If you’re evaluating your financial picture for the rest of 2023, make sure to consider life insurance. The purpose of life insurance is to have the peace of mind of knowing your loved ones will be taken care of financially if you pass away.
Life insurance buyers have many choices depending on their financial goals and budgets. To find the best life insurance companies, we evaluated term and permanent life insurance using data provided by: AccuQuote, a national online life insurance agency; Veralytic, an independent provider of life insurance reports that help consumers and their financial advisors compare cash value life insurance policies to others; and our own research.
Our Ratings of the Best Life Insurance Companies
Here are our top picks for the best life insurance policies:
- 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
Summary: Best Life Insurance Companies
The largest life insurance company in the United States, based on market share, is Northwestern Mutual. For our ratings we take into account several different factors, like cost competitiveness, historical performance, reliability of policy illustrations and financial strength, to determine the best life insurance companies.
What Is Life Insurance?
Life insurance is a contract between you and the insurance company that says the life insurance company promises to pay out a death benefit if you have paid your premiums. You can buy life insurance with the help of a life insurance broker or agent. You may be able to buy it online from an agent or the insurance company, especially if you’re shopping for term life insurance.
Your beneficiaries can use the money for whatever purpose they choose. Often this includes paying everyday bills, paying a mortgage or putting a child through college. Having the safety net of life insurance can ensure that your family can stay in their home and pay for the things that you planned for.
There are two primary types of life insurance: term and permanent life. Permanent life insurance such as whole life insurance or universal life insurance can provide lifetime coverage, while term life insurance provides protection for a certain period.
How To Find the Best Life Insurance Policy for You
There are many different types of life insurance to consider. But armed with the right information, you can quickly narrow down the options based on your needs in a life insurance policy.
There are some important things to consider when shopping for life insurance:
- Look at financial strength ratings
- Select life insurance as part of a larger financial plan
- Work with an experienced life insurance agent
- Don’t assume insurance companies offer competitive pricing for everyone
- Insist that cost disclosures for universal life insurance be included in any proposals
- Figure out if you want life insurance riders
- Life insurance for military members
Look at Financial Strength Ratings
If you knew that your insurance company would likely be unable to pay out your beneficiaries’ life insurance claim in the future, you’d want to choose a different company. One way to make that kind of determination is to look at the insurance company’s financial strength rating.
The financial strength ratings available from agencies like AM Best and Standard & Poor’s help you assess a company’s ability to pay out claims in the future. Insurers with Superior (A+ to A++) or Excellent (A- to A) ratings are those you can have financial confidence in.
All of the best life insurance companies we have named have either Superior or Excellent financial strength ratings from AM Best.
Select Life Insurance as Part of a Larger Financial Plan
While it may be tempting to avoid the topic of dying, addressing life insurance needs as part of your overall financial plan can make the difference between your family thriving or living in financial hardship after you’re gone.
Working with a trusted financial advisor is a great way to make sure your life insurance matches up with your financial goals. For example, if you want to be able to supplement your future retirement income, a financial advisor can help to identify the right options for a cash value life insurance policy.
Work With an Experienced Life Insurance Agent
Life insurance quotes are determined by factors such as your age, gender, lifestyle (such as smoking) and health. All factors are important, but health has a tremendous impact on the rates and types of life insurance you’ll qualify for—and which insurance companies will have the best life insurance quotes for you.
An experienced independent agent or financial advisor can save you a lot of time and frustration by pinpointing the insurance companies that are most likely to give you favorable rates based on your health and other factors.
Don’t Assume Insurance Companies Offer Competitive Pricing for Everyone
Every life insurance company has its own rules that determine the rates it offers. As a result, your premium can vary significantly depending on the insurer. The accumulation rate of cash value and the policy fees for cash value policies also vary between companies.
Insist That Cost Disclosures for Universal Life Insurance Are Included in any Proposals
A life insurance quote reflects what you’ll be billed for, but it doesn’t always tell you about a policy’s internal costs, such as expenses and fees.
Universal life insurance policies have premiums, like any other life insurance policy, but they also have other costs in the form of policy fees. When shopping for this type of policy, be sure to ask the insurer about premiums, fees and any other costs that may be associated with the policy.
“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,” warns Barry Flagg, founder of Veralytic.
Figure Out if You Want Life Insurance Riders
If you can’t seem to find a life insurance policy that seems perfect, you may want to check into the life insurance riders offered by the insurance company.
Life insurance riders allow you to customize your policy by adding extra coverages. Common riders include benefits you can use while you’re alive, such as accelerated death benefits, long-term care and waiver of premium if you become disabled.
Some riders are included in certain types of life insurance policies without extra charge, such as accelerated death benefit riders. If you’re interested in customizing and expanding coverage, ask your life insurance agent to explain your rider options.
Life insurance for military members
Military service members have life insurance options that are specifically for them:
- Active-duty service members of the Army, Navy, Air Force, Space Force, Marines, or Coast Guard or those who meet other eligibility requirements qualify for Servicemembers’ Group Life Insurance (SGLI).
