According to LIMRA, 43% of Americans do not have life insurance, and 40% of Americans without life insurance say they would have trouble paying living expenses if they lost their primary wage earner. Purchasing life insurance can help ensure that your family doesn't fall into financial hardship if anything should happen to you.
Whole life insurance is a type of permanent insurance that provides a death benefit to your family (or any beneficiary of your choice) in the event of your death. A whole life policy covers you for life (so long as premiums are paid), provides cash values that you can borrow from, and may make you eligible for dividends with some companies.
To help you find the coverage you need to care for your family if something happens to you, we reviewed more than two dozen national insurers. We evaluated providers based on financial stability, coverage options, available add-ons, and customer satisfaction ratings. These are our top choices.
The 6 Best Whole Life Insurance Policies of 2020
Best Overall: New York Life
New York Life Insurance Company is the third-largest life insurance provider in the U.S. and the #1 mutual insurer. As a mutual company, New York Life pays dividends to eligible policyholders and has been doing so since 1854. In 2020, they paid 1.9 billion in dividends to policyholders. They have been around for 175 years, with an AM Best financial strength rating of A++ (Superior).
New York Life offers three different types of whole life insurance plans, including a customizable plan. They can issue whole life insurance policies for people up to age 90. Policies are available with level premiums, so it is easy to budget, and some of their plans allow access to tax-free cash values. As with other whole life policies, you can borrow from the life insurance policy once your cash value accumulates.
New York Life offers several riders, including an accidental death benefit rider, an option to purchase paid-up additions, a living benefits rider (which provides access to your death benefit early if you need it due to a terminal illness), and a chronic care rider (which provides a tax-free accelerated payout if you become chronically ill).
New York Life sells its policies through local agents who can provide individualized quotes as well as personal service and advice. New York Life's customer service is very highly ranked, with an excellent complaints trend score with the NAIC and overall satisfaction ranking of Better Than Most on the latest J.D. Power Life Insurance Study. Although there are no online quote samples for New York Life policies, premiums were ranked as Better Than Most of the 25 other life insurers in the same study.
For its broad range of whole life policies and riders, top-ranked customer service, and long history of success, New York Life is our choice as best overall in our review of whole life insurance providers.
Read full review: New York Life Review
Best for Dividends: Northwestern Mutual
Northwestern Mutual was founded in 1857 and is the largest insurer in the U.S. for individual life insurance. As a mutual insurer, Northwestern Mutual’s eligible policyholders may collect dividends that add to the value available through their policies. Northwestern Mutual has an exceptionally low complaint trend (only seven complaints in 2019 with the NAIC) and also has earned the award for highest customer satisfaction among 25 insurers in the 2019 J.D. Power Life Insurance Study, as well as an A+ (Superior) financial rating by AM Best.
Northwestern Mutual Life Insurance offers a wide range of products including several options for whole life insurance. The company issues whole life policies up to ages 55 to 80, depending on the plan you choose. Plans offer level premium payment options up to age 65 or 90. They also have the option of a survivorship whole life policy and a blended term and whole life policy option, which is unique to them.
Northwestern Mutual is set to pay out $6 billion in dividends to policyholders in 2020, this is almost three times as much as its competitors. When you get dividends from Northwestern, you can use them in four different ways, depending on your needs at the time. You can purchase paid-up additions to your life insurance, which increase your death benefit. You can also use dividends to take a break on your premium payments, to accumulate interest by adding them to the cash value of your policy, or you can ask to receive your dividends in cash to spend or invest them outside of your policy.
Northwestern Mutual does not offer quotes online. Policies are customized, so you need to speak to a financial advisor or independent broker or agent to purchase a whole life policy.
Pricing for Northwestern Mutual ranked as "Among the Best" in the 2019 J.D. Power Life Insurance Study. This, in addition to record-breaking dividends in 2020, makes Northwestern Mutual our top-ranked insurer for dividends in our in-depth review.
