One reason many people hold off on buying life insurance is that they think it is too expensive. When asked, people often estimate the cost of a 20-year term life policy for a healthy 30-year-old at almost three times its actual cost—$41 a month, when, in fact, the cost is often closer to $12 a month.
Early adulthood is actually a great time to buy life insurance. By buying coverage early, you lock in the best available rates to prepare for the responsibilities you may have in the future. However, choosing a life insurance company can be tricky.
To help young adults find the coverage they need, we looked at over 25 life insurance companies and compared products, pricing, riders, customer satisfaction ratings, and financial strength. What follows are our top picks to help you find the best options.
The 7 Best Life Insurance Companies for Young Adults of 2020
- New York Life: Best Overall
- John Hancock: Best for Healthy Lifestyle Choices
- Guardian: Best for Building Savings
- State Farm: Best for Cash Value Term and Bundling
- Mutual of Omaha: Best for Young Families
- Transamerica: Best Low-Cost Term & Final Expense
- Northwestern Mutual: Best for Dividends
Best Overall: New York Life
New York Life was the top-ranked life insurance company in our reviews of over 25 life insurers. The company was founded in 1845 and is a mutual insurer, which means that it pays dividends to eligible policyholders. New York Life has a financial strength ranking of (A++) Superior by AM Best and ranks better than most in customer satisfaction in the J.D. Power Life Insurance Study. Its complaint trends with the National Association of Insurance Commissioners (NAIC) are low for its size.
New York Life offers term, whole, and universal life insurance options—however, you will need to answer a medical questionnaire or take a medical exam in order to get a policy. The company's term life coverage has level premiums and can be converted to a whole life policy later without a medical exam. Whole life plans have options for level premiums or limited pay.
Coverage amounts vary depending on the product but can be as little as $10,000 and go up to several million.
Riders with New York Life include:
- Living benefits, such as chronic illness or terminal illness riders that allow you to access funds from your policy under certain conditions
- Disability waiver of premium, which pays your premiums if you become disabled
- Spousal paid-up option that lets your spouse purchase a policy without a medical exam if you die
The New York Life website also has helpful articles with tips on life insurance, as well as useful life tips about things like having a baby, buying a home, or getting married. Once you sign up for coverage, you can access your policy using the MyNYL online portal.
Overall, New York life has a well-rounded product offering and allows you to work with financial professionals to help assess your needs and build a comprehensive financial strategy, regardless of budget, which is why we selected them as best overall.
Read the full review: New York Life Insurance
Best for Healthy Lifestyle Choices: John Hancock
Though founded in 1862, John Hancock has a uniquely modern approach to life insurance, including being the only life insurer we found that offers discounts based on healthy choices. The company has an AM Best financial stability rating of A+ (Superior) and is one of the top-10 life insurers in the U.S. We checked the NAIC complaints index report, and John Hancock has a low level of complaints for a company of its size.
Among the products that John Hancock offers are term life, whole life, and universal life insurance plans. John Hancock also has a unique program called Vitality, which gives you the ability to add one of two riders to your policy. Vitality Go includes a discount on a fitness device, Amazon.com discounts, healthy gear, and food discounts. The Plus program includes up to 15% a year in savings on the life insurance premium, gift cards with certain partners, and a free Fitbit (or the ability to earn an Apple Watch based on your physical activity).
The company also offers:
- A program for people with diabetes
- A Quit Smoking Incentive (QSI) program
- An Unemployment Protection Waiver of Premium rider
- A Critical Illness Benefit rider
- Accelerated death benefit riders
- An interactive online tool called LifeTrack to help you see projections based on changes you are considering making in your coverage or investments
Policies are available with simplified underwriting and instant decisions in some cases, or you may have to take a medical exam. John Hancock may also have flexible underwriting for those with heart health issues, sleep apnea, and marijuana use. Quotes for permanent life insurance are not available online; you need to speak with a financial advisor.
John Hancock goes the extra mile to help provide support, resources, and incentives to keep policyholders healthy, which is why we selected them as the best life insurance for young adults making healthy lifestyle choices.
Read the full review: John Hancock Life Insurance
Best for Building Savings: Guardian Life
Guardian Life was founded in 1860 and offers a full line of life insurance products. The company has the highest available rating for financial stability from AM Best of A++ (Superior) and customer satisfaction rankings that are in the top 10 in the most recent J.D. Power life insurance study. Guardian had 215 complaints with the NAIC in 2019.
Guardian offers term life insurance with issue ages ranging from 18 to 75 with level premiums and conversion options. Terms are for 10,15, 20, or 30 years. A whole life policy is also available, which makes you eligible to collect dividends. This policy has a guaranteed level premium option up to age 95, 99, or 121, and cash values that are guaranteed to grow up to age 100 or 121. Issue ages range from birth to 90 years old with limits starting at $25,000. In addition, Universal life policies are available that offer investment options with varying degrees of risk.
