Taking out the best life insurance is vital to ensure your family will be financially protected in the event of your death. Such a policy is often recommended to cover your mortgage costs, but it can do so much more than that – the money can give your loved ones an income when you’re no longer there to provide for them, ensuring their finances won’t be put in jeopardy.
Yet as with so many things in finance, you get out what you put in; even with the best life insurance policy, the benefit of it – in other words, the payout – will depend on the cover you choose at the outset. Another key decision will be the term of the policy, so for example, do you want a policy that only pays out if you die within a certain timeframe, or would you prefer a plan that doesn’t have an end date, making a whole of life policy preferable? You may also have the option to accumulate a cash value (perhaps to fund home improvements or your child’s education), and the choice between flexible or guaranteed premiums, with the former being ideal for those whose protection requirements may change alongside major life events.
The best life insurance companies will offer a whole range of options to suit your individual requirements, but it’s important to look beyond the headline features of a policy and consider the strength of the company itself. You need to be confident in its finances and longevity – after all, a life insurance policy can be active for years to come – not to mention its customer service record, making sure to investigate its claims history and how it deals with the day-to-day admin of a policy. Being able to find quotes online is particularly important in the current climate, so ensuring any potential company has good digital functionality is key.
In our quest to help you find the best life insurance companies, all of these factors and more are covered in our overview. Not only that, but we’ve made sure to showcase the companies that stand out in particular areas, such as those that offer exceptional cash value options and long-term care provision, or make it particularly easy to apply. Yet for many people, the cost of a life insurance policy will be the biggest consideration. That’s why it’s vital to thoroughly compare the options, and happily, Assurance and similar comparison sites make it quick and easy to find quotes online and compare their relative merits. And while you’re thinking about your long-term health, it could be a great time to look for the best health insurance companies, ensuring your finances are fully protected no matter what’s around the corner.
1. Northwestern Mutual: Best overall insurer
Excellent financials and customer satisfaction make Northwestern an easy provider to recommend. There are plenty of people who would tell you that Northwestern Mutual offers the best life insurance on the market - at least in terms of major nationwide providers - and its customer satisfaction scores would seem to bear them out.
In the most recent annual JD Power survey of the 23 largest life insurance providers in the country, Northwestern received a score of 810 (out of 1,000), putting it at the top of the table. In addition, it offers a wide range of standard policies and one or two non-standard options too. You don’t necessarily come to Northwestern for innovative products though. You come for exemplary customer service and support.
2. State Farm: Best for early repayment
State Farm’s financial strength is rated at A++, which means it is never going to have trouble fulfilling its obligations to customers, and it has excellent ratings from JD Power. But what we really liked are its innovative products, and especially its “Limited Pay Life Plans” for 10, 15 or 20 years, which let you pay completely for your life insurance premium in the term you choose, meaning you have nothing to pay during retirement.
In addition, when it comes to whole life insurance, State Farm offers more policy discounts than many other insurers.
3. Guardian Life: Best for cash value options
“Everyone deserves a Guardian,” says Guardian Life, and the company boasts serious financial strength (A++ rated) and reasonable customer satisfaction scores. It stands out if you’re looking to accumulate cash value. It offers eight different cash value options, more than many other providers.
It also has a great website. Its cartoony illustrations are a breath of fresh air in a world dominated by cliched happy family stock shots.
4. John Hancock: Best for rewards
John Hancock is the only major provider we’ve come across to reward policy holders who commit to healthy lifestyles. Its Vitality wellbeing scheme stands on its own. Two Vitality options (one free, one costing a small monthly fee) offer fitness and nutrition information and reward healthy activities like exercise and medical checkups with discounts to Amazon.com and outdoor retailer REI. It also offers free or reduced wearable fitness devices, and even an Apple Watch.
5. Pacific Life: Best for long-term care
We liked the flexibility of Pacific Life’s policies. Pacific Life offers a variable universal policy, allowing you to adjust your policy’s investment allocations to meet your own growth objectives and risk tolerances. It also offers two types of term life policy. Best of all, Pacific Life offers life insurance with long-term care benefits. This allows the policy to be used for long-term care, with the death benefit reduced as a result.
6. New York Life: Best for dividends
New York Life is one of a number of mutual insurance companies in this list, meaning it pays out dividends to eligible policy holders when the business is performing well. It is also the oldest mutual life insurance company in the US.