Read full review: Northwestern Mutual Review
Best for Bundling: State Farm
State Farm has been in business since 1929 and is a well-known name for all types of insurance. The company has a financial strength rating of A++ (Superior) by AM Best.
With over 100 different product lines available, including insurance coverage for health, life, auto, home, and more, as well as banking and investment products, State Farm gives you nearly limitless ways to combine resources to enhance your financial security, which is why the company is best for bundling in our review.
State Farm offers a few options for whole life insurance policies that build cash values. The company offers limited pay life policies that allow you to pay up the premiums of the policy in 10, 15, or 20 years. The issue ages are from zero to 85 years old, depending on the plan. They also offer single premium life policies, which allow you to pay off your life insurance policy in one lump sum payment. There's also a final expense whole life insurance policy option, issued up to age 80. As with other policies, you have the option to borrow from the cash values in the policy over time.
State Farm has several riders, including waiver of premium for disability, accidental death riders, child and spouse riders, and guaranteed insurability riders on some plans, which allow you to purchase an additional amount of insurance at specified times without a medical exam.
State Farm provides service through local agents, which allows you to build a relationship with your representative. They have been top-ranked for customer satisfaction in the J.D. Power surveys several years running, placing second out of 25 insurers in the most recent results. State Farm’s complaints trend with the NAIC is excellent, well below industry averages. Due to the broad range of products offered, State Farm is also able to offer bundling discounts across different policy lines, including home and auto, which is why we selected it as best for bundling.
Read full review: State Farm Review
Best Whole Life for Building Cash Value: MassMutual
Massachusetts Mutual Life Insurance Company was founded in 1851 and is the fourth-largest provider of life insurance in the U.S., with an excellent financial stability rating of A++ (Superior) from AM Best. As a mutual insurer, MassMutual pays dividends to its whole life policyholders. In 2020, the dividend payouts totaled $1.7 billion.
MassMutual's Participating Whole Life Insurance plan offers guaranteed cash values, participation in dividends, and a guaranteed death benefit, all of which make it our top choice for building cash value.
MassMutual offers many value-added riders including a life insurance supplement rider (that can allow you to use dividends earned to purchase additional values in your whole life policy), guaranteed insurability riders, a disability waiver of premium rider, and long-term care or accelerated benefit riders. As with most whole life policies, you also have the option to borrow from the cash values of the life insurance policy. In addition, for added savings, it is the only life insurer we found to offer a free life insurance policy for children through their LifeBridge Program.
Pricing for whole life policies with MassMutual is not available online. To obtain a quote with MassMutual, you need to speak with a financial professional. Pricing is rated as average in J.D. Power surveys, and the company ranked 13th out of the top 25 life insurers for customer satisfaction. MassMutual has a very low complaint trend with the NAIC, with one of the lowest levels of complaints among all the companies we reviewed.
Read full review: MassMutual Review
Best for Estate Planning: Guardian Life
Guardian Life is the 25th-largest life and health insurer in the U.S. and is one of the nation’s oldest life insurance companies, founded in 1860. The company is headquartered in New York City and has an AM Best financial strength rating of A++ (Superior). Guardian Life allows you to earn dividends as a whole life policyholder, which they have been paying every year since 1868. Guardian's whole life policy also offers guaranteed cash value, which you can borrow from.
Guardian issue ages start at age zero and go up to age 90, and their whole life policy covers you up to ages 95, 99, or 121, with guaranteed cash value growth until 100 or 121. Guardian is a good choice to consider if you are a smoker or have medical issues. They are one of the few companies that insure people with HIV.
The whole life policy allows you to borrow from cash values; however, note that there can be an impact on your ability to earn dividends as a result, and your death benefit payout may also be impacted.
Guardian's dividends, combined with its high age limits for accumulating cash value that can be borrowed against, are why we chose Guardian as the best option for estate planning.
Guardian Life has an award-winning customer service team and ranks seventh out of the top 25 life insurers for overall customer satisfaction. The company’s record of complaints with the NAIC is very low—well below the industry average for its size.
