Finding the best life insurance company for your needs isn’t as easy as choosing the next Netflix series to binge watch. There are a lot of factors people should take into consideration when searching for a plan.
First of all, what type of life insurance do you need? (And if you’re thinking, “Holy moly, there are different types?!” don’t worry, you’re not alone.)
Second, consider your specific conditions and lifestyle choices. Are you a smoker? Do you have a family history of a terminal illness? Different life insurance companies treat people with various habits, conditions and family history differently. You need to make sure you’re being treated fairly and finding the best deal.
Don’t be intimidated by the jargon, the options or the decisions related to your passing away. We’re here to tell you everything you need to know to find the best life insurance in 2019.
Types of Life Insurance
Keep in mind that numerous sub-categories of life insurance exist. However, there are two main types you should know about: term and permanent. Which is best for you?
Term Life Insurance
If you purchase term life insurance, you’ll only pay premiums for a set term, usually 10 to 30 years. Your primary objective is to ensure that a specific sum of money, the death benefit, will be given to your loved ones should you die during that term.
Pros of Term Life Insurance
It’s your most affordable option. We Penny Hoarders love to save a cent here and there! With a term life policy, you pay fewer fees and receive fewer benefits than with a permanent policy.
Also, rather than paying premiums for your entire life, you only pay for a set period of time. As a result, you end up paying a smaller total over the years.
If you want to, you can usually convert your term life insurance policy into a permanent life insurance policy. If money is tight at the moment but you want life insurance, a great option is to buy term insurance now and convert it into permanent later.
Most companies allow conversion within a certain amount of time after buying your insurance, but this time frame differs for each life insurance provider.
Cons of Term Life Insurance
A term policy doesn’t have any cash value. You’re only paying for the death benefit, or for the amount of money your loved ones will receive once you’re gone. If you opt for a permanent policy over a term policy, you’ll receive more benefits than just the death benefit. Granted, that’s a big reason that term life insurance is so affordable, but be aware of what you’re missing if you go with the cheaper option.
If you live past the set term, your family won’t get any payout when you do pass away. Granted, once your term expires, you can always sign up for a new term or switch to permanent.
Many people choose term life insurance so that, should they pass away unexpectedly, their family will have money to take care of expenses. Once your term is over, there’s a good chance you’ll have fewer expenses — you may have paid off your house and car by then, and your kids will have finished college. As you get older, your need for life insurance typically decreases; that’s why a lot of people prefer to opt for term life insurance.
However, that’s not always the case. If you have doubts, it’s time to look into permanent life insurance.
Permanent Life Insurance
Term life insurance is only valid for a set amount of time. Permanent, on the other hand, lasts for your entire life. This means that you’ll pay premiums for the duration of your life. There are two main categories of permanent life insurance: whole and universal.
Whole life insurance provides financial consistency, while universal life insurance provides financial flexibility.
Whole Life Insurance
A whole life policy provides death benefits to your loved ones once you pass away. Unlike term, however, whole life insurance also has cash value.
Pros of Whole Life Insurance
You’re set for life. Whether you die at age 30 or age 90, your family will receive death benefits. Whole life insurance doesn’t have the time restraints a term policy does.
Whole life insurance policies have cash value. You’ll pay your monthly, quarterly or annual premiums, just as you would with term — but a portion of these premiums goes into an investment account that accrues interest. You have a lot of options for how to use this cash value.
At any time, you can trade in your plan and forfeit coverage to receive the cash. You can take out a loan, withdraw a partial amount and even use the cash value to pay your premiums. (That last one is pretty cool!) Oh, and your cash value is tax-deferred.
Cons of Whole Life Insurance
The main downfall is the price. Because you’re paying for a longer period of time in addition to paying for cash value, whole life insurance can cost significantly more than term for the same death benefits.
The big question is… Is the price worth it? Once again, if you think you’ll have paid off most of your assets by the time you pass, you might want to go with term life insurance. If your financial situation is a bit more up in the air, whole life insurance could be better for your family.
You have to pay fees if you trade in your coverage for the cash value. You knew it had to be too good to be true, didn’t you? You don’t get all the cash you’ve accumulated—you have to pay fees. The amount you’ll pay in fees depends on the company.
Your loved ones won’t see the cash value. This is worth mentioning, because it’s natural to assume your family would receive the cash value that’s accrued when you pass. In reality, if you haven’t spent that money by the time you pass, the insurance company will take it back. Your family still only receives the death benefit.
Universal Life Insurance
Universal life insurance is very similar to whole, with three key differences: The amount of your premium payments can change over time, you can change how often you pay your premiums and your death benefits can change.
Pros of Universal Life Insurance
A universal life policy is a great choice if you think your financial situation could change significantly before you pass. For example, maybe you realize 20 years into your plan that your loved ones will need a little more assistance than you originally thought after you’re gone. You can increase the death benefits!
