About 36% of Americans intend to purchase life insurance in the next 12 months, and you may be among them. Which life insurance company is right for you depends greatly on what you are looking for, but some companies offer features that make them better than others. Knowing what the options are can help you decide if you will be better served with a term life policy or a permanent policy like whole or universal life.
Different types of life insurance work for different people. We reviewed over two dozen life insurance companies for factors including financial stability, complaints history, customer satisfaction rankings, and product offerings. We also researched add-ons and riders that give some companies an advantage over others. What follows are our top picks.
The 7 Best Life Insurance Companies of 2020
- New York Life: Best Overall
- Northwestern Mutual: Runner-Up, Best Overall
- MassMutual: Best for Building Savings
- AIG: Best Term Life Options
- Guardian Life: Best Estate Planning Option
- John Hancock: Best Optional Features
- Transamerica: Best Guaranteed Issue
Best Overall: New York Life
New York Life is a top-scoring insurer in our 2020 review of life insurance companies. Established in 1845, it is the third-largest individual life insurer in the U.S. and has an AM Best Rating of A++ (Superior). The company is a mutual insurer, meaning that it pays dividends on eligible policies, which can add to the cash value of your policy investment. New York Life has paid dividends every year since 1854.
Customer satisfaction rankings for New York life are high, rated as better than most by J.D. Power, and the complaints trend at the National Association of Insurance Commissioners (NAIC) is excellent, with virtually no complaints (only 58 in 2019, with a premium volume of over $10 billion dollars). This lack of complaints, in addition to the company’s abundance of insurance choices, is why we chose it as our best overall life insurance provider.
New York life offers plans for groups, such as members of the AARP and military veterans. The company offers over 10 different life insurance policies, including term and permanent life plans. You can purchase policies up to age 75 for term, and up to age 90 for whole life products, some of which make you eligible for dividends. There are also universal life plans available.
New York Life has some key riders that help you get the most value out of your policy. These include a money-back rider, accelerated death benefit riders (including chronic illness), options to purchase paid-up additions, and a spouse's paid-up option, enabling a spouse to take proceeds from the death benefit and use it to purchase their own policy without a medical exam.
Quotes for New York Life are not available online; to help clients determine coverage needs, New York Life financial specialists are available to meet with you to determine your goals.
Read the full review: New York Life Insurance
Runner-Up Best Overall: Northwestern Mutual
Northwestern Mutual was founded in 1857 and is the number-one life insurance company in the U.S. by premiums written. The company has an AM Best Rating of A++ (Superior) with a very low level of complaints with the NAIC. In customer satisfaction, they received the top award, scoring 810 out of 1,000 in the 2019 J.D. Power Life Insurance Study. As a mutual company, Northwestern Mutual pays dividends on eligible policies. In 2020, the company had a record-breaking year for dividend payouts, with $6 billion paid to policyholders.
Northwestern Mutual is the runner-up for best overall life insurance company because of all the benefits, payable dividends, and large variety of plans they offer, including the innovative blended policy. A consistently high-ranking insurer, they have an excellent reputation for providing the options and financial planning services to help you meet your goals, no matter what your budget or age.
Northwestern Mutual offers over 17 different life insurance plans, including convertible term, level and renewable term, whole life, and many universal life options. Besides individual life products that only insure one life, the company also has survivorship life policies. They are the only life insurance company we found that offers a combined policy, incorporating both term and whole life. They are also the only insurer that offers the possibility to collect dividends on eligible term life policies, which is highly unusual.
Life insurance coverage through Northwestern Mutual is available for purchase from birth to age 80. You can expect that you will have to go through some form of underwriting, depending on your age and the plan you are applying for.
Read the full review: Northwestern Mutual Life Insurance
Best for Building Savings: MassMutual
Massachusetts Mutual Life Insurance Company has been in business since 1851 and has a financial stability rating of A++ (Superior). Like New York Life and Northwestern Mutual, MassMutual is a mutual insurer that pays dividends on participating policies. MassMutual life insurance policies provide many opportunities to build savings through its whole life and universal life product lines. MassMutual has one of the lowest levels of complaints with the NAIC among all the insurers we reviewed.
There are several ways to build savings using life insurance. Besides building a cash value through a permanent policy, it is important to consider the additional features of a policy, including dividends, any guaranteed rate of return, and investment options. MassMutual offers all these, which is why we chose it as the best choice for building savings.
MassMutual’s participating whole life policy offers guaranteed cash value options, a guaranteed death benefit, and dividend participation. There are also a few universal life options to choose from. These give you flexible payments with customizable premium options to build higher cash values, and you can place your money in Guaranteed Principal Accounts (GPA) or investment accounts, depending on the risk you want to take. The savings you build in both the universal and whole life policies allows you to borrow from the cash values of the policy.
