A (Excellent) | |
| Brighthouse Financial | A (Excellent) | |
| Lincoln Financial | A+ (Superior) | |
| MassMutual | A++ (Superior) | |
| Penn Mutual | A+ (Superior) | |
How To Choose the Best Life Insurance Policy for You
There are numerous varieties of life insurance to take into account. But if you have the right knowledge, you can rapidly select a life insurance policy that best suits your needs.
When looking for life insurance, there are a few key factors to take into account.
- Examine the ratings of financial strength. The financial strength ratings provided by organizations such as Standard & Poor’s and AM Best aid in evaluating a company’s potential for future claim payments. You can trust insurers with excellent (A- to A) or superior (A+ to A++) ratings with your money.
- As part of a more comprehensive financial plan, choose a life insurance policy. Life insurance should be a part of your overall financial plan if your family depends on you so they can prosper after your death. You can better understand how life insurance fits into your overall financial plan with the assistance of an experienced financial advisor.
- Collaborate with a life insurance agent with experience. Finding a competent life insurance agent who can counsel you on the best options for your circumstances is crucial because life insurance can be complicated. Asking friends and family for recommendations for insurance agents is one way to achieve that.
- Don’t assume that everyone can get competitive pricing from insurance companies. Each life insurance provider sets its own rates based on its own set of regulations. As a result, depending on the insurer, your premium may differ considerably. The cash value accumulation rate and policy fees for cash value life insurance differ between providers.
- Demand that all proposals include cost disclosures for universal life insurance. Aim to inquire about premiums, fees, and any other possible costs from the insurer when looking for specific types of policies, such as universal life insurance.
- Barry Flagg, the founder of Veralytic, an independent publisher of life insurance research and analytics, cautions that “current regulations in some states and for some products permit insurers to ‘quote’ a low premium while charging high costs—without disclosing that you may need to pay additional premiums later in order to avoid a lapse.”
- Decide if you want riders on your life insurance. You might want to look into the life insurance riders that the insurance company offers if you are having trouble finding the ideal life insurance policy. You can add more coverage or benefits to your policy by using life insurance riders.
- Examine your options for life insurance for service members. There are options for life insurance tailored to military personnel:
- Servicemembers’ Group Life Insurance (SGLI) is available to active-duty members of the Army, Navy, Air Force, Space Force, Marines, or Coast Guard, as well as those who satisfy additional eligibility requirements.
- Veterans’ Group Life Insurance (VGLI) is available to veterans who had SGLI prior to retirement. Find out more about veteran’s options for life insurance.
Types of Life Insurance
Term life and permanent life are the two main categories of life insurance.
What Is Term Life Insurance?
With term life insurance, you can select a coverage duration of 10, 15, 20, or 30 years. The death benefit will be paid to your beneficiary if you pass away during that time. There is no death benefit if you outlive the term and choose not to renew the policy at a higher cost.
Those who wish to cover a specific financial need, like replacing their income during their working years, can benefit from term life insurance.
What Is Permanent Life Insurance?
People who want a death benefit to be paid out regardless of when they pass away might consider purchasing permanent life insurance. Policies for permanent life insurance also include a cash value component with potential for tax-deferred growth. Term life insurance is typically far less expensive than permanent life insurance.
Choosing permanent life insurance typically serves a purpose, such as providing for dependents financially, establishing a trust for future generations, or increasing cash value to augment retirement savings.
There are two primary subtypes of permanent life insurance:
Whole life insurance
Because the premiums, the rate at which cash value grows, and the death benefit amount are all fixed and guaranteed, whole life insurance is predictable.
Universal life insurance
This kind gives you more freedom, and depending on the circumstances, you might be able to change the death benefits and premium amounts. The insurer and the performance of the invested assets that support the policy will determine how much the cash value grows. There are four different types of universal life insurance: variable, indexed, fixed-rate, and guaranteed.
It can be challenging to comprehend permanent life insurance policies from quotes or fictitious illustrations. It is not possible to determine whether a life insurance policy is a good value by merely comparing quotes or estimating cash values. Look under the hood, suggests Veralytic’s Flagg. A Veralytic report, for instance, can be requested from a life insurance agent or financial advisor to determine how the policy you are thinking about stacks up against industry standards.
“In the end, what the insurer actually charges and the performance of the investments will determine the premium you must pay and/or the growth in cash value you will experience. Flagg warns, “You want to make sure the investments within the policy fit your risk tolerance and that the internal policy costs are competitive.
Variable life insurance
While whole life insurance provides a fixed death benefit, variable life insurance offers flexibility that whole life insurance does not.
One use of this flexibility is choosing how to invest your cash value. This is an option if you want to be actively involved in your life insurance policy because the investments you select have a significant impact on its performance. A variable life insurance policy, as opposed to a variable universal policy, provides a safety net to ensure that your death benefit will not be less than a predetermined amount.
In addition to not allowing you to alter your premiums, variable life insurance policies differ from variable universal life.
Like other permanent life insurance plans, a variable life policy has cash value that can be accessed during your lifetime. In order to prevent your policy from lapse, you must ensure that it retains a minimum amount of cash value.
What Does Life Insurance Cover?
Death from illness, accidents, and old age itself is covered by life insurance. This covers fatalities from illnesses, falls, auto collisions, and COVID. Accidental drug overdose deaths are included.
Accidental death and dismemberment insurance is a specific kind of coverage that only pays for unintentional deaths, like those caused by falls or auto accidents. It excludes deaths brought on by old age, illness, or disease. Additionally, it provides benefits for serious injuries like limb loss.
What Does Life Insurance Exclude?
Suicide clauses are commonly found in life insurance policies. Suicide committed during the first two years of the policy will not be covered, according to this clause.
With the exception of the suicide clause, life insurance policies pay the death benefit regardless of the cause of death, unless the policyholder ceases paying premiums or the insurer can demonstrate misrepresentation. If an insurer finds something, such as a known health condition that the policyholder concealed, they may refuse a life insurance claim. If the policy lapses as a result of nonpayment, they might also refuse to pay out.
Do I Need Life Insurance?
You might require life insurance if there is someone who depends on you financially, either now or in the future. As an illustration:
- Many people purchase life insurance in order to provide their families with a replacement income in the event of their untimely death.
- Purchasing life insurance can help cover the cost of paying off debts that would otherwise pass to your heirs.
- Certain people fund a trust with life insurance in order to give financial support to others after they pass away. For instance, a trust can be used to provide for your child in the event that they have special needs.
Other common reasons people buy life insurance are:
- to pay for their own funeral expenses.
- to give their families enough money to pay off debt, pay for monthly expenses, or pay off a mortgage.
- to guarantee that in the event of a parent’s death, children will have enough money for college tuition.
- to use a cash value policy to generate additional income during retirement.
- to give beneficiaries who are inheriting enormous taxable estates funds to pay estate taxes.
Is Life Insurance Worth It?
If you want to safeguard your family’s or your company’s financial future in the event of your untimely death, purchasing life insurance is worthwhile. These are a few of the main advantages of having life insurance.
Financial stability for your family: While a family deals with the loss of a loved one, a life insurance payout can help them make up for lost income. Anything from regular costs like groceries and utilities to larger ones like mortgage and auto loan payments can be covered by the death benefit.
Expenses associated with dying: A life insurance payout can assist your loved ones in covering burial fees and other associated costs. You can also control your own dying costs with the aid of life insurance. For example, in the event that you receive a terminal illness diagnosis, an accelerated death benefit rider can assist you in paying for your medical bills.
Estate planning: Life insurance can give heirs a tax-free death benefit that can be used to cover both state and federal estate taxes for high net worth individuals.