This is one of its great strengths. Last year, the company paid out $1.8 billion dividends, which is a sizeable sum even among large mutual providers. We also liked its flexible payment options, allowing you to pay off the coverage early (before you retire, for example) and an option that covers two people on one policy.
7. Mutual of Omaha: Best for ease of application
Mutual of Omaha’s standout feature is that many of its policies are available without a medical exam, making the application process easy. This isn’t unique, but it is unusual. You can buy small sum coverage of between $2,000 to $25,000 online, without any medical questions at all. These policies largely cover funeral expenses and other end of life costs. You can buy $40,000 of coverage through an agent. The application for this policy asks a number of health questions but doesn’t necessitate a medical exam.
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How much does life insurance cost?
This question is always followed by another: How much coverage do you need? The amount of coverage you need determines how much you pay in monthly premiums. For example, a $250,000 term life insurance policy can cost close to five times less than a $1,000,000 policy. Your premium also depends on your gender, age and health. A healthy woman can expect to pay around $20 a month for a $250,000 policy, while a healthy man can expect to pay around $25 a month. Whole life policies, which include a savings account that builds value, are more expensive and cost between $100 and $500 a month.
How to choose a life insurance policy
Life insurance is a grim subject – no one wants to think about dying, much less how their family will be provided for when they’re gone. But when you get a life insurance policy, your family will continue to receive an income as well as have money to pay for funeral expenses and your children’s future educational expenses.\
How much do you need?
According to the American Council of Life Insurers, most experts recommend getting a policy that pays between seven and 10 times your annual income. Depending on your age, income, savings and other factors, you may need more or less. There are many online calculators that can help you figure out how much you need in insurance as well as how many years your policy should last.
Generally, the older you are, the more likely it is a shorter policy will be useful. If you have enough savings, a good retirement plan and low debt, a lower limit policy is a good option. When you call for a quote, the agent will ask you questions about your financial situation, health and plans for beneficiaries before making recommendations.
What type of policy should you get?
There are two main types of life insurance policies: term and permanent. A term policy is the most common and most affordable. It covers you for a certain amount, called the face value or death benefit, for a set period of time. A $250,000 policy with a 20-year term will pay your beneficiaries $250,000 if you die at any time during the 20 years the policy lasts.
A permanent policy doesn’t expire and instead lasts for as long as you pay the premium. A permanent policy is guaranteed to pay out the claim. It’s not an if – it’s a when. In addition to the death benefit, a permanent policy has a living benefit that builds value each year. A portion of your premium is put toward building the value of the living benefit. A permanent policy is much more expensive than a term policy, often costing up to 10 times as much.
A good way to think about the differences between term and permanent life insurance is to compare it to renting versus owning a home. Renting can be cheaper, but it’s temporary and doesn’t build any value. Owning a home is more expensive, but you build equity and long-term value.
Pros & Cons of Permanent Life Insurance
When you shop for life insurance, you’re asked to choose between a term and a permanent policy. There’s a lot of confusing terminology, and different types of permanent policies can be complicated. A term policy is straightforward – it pays out a certain amount if you die during the length of the policy. If you’re considering a permanent policy instead, here are some pros and cons to consider:
Pro: These policies never expire. Unlike term life insurance, which lasts up to 20 years, a permanent policy does exactly what the name suggests and doesn’t expire. It lasts for either as long as you live or as long as you make payments. If you do miss payments, you may end up relinquishing some of the policy’s cash value.
Con: These policies are expensive. When we got quotes, the permanent policies were two to five times more expensive than the term policies. Yes, much of your payment goes toward increasing your policy’s long-term value, but the higher monthly payments may be outside your budget. Keep in mind that factors like age, gender and health help determine your monthly premiums.
Pro: There are savings benefits in addition to policy payout. Term life insurance pays out a set amount if something happens to you during the policy’s term. Permanent life insurance has a savings element that accrues value over the life of the policy. This can increase the death benefit paid out to your beneficiaries, and you may be able to access it in other ways, depending on your policy.
Con: The policies are complicated and confusing. Permanent life insurance is complicated, and it can be hard to comparison shop because there’s a lot of variance between providers. In addition, there are many subtypes, such as whole, universal, variable and indexed universal, that have different ways of building your policy’s cash value.
If you want to make sure your loved ones don't have to worry about their finances after your death then life insurance provides great peace of mind at a difficult time. Start your search for life insurance at Assurance and get custom quotes from multiple providers in your area.