MassMutual has riders you can add to the policy:
- A life insurance supplement rider that allows you to use dividends to purchase additional values
- Guaranteed insurability riders
- A disability waiver of premium rider
- Accelerated benefit riders that can help you cover costs of long-term care
Read the full review: MassMutual Life Insurance
Best Term Life Options: AIG
AIG was founded in 1919 and is the fifth-largest life insurer in the U.S. The company has an AM Best rating of A+ (Superior). AIG’s customer satisfaction scores and complaints trends are average based on the J.D. Power survey and most recent data with the NAIC, respectively.
AIG offers 18 different term life policy options through various flexible term life plans. The company's Quality of Life (QOL) insurance program includes the advantage of living benefits for chronic, critical, or terminal illness. The maximum term is 35 years, and the policies have level premiums throughout the selected term. After the end of the term, policies can be renewed annually up to age 95. AIG’s incredible breadth of term life options is why we chose it as best for accommodating all of your term life insurance needs.
AIG’s term offering is unique because you can choose the length of term you need instead of settling for the standard term lengths other insurers offer (such as 5, 10, 15, or 20 years, for example). You can also convert the term policy into a permanent life insurance policy without proof of insurability during an eligibility period. The company offers life insurance with no waiting periods and no medical exams.
Besides the QOL plan, AIG also offers the option to add riders to the term policy:
- Child rider
- Accidental death benefit rider
- Terminal illness rider
- Waiver of premium for disability rider
Read the full review: AIG Life Insurance
Best Estate Planning Option: Guardian Life
Guardian Life Insurance Company was founded in 1860 and is one of the largest mutual insurers in the U.S. The company has an AM Best rating of A++ (Superior). Guardian Life has a very low level of complaints with the NAIC and is a highly ranked life insurer for customer satisfaction in the top 10 of the J.D. Power surveys.
Guardian has term and permanent insurance options available for purchase from ages 18 to 90. The company has a specialized tax-advantaged plan designed for wealth transfer called the EstateGuard Whole Life Insurance. EstateGuard is a survivorship life policy with built-in living benefits, the ability to build cash values (and borrow from them tax-free), guaranteed death benefits, and level premium payments. The plan also has cash value growth guarantees and makes you eligible for dividends. The strength of this policy is why we chose Guardian as the best option for estate planning.
Guardian provides riders that you can add to your policy, including a spouse or child rider, a DuoGuard rider that allows a surviving spouse to purchase life insurance without proof of insurability, index participation features on whole life policies, accelerated death benefit riders for long term care, and guaranteed insurability riders (up to age 50).
The EstateGuard plan requires you to speak with a representative to obtain a quote.
Read the full review: Guardian Life Insurance
Best Optional Features: John Hancock
Established in 1862, John Hancock is the sixth-largest life insurer in the U.S. and has an AM Best rating of A+ (Superior) for financial strength. For a company as large and established as it is, John Hancock has a very low level of complaints with the NAIC. The company has taken a unique and innovative approach to motivating policyholders to live healthier lifestyles by rewarding positive choices with premium rebates and perks focused on health and wellness.
For example, John Hancock has a life insurance policy for people with Type 1 or Type 2 diabetes called Aspire. There's also a Quit Smoking Incentive (QSI) program that allows smokers to enjoy the reduced rates of non-smokers for the first three years of a policy, in hopes of encouraging them to quit smoking. These programs are why we named John Hancock the best life insurer for optional features.
John Hancock has 14 different life insurance plans, including term, final expense, whole life, universal life, and survivorship life. The company offers simplified underwriting (without a medical exam) and fully underwritten policy types. It is known for quick underwriting and providing reasonable rates for people with health issues, such as asthma, diabetes, or heart disease.
The stand-out feature of John Hancock’s life insurance is the Vitality Program. This program provides a fitness tracker and the ability to earn points that entitle you to premium refunds based on your physical activity. The Vitality Program also gives you discounts and rewards with partners like Amazon and certain grocery stores that specialize in healthier food choices. Some of the company’s plans give you access to the Life Track Policy Management service, which allows you to take a hands-on approach to managing your policy's cash values.
John Hancock provides a series of living benefit riders, a waiver of premium for unemployment rider (pays your premium if you are unemployed for up to 12 months), and critical illness and long-term care riders.
Read the full review: John Hancock Life Insurance
Best Guaranteed Issue: Transamerica
Transamerica has been around since 1904, is the eighth-largest life insurance company in the U.S., and has a financial strength rating of A (Excellent) from AM Best. Transamerica has average ratings for complaints with the NAIC and ranked 20th out of 24 insurers reviewed for customer satisfaction in the J.D. Power study. Transamerica’s financial strength and living benefit options for their simplified issue and guaranteed issue policies make them our top pick for best guaranteed issue life insurance.
