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Best life insurance 2021: Protect your loved ones

Best life insurance 2020: Protect your loved ones
(Image credit: ShutterStock)

Find the best life insurance companies and you can have peace of mind that your family will be financially secure when you’re no longer around. A good life insurance plan is not only able to cover your mortgage costs, but can provide a valuable income to your loved ones, ensuring they needn’t struggle financially during an already difficult time. 

This is why taking the time to choose from the best life insurance plans is essential, and with an abundance of online quotes available you can begin to narrow down the options. There are, of course, several decisions you’ll need to make when searching for a life insurance policy, such as the level of cover you want (which translates to the payout your loved ones will ultimately receive), and the term of the policy itself – do you want a whole of life policy, one that doesn’t have an end date and will pay out no matter when you pass, or would you prefer the slightly cheaper life insurance option of a policy that will only pay out if you die within a pre-agreed term? 

Things like your age will also affect your life insurance premiums (plans for seniors, for example, will typically be more expensive than those for younger policyholders), as will the decision of whether or not to accumulate a cash value, or the option of taking flexible or guaranteed premiums. Yet it isn’t always simple to find the plan, or indeed the life insurance company, that can perfectly meet your requirements. You’ll need to take into consideration things like the reputation of the life insurer itself as well as its claims history, customer service record and online functionality, to ensure your requirements can be effortlessly met.

This is why you need to thoroughly compare the options online, and where our overview of the best life insurance companies can give you the perfect head start. We’ve scoured the market to uncover the insurers that come out on top in a whole range of areas, from the top rated life insurance company for rewards to the one that offers the smoothest application process, as well as highlighting the best life insurer overall. While you're in the process of securing peace of mind, now could be an ideal time to compare the best health insurance companies, and ensure your long-term health needs are covered financially too.


1. Northwestern Mutual: Best life insurance overall 

Northwestern Mutual

(Image credit: Northwestern Mutual)

Northwestern Mutual

Best overall insurance provider

SPECIFICATIONS

Information support: Good online information hub, tackling subjects beyond basic insurance | Customer support: Telephone, online support and social media | Interface: Browser and mobile app

Reasons to Buy

A mutual society not beholden to shareholders
Good basic policies
Many satisfied customers

Reasons to Avoid

Non standard policies are limited

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 life insurance for early repayment

State Farm

(Image credit: State Farm)

State Farm

Best for early repayment

SPECIFICATIONS

Information support: Online information hub, quote tool, life planner | Customer support: Telephone, email support and social media | Interface: Browser and mobile app

Reasons to Buy

Very strong financials
Early payment options
Good tools

Reasons to Avoid

Website not as intuitive as some

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 life insurance cash value options 

Guardian Life

(Image credit: Guardian Life)

Guardian Life

Best for cash value options

SPECIFICATIONS

Information support: Online information hub | Customer support: Telephone, email and social media | Interface: Browser

Reasons to Buy

A wide range of insurance options
Great options for cash value accumulation
Good website

Reasons to Avoid

Decent customer satisfaction but not the best

“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 life insurance for rewards

John Hancock

(Image credit: John Hancock)

John Hancock

Best for rewards

SPECIFICATIONS

Information support: Online information hub, quote tool | Customer support: Telephone, email and social media | Interface: Browser and app (for Vitality program)

Reasons to Buy

Innovative policies
Great wellbeing rewards
Feature-packed website

Reasons to Avoid

Underwhelming customer satisfaction scores

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 life insurance for long-term care

Pacific Life

(Image credit: Pacific Life)

Pacific Life

Best for long-term care

SPECIFICATIONS

Information support: Online information hub | Customer support: Telephone, email support and social media | Interface: Browser

Reasons to Buy

Wide range of policy options
Excellent complaints record

Reasons to Avoid

Average customer satisfaction scores
No quotes through the website

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 life insurance for dividends

New York Life

(Image credit: New York Life)

New York Life

Best for dividends

SPECIFICATIONS

Information support: Website | Customer support: Telephone, email and social media | Interface: Browser

Reasons to Buy

Innovative policies
Very strong financials
Good but not great customer satisfaction

Reasons to Avoid

Basic website

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 life insurance for ease of applying

Mutual of Omaha

(Image credit: Mutual of Omaha)

Mutual of Omaha

Best for ease of application

SPECIFICATIONS

Information support: Online information hub, quote tool | Customer support: Telephone, email support and social media | Interface: Browser

Reasons to Buy

Very good customer satisfaction score
Medical exams not necessary for a number of policies
Good, jargon-free website

Reasons to Avoid

Strong finances but not the strongest

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.


How to choose a life insurance policy

Life insurance isn't always an easy subject to broach – 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 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.