You can update your plan without having to get a new policy, which is a huge relief. If you have term life insurance, you have to either convert to a permanent policy or buy a new policy once your term expires if you want new terms.
If you have whole, you can forfeit your coverage for the cash value and sign up for a new policy if you want to. With universal, you can make a ton of changes to your policy without going through the hassle of getting a new plan.
A Con of Universal Life Insurance
Keep in mind, universal has most of the same cons as whole life insurance. There is one more main thing to consider, though.
Of the three main types of life insurance, universal has the most variables, making it the most confusing. If you aren’t exactly a life insurance pro, this could be intimidating. I definitely recommend seeking advice from a third-party professional before choosing a universal plan or making any changes to it.
The 7 Best Life Insurance Companies for 2019
There isn’t one magical life insurance company that’s best for everyone. (Although that would be amazing, wouldn’t it?)
Different people benefit from certain companies and policies. To make things easier for you, we’ve used a simple methodology to find the seven best life insurance companies out there.
We took three main factors into account in our search for the best life insurance companies: financial strength, customer satisfaction and premiums.
Life insurance is a long-term purchase, so you want to be confident that the company you’re buying life insurance from will last longer than you do. Also, it’s vital that they’re financially sound enough to keep their promises to you and your family.
I’ve taken AM Best’s financial strength ratings into account. AM Best is a third-party credit rating company that rates life insurance on a letter grade scale, the highest being A++ (superior).
All of the companies on this list are rated either A, A+ or A++. Ratings of A- and A are considered excellent, while A+ and A++ are superior.
Financial strength becomes a lot less impressive if other aspects of a company are subpar. That’s why customer satisfaction is such an important thing to take into account.
I’ve evaluated these companies’ customer satisfaction by looking at their J.D. Power ratings. J.D. Power is a marketing research company that surveys customers, then rates insurance companies on a 1,000-point scale based on those survey answers.
After scoring the companies, J.D. Power labels each company as “among the best,” “better than most,” “about average” and “the rest.”
All you Penny Hoarders out there… you knew I’d have to take your personal finances into account, didn’t you?
When it comes down to it, a lot of the largest life insurance companies offer very similar plans. In these cases, some people simply choose the option that’s most affordable for them.
This factor was a bit more subjective than the others, because your premium payments can depend on a variety of factors—your age when you buy insurance, your health and your habits, just to name a few.
The Best Life Insurance Companies Overall
|Company||AM Best Rating||J.D. Power Ranking||Premium||Best for…|
|State Farm||A++||825||Average||Term life insurance|
|Northwestern Mutual||A++||812||Low||Whole life insurance|
|Protective||A+||791||Low||Universal life insurance|
|Mutual of Omaha||A+||792||Average||Burial insurance|
|Voya||A||744||Low||Those with a family history of cancer|
The Best Term Life Insurance Company: State Farm
- Financial strength: A++ (superior)
- Customer satisfaction: 825 (among the best)
Do you already use State Farm to insure your home, car or health? Then you can save money by purchasing your life insurance through them, too. Yep, State Farm rewards you for buying multiple types of insurance with them.
However, even if you don’t use State Farm for other types of insurance, it’s still a fantastic choice for term life insurance. J.D. Power has ranked State Farm as the life insurance company with the highest customer satisfaction for five years in a row.
You can select a 10, 20 or 30 year term for $250,000. The policy is renewable up to age 95 and can be converted to a whole life program.
The Best Whole Life Insurance Company: Northwestern Mutual
- Financial strength: A++ (superior)
- Customer satisfaction: 812 (better than most)
My favorite thing about Northwestern Mutual’s whole life insurance? It’s highly customizable. No two people’s needs are the same, so why should everyone have the same whole life insurance plan?
The company has a lot of optional add-ons (called “riders” in the insurance world) for a life insurance policy. For example, a waiver of premium rider is available so that, should you become disabled while you have insurance, Northwestern Mutual no longer requires you to pay the premiums. This is just one of many riders, and Northwestern Mutual offers more riders than most of its competitors.
You also have a number of payment options. You can select a policy in which you pay your premiums until you reach an agreed-upon age. Or you may choose to pay your premiums for a certain number of years until your balance is paid off, ranging from 10 to 30 years.
The Best Universal Life Insurance Company: Protective Life Insurance
- Financial strength: A+ (superior)
- Customer satisfaction: 791 (better than most)
Good news: When it comes to price, Protective Life Insurance is probably your best universal life insurance option.
Protective stands out because it offers something called Custom Choice UL (Universal Life) Insurance. Universal life insurance is already known for being customizable, but this policy kicks things up a notch.
At first, the Custom Choice UL policy looks like term life insurance. You choose a set amount of time you want your premiums and death benefit to remain stagnant.
