You have heard before: Best time to buy life insurance is when you are young!
Life insurance shopping can be daunting. How do you sort through dozens of companies trying to sell you hundreds of different policies to tell them apart from the ones that actually give you something of real value in exchange for your hard-earned money?
In fact, all life insurance is not created equal. There are some policies that rob your wallet in the form of hidden fees and inadequate coverage, while others that offer excellent protection at competitive rates. We looked at coverage options, customer satisfaction ratings, financial strength and value overall – and found the five life insurance companies that really set themselves apart.
Whether you’re a young professional getting started, a parent planning for your family’s future or approaching retirement, this guide will help you find the right coverage without blowing the bank.
How We Selected These Top-Rated Plans
Before we get into our recommendations, let’s talk a little about what makes a life insurance policy worth your dough. We rated each plan in a variety of important categories:
Financial Strength: Insurers are required to have robust financial ratings to pay out claims when the time arrives. We looked at only insurers that carry A- ratings or better from the major ratings agencies.
Coverage Options: The top plans had the most options available in terms of coverage amounts and policy types, which allowed us to personalize our selection for our specific life stage and financial circumstances.
Price Transparency: No hidden costs or ‘gotcha-style’ premium increases. The companies we chose for our list offer transparent, upfront pricing.
Customer Service: When you’re filing a claim or while you’re shopping around, helpful customer service is everything.
Speed of Claims Payments: Quick and fair payouts when your beneficiaries need them most.
Northwestern Mutual – Best Whole Life on the Planet
Northwestern Mutual has established its position as one of America’s most trusted life insurance companies. With a business history that spans over 165 years and a series of impressive financial strength ratings, they offer a level of stability that’s tough to beat.
Why Northwestern Mutual Stands Out
Their whole life insurance policies mix death benefit protection with the ability to accumulate cash value. This is so your policy is not only protecting your family, but also building up wealth. The cash value in the policy grows tax-deferred, and can be tapped through loans against the policy, if needed.
Key Features:
- Death benefit that does not decrease
- Dividend-paying whole life with cash value and annual dividends
- Flexible premium payment options
- No medical exam required for policies up to certain amounts
- Local agents that provide good customer service
Who Should Consider This Plan
Northwestern Mutual is best if you want permanent coverage and don’t mind paying higher premiums for guaranteed cash value growth. It’s particularly attractive for:
- High earners who want to save with tax benefit
- Parents who want to leave a certain inheritance
- Business owners who rely on key person insurance
Average Monthly Cost: $150-$400 for a non-smoking 35-year-old with $250,000 in coverage
Term4Sale – The Best Priced Term Life Insurance
Note that Term4Sale is not an insurance company but rather a service that allows you to compare rates from leading term life insurance providers. Most of the time, this results in a much greater reduction in price compared to purchasing directly from individual businesses.
What Makes Term4Sale Different
Instead of shopping for the best rate with just one carrier, Term4Sale gives you rates from a handful of the top-rated companies all at once. That transparency ensures you get the best rate, tailored to your financial needs.
Key Benefits:
- Get rates from 40+ top insurance companies in seconds
- No-obligation quotes in minutes
- Trained agents to assist with your choice
- Policies from $25,000 to $10 million
- Terms from 10-30 years
Perfect For Budget-Conscious Buyers
Term4Sale is particularly good for those in search of cheap term life insurance, for those who are seeking as much coverage as possible for as little cost as possible. It’s ideal for:
- Young families with tight budgets
- People with temporary insurance needs
- Anyone that needs to compare alternatives on-the-fly
Estimated Monthly Cost: $20 – $80 for a 35-year-old non-smoker with 20-year, $250,000 coverage
| Coverage Amount | 20-Year Term | 30-Year Term |
|---|---|---|
| $250,000 | $25-$45 | $35-$65 |
| $500,000 | $40-$75 | $55-$110 |
| $1,000,000 | $65-$130 | $95-$200 |
State Farm – Integrity You Count On, Service You Can Trust
The same reliability that State Farm is known for when it comes to auto and home insurance extends to life insurance. With agents operating in almost every community, they provide the personal service that many online-only companies can’t.