- Veterans who had SGLI before retirement qualify for Veterans’ Group Life Insurance (VGLI).
The Supporting Families of the Fallen Act passed in October 2022, increasing the coverage amounts of both SGLI and VGLI from $400,000 to $500,000.
Military members who decide to supplement SGLI or VGLI can do so with a private insurance company, like the American Armed Forces Mutual Aid Association, USAA and many others.
Types of Life Insurance
There are two primary types of life insurance: term life and permanent life.
What Is Term Life Insurance?
Term life insurance is a policy where you choose the length of coverage, such as 10, 15, 20 or 30 years. If you die within that term, your beneficiary will receive the death benefit. If you outlive the term and don’t renew the policy (at a higher cost), there is no death benefit.
Term life insurance is good for folks who want to cover a specific financial concern, such as income replacement during your working years.
Related: What Is Term Life Insurance?
What Is Permanent Life Insurance?
Permanent life insurance is good for folks who want a death benefit paid out no matter when they pass away. Permanent life insurance policies also have a cash value component that can accumulate money on a tax-deferred basis. Permanent life insurance is usually significantly more expensive than term life.
People who choose permanent life insurance usually have specific goals in mind, such as supporting financial dependents, funding a trust for heirs, or building cash value to supplement retirement savings.
Permanent life insurance can be broken down into main subtypes:
Whole life insurance
Whole life insurance is predictable because the premiums, rate of cash value growth and amount of the death benefit are fixed and guaranteed.
Related: What Is Whole Life Insurance?
Universal life insurance
This type offers more flexibility and you may be able to adjust premium payments and death benefits within certain parameters. The cash value growth will depend on the insurer and the performance of the invested assets that are underlying the policy. Types of universal life insurance are fixed-rate universal, guaranteed universal, indexed universal or variable universal.
Permanent life insurance policies can be difficult to understand from quotes or hypothetical illustrations. Simply comparing life insurance quotes or some projection of cash values won’t reveal whether the policy is a good value. “Look under the hood,” advises Flagg of Veralytic. For example, a life insurance agent or financial advisor can request a Veralytic report to see how the policy you’re considering compares to industry benchmarks.
“Ultimately, the premium you’ll have to pay and/or the cash value growth you’ll see depends on what the insurer actually charges and how well the investments do. You want to confirm that internal policy costs are competitive and that the investments within the policy fit your risk tolerance,” cautions Flagg.
Variable life insurance
Variable life insurance offers flexibility not found in whole life insurance, but with a safety net so your death benefit can’t drop below a certain amount.
That flexibility includes deciding on where to invest your cash value. The investments you choose play a vital role in the success of your policy, which makes this an option if you want to play an active role in your life insurance. Unlike a variable universal policy, a variable life insurance policy offers a safety net so that your death benefit won’t fall under a specific dollar figure.
A variable life insurance policy doesn’t let you change your premiums, which also makes it unlike variable universal life.
Similar to other types of permanent life insurance, a variable life policy offers cash value, which you can tap into while you’re alive. You need to make sure your policy maintains at least a minimal level of cash value or your policy could lapse.
What Is No-Exam Life Insurance?
Life insurance companies sometimes offer policies without a life insurance medical exam. These no-exam life insurance policies don’t require an exam but you may be asked to answer health-related questions.
Types of life insurance policies include:
- Accelerated underwriting: Life insurance companies primarily use information from third-party sources and algorithms to set your rate. The insurance company will review your prescription drug history, criminal record and driving record to gauge your risk. With that information, the insurance company will set your life insurance rates.
- Guaranteed issue life insurance: There’s no medical exam, no health questions asked and you can’t be turned down.
- Simplified issue life insurance: There’s no medical exam, but you likely have to answer a handful of health questions.
Guaranteed issue and simplified issue policies can cost much more than policies that are fully underwritten, but they’re a way to get life insurance quickly and may be the only option for older people and those with health issues.
Other Types of Life Insurance
Other types of life insurance include:
- Burial insurance: Also called funeral insurance or final expense insurance, a burial insurance policy typically has a small death benefit meant to pay off final expenses, such as $10,000. They are typically whole life insurance policies and will have a high cost for the amount of coverage.
- Survivorship life insurance: A survivorship life insurance policy, also called second-to-die life insurance, offers coverage for a husband and wife. The death benefit isn’t paid out until both people die.
- Mortgage life insurance: A mortgage life insurance policy pays off your mortgage if the policyholder dies. The payment goes directly to the mortgage lender.
- Supplemental life insurance: Supplemental life insurance is a free or low-cost group policy that may be offered by an employer or group. If a supplemental policy is connected to an employer, you will likely lose that coverage if you quit or are terminated.
Cheapest Life Insurance Companies
Life insurance rates vary based on your age, health and more. We analyzed term life insurance rates for a $500,000 policy to determine the cheapest life insurance companies, based on the insurers in our analysis.
Rates are for a 20-year, $500,000 term life insurance policy for buyers in excellent health and of average height and weight.