Guardian offers many riders, including:
- Accelerated death benefit riders for long term care
- Index Participation Feature (this allows you to add investment market participation options to the whole life policy)
- Children and spousal riders (insure your family on one policy)
- Guaranteed insurability riders, allowing you to increase coverage later without additional underwriting (no medical exam)
We chose Guardian as the best for building savings because of the whole life option, which makes you eligible for dividends, offers coverage up to age 121 with level premiums, and has guaranteed cash values and the option to participate in the stock market with the additional rider. Guardian also provides a 2.5% interest guarantee and the ability to insure your spouse and children on the same policy.
Read the full review: Guardian Life Insurance
Best for Cash Value Term and Bundling: State Farm
State Farm was established in 1922 and offers over 100 different insurance products. The company has a top rating for financial strength by AM Best of A++ (Superior). A review of State Farm’s customer satisfaction rankings and complaints registered with the NAIC revealed very low levels of complaints. State Farm was rated No. 1 for customer satisfaction by J.D. Power in 2020.
State Farm offers term, whole life, guaranteed issue, and universal life policies. The life product that really makes them stand out for young adults is the Return of Premium Term policy. This policy offers coverage with level premiums for a set term, which makes it easy to budget. The policy is convertible at the end of the term, but also offers a return of premium rider if you survive the term. Finally, it offers a one-of-a-kind option among term policies: You can borrow from it. Term life insurance does not usually offer cash values, so being able to borrow money from this policy is a unique feature you probably will not find anywhere else.
Some typical State Farm riders include:
- A spouse and child rider (children can be covered up to $20,000 of coverage) that's convertible without a medical exam up to age 18 or 25
- For people aged zero to 37, there is a guaranteed insurability rider to add coverage up to $100,000 at different points in life, such as when you get married or have children
- Waiver of premium riders for disability
State Farm has an online quoting tool for term life, but it has a few glitches. Quotes are available from local agents, and service is quick and friendly.
We chose State Farm as the best for cash value term and bundling because of their term life policy that accumulates cash value very quickly and also provides a return of premium option. We also like that State Farm offers a complete range of products if you want to bundle your insurance in one place to get discounts.
Read the full review: State Farm Life Insurance
Best For Young Families: Mutual of Omaha
Mutual of Omaha is well-known for life insurance for seniors, but the company also has numerous advantages for young people that should not be overlooked. Founded in 1909, Mutual of Omaha has a solid reputation for customer service and a financial strength rating of A+ (Superior) by AM Best. Mutual of Omaha was rated in the top-five life insurers by J.D. Power, ranking better than most for both customer satisfaction and price.
Mutual of Omaha offers universal and term life insurance for young adults. Term life is available up to a 30-year term, which makes it a good option to lock in a low premium while you're young. There are three different universal life plans, one with a 2% guaranteed interest rate. The universal policies offer a death benefit, cash values that you can borrow from, flexible premium options, and accelerated death benefits.
Mutual of Omaha's policy riders are one of the main reasons we rank them as a good choice for young adults. These riders contain features that weren’t available with many other insurers, including:
- A waiver of premium for unemployment
- An optional rider for residential damage that provides a waiver of premium for six months if your home sustains more than $25,000 of damage
- Partial return of premium rider that helps you get some of your money back if you purchase a term life policy and survive the term
You can also add coverage for your children by purchasing children’s life insurance starting at 14 days and up to 17 years old. Mutual of Omaha offers up to $50,000 of children's coverage, which is higher than some other competitor’s child life policy limits.
Mutual of Omaha also offers policyholders cost savings for things such as home mortgages, health and wellness (including massage), and low-cost gym memberships through the Mutual Perks Program. Overall, Mutual of Omaha offers the best value in ur review for young adults building their families, both for their competitive pricing and value-added riders and advantages.
Read the full review: Mutual of Omaha Life Insurance
Best Low-Cost Term & Final Expense: Transamerica
Transamerica was founded in 1904, has a financial strength rating of A+(Excellent), and is the ninth-largest life insurer in the U.S. The company is part of one of the world’s leading financial organizations, Aegon N.V. Transamerica’s complaint trends with the NAIC are about average for its size, and its ranking with J.D. Power for customer satisfaction is fair.
We chose Transamerica as the best low-price term life insurance for young adults because the company has a money-back option for some term life plans, better pricing than competitors, and living benefits that help policyholders maximize the value of their plan.
Transamerica offers two term insurance plans with conversion options and terms of 10, 15, 20, 25, and 30 years. The 20- and 30-year terms offer a money-back option. Coverage limits are available up to $2 million or $10 million, depending on the plan. Some plans also have accelerated death benefits if you have a chronic, critical, or terminal illness.
Transamerica also offers whole life and universal life insurance plans. The company offers final expense insurance with no medical exam up to age 85 for up to $50,000 of coverage. The final expense coverage has no waiting period, level premiums with coverage up to age 121, and the option to also build cash value.
Available riders include:
- A monthly disability income rider, which pays you up to $2,000 a month for up to two years
- Children’s riders
- A return of premium rider on the 20- and 30-year terms that pay back up to 100% of eligible premiums if you survive the term of your policy and don't convert it to permanent coverage
Transamerica has a great plan explorer tool on its website to help you consider different life insurance strategies based on your personal situation. You can get some term quotes online, but need to speak to an agent to obtain other quotes.