State Farm’s Competitive Advantages
They offer guaranteed issue life insurance and are supported with strong financial ratings and decades of claims-paying history. State Farm agents take the time to understand your life, your budget and your needs.
Standout Features:
- Local agents for face-to-face service
- Bundle discounts with auto/home insurance (up to 25%)
- Simplified underwriting for healthy applicants
- Convertible term insurance to permanent coverage
- 24/7 customer service support
Best Fit for Existing Customers
State Farm life insurance is a good fit if you already have other insurance policies through them. The bundling discounts and single-point-of-contact ease are real benefits.
Ideal Candidates:
- Existing State Farm auto or home insurance policyholders
- Individuals who want to deal with local agents
- Families who want all their insurance needs to go through one company
Estimated Monthly Cost: $30 – $90 for a 35 year old non-smoker with $250,000 term coverage.
Prudential – Adaptive to Your Needs, No Matter Your Stage in Life
Prudential has an extensive lineup of life insurance products that are meant to grow as your needs evolve. They have offerings for almost every scenario, ranging from simple term coverage to complex permanent policies.
Prudential’s Unique Approach
What distinguishes Prudential’s model is their customizability. A lot of their policies have riders and various options that allow you to change the type or amount of coverage without having to buy a whole new policy as your life changes.
Notable Features:
- Convertible term coverage that can be converted into a permanent policy
- Return of premium options on term plans
- Terminal illness accelerated death benefits
- Child coverage riders
- Disability waiver of premium options
Adapts to Changing Needs
Prudential is a good fit for those who expect that their insurance needs could change significantly over time. Their policies grow with you rather than needing to be replaced in favor of a new one altogether.
Great Choice For:
- Young professionals expecting income growth
- Would-be parents preparing for future kids
- Anyone who wants the most flexibility to manage their coverage
Estimated Monthly Cost: $25-$95 for a 35-year-old non-smoker with $250,000 coverage
New York Life – The Ultimate Protection with Proven Performance
New York Life has been protecting families since 1845, and they happen to be one of the oldest and most established life insurance companies in America. As a mutual company, policyholders are also owners of the company (and not just customers).
The New York Life Advantage
As a mutual company, New York Life is owned by policyholders instead of outside shareholders. This frequently results in superior dividend credits and more policyholder-beneficial determinations.
Key Strengths:
- Mutual company structure prioritizing policyholders
- Excellent dividend-paying whole life policies
- Strong financial ratings and stability
- Comprehensive agent network
- Variety of policy types
Premium Service for Long-Term Thinkers
New York Life rates are usually higher than standard coverage, but offers excellent value for consumers interested in long-term financial planning and wealth accumulation.
Best Suited For:
- High-net-worth individuals
- Individuals seeking participating whole life policies
- Those who value stability and reputation of their company
- Families planning multi-generational wealth transfer
Estimated Monthly Rates: $120-$350 for a 35-year-old non-smoker with $250,000 in whole life protection
Smart Shopping Tips for Life Insurance
It’s not enough, when it comes to life insurance, to simply find the lowest premium. Here, experts outline how to ensure you make the smartest pick:
Buy Coverage While You’re Healthy
With time and health complications people pay more for life insurance. When you buy coverage early, it locks in those prices while you’re young and healthy, particularly with so-called level-premium term policies.
Consider Your True Coverage Needs
One general rule of thumb is 10 times your annual income, but that may not apply in all cases. When estimating coverage amounts, take into account your debts, family expenses, goals for the future and current savings.
Don’t Ignore Policy Riders
Riders are supplementary aspects that make your policy your own. Even if they do raise premiums, key riders, such as disability waiver of premium or accelerated death benefits, frequently are far less costly than stand-alone policies.