When the time frame ends after, say, 30 years, your premiums stay the same. However, your death benefit amount slowly decreases. Once your balance hits the minimum of $10,000, the death benefit stays at that amount and your premiums will start to increase.
The Best Burial Insurance Company: Mutual of Omaha
- Financial strength: A+ (superior)
- Customer satisfaction: 792 (better than most)
When you buy burial insurance, the death benefit is specifically intended to help your loved ones pay for funeral and burial costs. (You’d be surprised how much it costs to be put in the ground or cremated!)
There’s an age limit when you’re buying burial insurance. Mutual of Omaha’s minimum age requirement is 45, while many companies’ don’t start until age 50. If you want to get a jump on things, Mutual of Omaha is a great choice.
Because it’s primarily intended for funeral and burial costs, burial insurance death benefits amounts are much lower than death benefits for other kinds of life insurance policies. With Mutual of Omaha, you can get a policy ranging from $2,000-$40,000. Most of its competitors’ payouts have a much lower threshold. For example, Royal Neighbors of America and AIG cap at $25,000.
The Best Life Insurance Company for Smokers: Transamerica
- Financial strength: A+ (superior)
- Customer satisfaction: 751 (the rest)
If you’re looking for yet another reason to quit smoking, here’s one for you: Life insurance costs substantially more for smokers than for non-smokers. The older you are when you buy life insurance as a smoker, the more shockingly high that price will be.
(Pro tip: If you’re comfortable with waiting to purchase life insurance, quit today and start shopping for insurance next year. Most companies classify you as a non-smoker if you haven’t smoked for at least 12 months.)
Thinking you can just lie on your application and say you don’t smoke? Well, that’s called insurance fraud, and I don’t recommend it. Plus, many companies require you to take a medical exam, so you could easily be caught.
Thankfully, Transamerica can make things easier for you than a lot of life insurance companies can.
Smokers probably won’t be able to find lower prices anywhere else! Transamerica has strong financial stability. While its customer satisfaction ranking is just so-so, the score is still better than the scores of many competitive companies.
Note: Banner Life Insurance offers competitive prices for smokers along with Transamerica, but it hasn’t been ranked by J.D. Power, so it didn’t make it onto this list. Still, it’s worth getting a life insurance quote from both companies!
The Best Life Insurance for Millennials: Lincoln Financial Group
- Financial strength: A+ (superior)
- Customer satisfaction: 778 (better than most)
You might think it’s unnecessary to get life insurance if you’re in your 20s or 30s. If you don’t have a mortgage, spouse or kids, why bother buying now?
Well, the younger and healthier you are, the lower your premiums will be! If you select 30-year life insurance coverage at age 25, you’ll be covered until you’re 55, and there’s a decent chance you’ll get married, pop out a couple kids or buy a home before age 55. If you purchase life insurance before you think it’s necessary, your payments will be much lower than if you wait!
Lincoln Financial Group is even more affordable than its competitors, with better financial strength and customer satisfaction to boot.
For example, using QuickQuote, I received an insurance quote for a 30-year, $250,000 term policy for a 25-year old woman in good health in California: $18.77 per month with Lincoln.
Foresters Financial cost $19.69 per month, and Mutual of Omaha cost $20.86.
A buck or two may not seem like a notable difference. However, if you pay an extra dollar per month for 30 years, you just spent an extra $360!
The Best Life Insurance Company for Those With a Family History of Cancer: Voya Financial
- Financial strength: A (excellent)
- Customer satisfaction: 744 (the rest)
It’s understandable that rates differ for people who have been diagnosed with cancer or who have beaten cancer. But guess what? Even if you just have a family history of cancer, this will affect your rates. If anyone in your family was diagnosed before age 60 and/or died from cancer, this will probably affect your life insurance premiums.
Not every type of cancer will affect your premiums. Certain types of cancer have been linked to genetics, and others haven’t. Your sex is another factor. For example, if you’re a woman whose father had prostate cancer, this likely won’t affect your rates… but it could affect your brother’s rates.
But all isn’t lost. Voya Financial is here to help! (You may be familiar with the company ING, but you should know they recently changed their name to Voya Financial.)
Voya Financial is known for placing less emphasis on a family’s history than most other companies do when determining rates.
If something as dire as cancer is part of your family history, then you should still talk to insurance agents and get life insurance quotes from multiple companies. However, there’s a good chance Voya Financial will offer you some of the best—if not the best—premiums. Plus, its financial strength and customer satisfaction is higher than most of its competitors.
Who knew there was so much to consider when choosing the best policy?
Thankfully, if you choose one of these seven top life insurance companies, you’ll set yourself and your family up for success.
Laura Grace Tarpley is a freelance writer and an editor for FluentU. Follow her on Twitter @lgtarpley.