With some of the most unique choices in our review, a convenient shopping interface, and flexibility in wealth preservation, Transamerica is our top pick for young adults seeking either term life coverage or a final expense policy.
Read the full review: Transamerica Life Insurance
Best for Dividends: Northwestern Mutual
Northwestern Mutual Life Insurance Company was founded in 1857 and offers the largest number of life insurance plans of any company we reviewed. It is the number-one insurer for life insurance in the U.S. and has a financial strength rating of A++ (Superior) by AM Best. Northwestern Mutual slipped from first to fourth for customer satisfaction by J.D.Power, and Northwestern Mutual’s complaints trend is very low.
Northwestern Mutual offers term, whole, and universal life coverage. The term life plans are convertible and offered in 10- and 20-year terms, or up to a specific age, such as age 80. The whole life policy allows policyholders to be eligible to receive dividends that can be used to:
- Purchase additional life insurance with paid-up additions
- Reduce your premium payments
- Invest in your policy cash values
- Receive cash payments
Northwestern Mutual stands out for its blended Whole Life Plus policy that combines term and whole life in one plan with accelerated care benefit options. This allows flexibility to shift values between the term and whole life portions as you are able to afford it. This provides policyholders a level of protection and flexibility not available with many other insurers.
Additional riders offered by Northwestern Mutual include a waiver of premium rider for disability, early payment benefits for terminal illness, an indexed protection benefit that increases the death benefit for a limited time, and a rider up to age 38 that allows you to purchase more coverage without proof of additional insurability.
You cannot get detailed quotes from Northwestern Mutual online, but the company offers a number of tools and resources on its website, including a needs assessment calculator. The company takes a personalized approach to recommend products as part of a financial strategy and will put you in touch with a local financial planner or professional to get quotes.
We chose Northwestern Mutual as the best for dividend payments because of their long-standing history of paying dividends and the ability to choose how you use the payments, including adding it to your cash values or accepting it in cash.
Read the full review: Northwestern Mutual Life Insurance
What Is Life Insurance for Young Adults?
As a young adult, you have several options for life insurance. There are two main types of life insurance: permanent and term. Permanent policies are appealing to young adults because they allow you to secure a death benefit to protect your family in case you die and accumulate cash value that you can borrow against or use as savings. Term life, on the other hand, is appealing because it’s cheaper. However, term life only pays a death benefit for the duration of the term; it is not a lifelong coverage.
There is no single life insurance product that is specifically for young adults. As a young adult, you have access to all the types of life insurance policies and riders that can be used to provide custom coverage based on what's best for where you are in life. Whether you are starting a family, buying a home, or have student loans to worry about, different companies’ riders or policy features will help you maximize your coverage, provide additional resources, and help you get the most value out of the protection.
Why Should You Get Life Insurance as a Young Adult?
The biggest advantage of life insurance for young adults is that you get the best possible life insurance rates, especially if you're healthy. Life insurance rates are based on a number of factors, including age, health, and lifestyle habits. All things being equal, your rate for life insurance will be remarkably lower when you're in your 20s and 30s than it will be after you reach 40. When it comes to buying life insurance, it’s important to lock in lower pricing sooner, especially if you can secure coverage with guaranteed insurability riders that allow you to convert a less expensive term policy into a permanent policy later on.
Term vs. Permanent Life Insurance: Which Is Better for Young Adults?
Term life insurance is a limited time contract and only pays out if you die within the specified term. Permanent life insurance, on the other hand, covers you for your whole life (as long as you pay your premiums). Within the permanent life categories, there are whole life and universal life options.
Term life is less expensive—usually six to 10 times less expensive than permanent life insurance. However, permanent life insurance provides a death benefit plus a cash value that accumulates over time (like savings) and that you can borrow against.
What Is the Minimum Age to Get Life Insurance?
Each insurance company has different starting ages for life insurance, but many start at 14 days for children’s policies. One of the big advantages that these policies usually offer is the option for children to convert their policy to permanent coverage when they reach the age of majority. So, if you are purchasing a child policy, be sure and look at the long-term outlook for conversion.
Can Life Insurance Hurt Your Savings?
Life insurance needs to be considered as part of your financial strategy. Paying into a term life policy could be a cheaper option today, but, if you survive the term without converting it, then you end up out of pocket for several years of premiums with no return on your investment. For whole life policies, it's important to weight saving on your own as opposed to saving within your policy. The best guaranteed interest rate on a permanent life policy that we found was 2.5%, but if you saved or invested the money yourself, you might be able to earn a higher rate of return—thought it might not be guaranteed.
How We Chose the Best Life Insurance Companies for Young Adults
We looked at over 25 life insurance companies in our life insurance review to find the companies offering the best coverage, conversion options, cash values, and dividend eligibility. We ran independent price studies for young adult rates and also checked company websites, third-party reviews, complaints with state regulators, and customer satisfaction surveys to ensure these companies have a history of delivering on their promises. When possible, we also looked at the underwriting flexibility of each company for certain higher-risk categories. Finally, we tried to find the companies offering the most value for people who are starting out in order to build this list of the best life insurance companies for young adults.
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