Work with Licensed Professionals
Agents who sell life insurance must also receive passing grades on licensing tests and carry through with continuing education. They can also explain complicated policy features and help you find a policy that best suits your circumstances.
Shop Out for Red Flags
But not every life insurance offer is a good value. Here are some red flags:
Pressure to Buy Now: Reputable insurance providers won’t use pressure to force you to make a decision. Take that time to compare and educate yourself about your options and to carefully read policy details.
Suspiciously Low Rates: If a rate is abnormally lower than many of the other companies, do some investigating. They could have strict underwriting or low benefits.
Gimmicky Investment Features: Some policies are mixed with gimmicky investment products. Make sure you know what you’re buying and what it does.
Weak Financial Ratings: Avoid insurers that have anything less than a B financial grade from major ratings agencies. Your beneficiaries want a company that will still be there to pay claims.
Making Your Final Decision
The determination of how much life insurance is right for you is a personal one and depends on your individual situation, goals and preferences. The five plans we’ve picked definitely offer great value within their categories, but your best option really depends on your personal situation.
You might also want to ask the following questions:
- Do you need short-term or long-term coverage?
- Do I want the policy to develop cash value?
- Do you prefer local agents or online options?
- Is cost your main concern, or are you looking for features all over?
- How important is the reputation and history of the insurance company?
And, you can always begin with one type of policy and add coverage or exchange policies later as your situation and intentions change. The biggest thing is getting some coverage in place to make sure your family is protected.
Frequently Asked Questions
How much life insurance do I really need?
Most financial advisers advise coverage of 7-10 times your annual income, but your needs depend on your debts, family expenses and financial goals. Think about your mortgage balance, how much you want to set aside to help send your kids to college and how much your spouse would need to support his or her lifestyle without your income.
Term or whole life insurance?
Term life insurance covers you for a specific period, say 10-30 years, at a lower premium but does not accumulate cash value. Whole life insurance offers lifetime protection and a guaranteed cash value increase, but the price is far higher. Term typically is good for short-term needs, while whole life is for when you need permanent protection and are looking to build wealth.
How difficult is it to get life insurance if I’m in poor health after a heart attack or stroke?
Yes, though it could be more expensive or need special underwriting. Several companies sell simplified issue or guaranteed acceptance policies to people with health issues, but the coverage amount is usually capped and the premiums are generally higher. Some employers also provide group life insurance that doesn’t require medical exams.
How long does it take for life insurance to pay out a claim?
Reputable insurance companies process simple death benefit claims in a 30-60 day timeframe once all required documentation is received. Claims can be delayed if further investigation is required, but state law generally requires payment within a set time after approval of a claim.
Should I purchase life insurance through my employer or get an independent policy?
Life insurance offered through your employer is typically a good place to start because it’s often free or inexpensive, but it usually only provides a small amount of coverage (frequently 1-2 times your salary) and isn’t portable if you leave your job. Individuals have more control over the amount of coverage with individual policies, and they stick with the covered individual at any job.
Can I adjust my life insurance policy later?
This will be specific to your policy type and insurer. Many term policies can be converted to permanent coverage, and some permanent policies can be increased with additional coverage or have their features altered. But changes or riders often require new underwriting and may result in higher premiums, so it’s crucial to select carefully from the outset.
What if I can no longer afford my premiums?
Options vary by policy type. In general, term policies automatically expire if premiums aren’t paid, though some plans have grace periods. Whole life policies could offer the ability to use your cash value for premium payments, to decrease your death benefit, or even to convert to a fully paid amount of coverage. If you’re struggling to make payments, contact your insurer right away to discuss options.
If I’m single and have no dependents do I need life insurance?
When you are single, life insurance needs are less, but you might want to have coverage on hand to help cover final expenses, any remaining debt or to leave a financial gift to charitable organizations or loved ones. For young, healthy singles, large amounts of term coverage can often be purchased extremely cheaply, and some financial advisors suggest purchasing permanent coverage early to establish insurability and experience the benefits of the compound growth typical of cash value policies.