Although several companies offer a final expense guaranteed issue policy, Transamerica offers issuance for the largest age range among companies we reviewed—from ages zero to 85. The policy has a maximum limit of $50,000, which is higher than many other insurers. The final expense guaranteed issue policy has no waiting period. Transamerica does not offer quotes online for the guaranteed issue policies.
In addition to simplified underwriting and guaranteed issue policies, Transamerica offers term life insurance, whole life insurance (with level premiums and guaranteed cash values), and some universal life insurance products.
Riders with Transamerica include accelerated death benefit riders for nursing home or terminal illness, monthly disability income riders (besides the waiver of premium rider, this rider pays you up to $2,000 a month if you become disabled), a return of premium rider, and a child or grandchild rider.
Read the full review: Transamerica Life Insurance
What Is Life Insurance?
Life insurance is a contract between you and an insurance company. As part of your agreement, you pay premiums on your policy and, in exchange, the insurance company agrees to pay out a set amount of money to beneficiaries of your choice if you die during the duration of the contract. When you buy life insurance, you decide how long you need the insurance and how much of a death benefit you want.
Term vs. Permanent Coverage
Term and permanent life insurance both provide a death benefit in exchange for premiums. While term life insurance provides a death benefit for a limited amount of time, permanent life insurance includes a death benefit for the rest of your life—so long as you pay your premiums.
Permanent life also offers several advantages beyond the death benefit, including:
- The opportunity to build savings in cash value growth
- The option to borrow money from the value of the policy if you need it
- The ability to earn dividends (only with mutual insurers who offer participating policies)
- The opportunity to invest your cash value
- Flexible premium schedules
Overall, permanent life insurance is a more comprehensive product than term life. It offers the opportunity for saving and investing, plus a death benefit that is available for your lifetime. Where term life excels is in cases where one needs lower-cost insurance or coverage for only a finite period of time. For instance, one may choose to carry term life protection only up until children are through college and out on their own.
What Does Life Insurance Typically Include?
A standard life insurance policy provides a death benefit. Permanent policies also include cash value and, in the case of mutual insurers, dividends on eligible policies. In addition to these core offerings, most life insurance policies also offer several riders to help policyholders get additional value out of their policies. These riders are usually optional and increase the cost of your policy.
Some examples of riders include:
- Accidental death riders
- Living benefits or accelerated death benefits
- Waivers of premium if you are disabled
- Return of premium riders
- Child or spousal riders
- Guaranteed insurability riders
What Does Life Insurance Typically Exclude?
Life insurance covers death due to illnesses, accidents, and almost any other reason. However, most policies do contain exclusions or waiting periods before the life insurance policy will pay out the full death benefit.
Here are some examples of common exclusions or clauses:
- An incontestability clause that can apply in the first two years of an insurance policy and allows the insurance company to challenge claims in that time period.
- Death as part of extreme sports or adventure activities, or if your work in a high-risk industry and die on the job
- Failure to disclose all facts or answer questions on your life insurance application truthfully. Knowingly omitting or providing false information on an application are examples of insurance fraud.
What Are the Typical Costs of Life Insurance?
Most people overestimate the cost of life insurance by three to five times. The average cost of life insurance will vary depending on your age, health, sex, amount of coverage you choose, and the type of policy. Life insurance pricing can also vary depending on the state you live in and what kind of lifestyle you lead. You can expect to pay up to 10 times less for term life insurance than for permanent life insurance because the term is for a limited time and the policy does not have cash values. Prices for the cheapest life insurance start around $10 per month and can run into hundreds of dollars per month.
Is Life Insurance Worth It?
Insurance is about protecting your family’s financial security and avoiding financial hardship if an unexpected loss occurs. In the case of life insurance, it is about replacing the income of the insured in case they die. If you do not need the protection, then life insurance is not worth it. If death would create a hardship, then life insurance is worth it, just as home or car insurance is worth it. Unlike home or car insurance, though, life insurance can also help you build savings.
A good way to make sure life insurance is a good investment is to take advantage of riders to include things that might happen besides your death. For example, get a return of premium rider if you suspect you will survive the term or a policy that will pay accelerated death benefits for chronic, terminal, or critical illness if you believe this may be likely given the state of your health.
How We Chose the Best Life Insurance Companies
Finding the best life insurance company can be challenging, especially since the advantages one company over another are not immediately obvious. Everyone’s needs are unique, so we looked at over two dozen insurers to come up with our list of the best life insurance companies. We researched each company’s financial stability, reputation, customer satisfaction ratings, complaints with the NAIC, and ratings with the BBB. We also considered policy plan options, riders, and value-added benefits for various age groups and other specific needs. We looked at quotes, spoke with insurers and agents, and reviewed policy features, limitations, and advantages to finalize our selections for the best life insurance companies.
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