You will have to speak to an agent to obtain a whole life insurance quote. You may also have to take a medical exam to get a Guardian Life policy. A Guardian Life agent will complete an application with you and, based on an underwriting review, they will decide if you will need to undergo an exam or not.
Read full review: Guardian Review
Best for Child Life Insurance: Mutual of Omaha
Mutual of Omaha was established in 1909 and is well-known for offering life insurance policies without medical exams. The company offers several options in whole life insurance for people of all ages, including children, which may be issued without a medical exam.
The Mutual of Omaha Whole Life Plus Guaranteed is a level-premium, no-medical exam, guaranteed-acceptance policy for customers ages 45 to 85 (50 to 75 in New York). The company also has the Living Promise Whole Life policy, which offers simplified underwriting, meaning you fill in a medical application and may not need to have a medical exam. This plan also has accelerated death benefit rider options for terminal illness and nursing home benefits in some states.
Finally, Mutual of Omaha offers a children's whole life policy with simplified applications online and issue ages from 14 days to 17 years. This policy offers higher values of coverage up to $50,000, which is higher than children’s insurance available from many other insurers. This is why we named Mutual of Omaha the best company for children's life insurance.
Mutual of Omaha has an excellent customer satisfaction ranking coming in at #3 out of 25 of the largest life insurers in the J.D. Power life Insurance Study, and a low history of complaints with the NAIC compared to other insurers of their size. The life insurance policy packages also come with access to a MutualPerks program, which provides discounts to policyholders in a variety of products and services, including mortgages and wellness services.
Read full review: Mutual of Omaha Review
What Is Whole Life Insurance?
Whole life insurance is a type of permanent life insurance that covers policyholders up to a stated death benefit for life. It also allows you to build cash values that you can borrow from, which people sometimes use to help finance a major purchase, like a house or a child’s education. Whole life is different from term life because it covers you for your entire life (as long as premiums are paid), whereas term life only covers you for a specified time.
Death Benefits vs. Living Benefits
Death benefits and living benefits are two different elements of a life insurance policy. Death benefits can be defined as the amount of money a life insurance company agrees to pay your beneficiary in the event of your death. Living benefits, also called accelerated death benefits, are funds that the insurance company agrees to advance you while you are still living. Living benefits may be sold as additional features that you may add to a life insurance policy through a rider.
In some cases, a life insurance company may provide living benefits as part of a life insurance policy package. Examples of living benefits include critical illness riders, long-term care riders, and other cash advance arrangements that take money from your death benefit amount and pay you while you are still alive to access care, or due to pre-defined hardships like disability or loss of employment.
Whole life policies also provide access to cash values through loans, each insurer handles these differently. Loans may be tax-free or not, and may reduce the value of your death benefit or not, depending on the contract terms. Some life insurance policies require you to pay back a loan before getting the death benefit, although most would likely reduce the death benefit payout as a result.
Whole Life Insurance Compared to Term and Universal Life
Whole life is different from term life because term life only provides coverage for a limited time period, whereas whole life provides coverage with a death benefit for your entire life. Universal life is another type of permanent life insurance similar to whole life.
While universal life and whole life both build cash values, universal life policies provide investment options that can help policyholders grow their cash values faster. Universal life policies sometimes offer additional flexibility in the management of the premiums. However, universal life policies may also carry more risk due to market volatility.
Why Should You Get Whole Life Insurance?
Life insurance is typically thought of as a tool to protect your family in case of your death—to provide them with financial resources so they do not have to reduce their standards of living or go through financial hardship. There are also many other reasons people get life insurance:
- To build savings through the accumulation of cash values.
- To get coverage for children, locking in affordable long-term insurance for them while they are young, or as a savings vehicle to build cash values for them.
- It can be used as security for your mortgage, instead of buying mortgage insurance. The benefit of buying life insurance to secure your mortgage instead of mortgage insurance is that it gives your beneficiary the flexibility to do as they see fit with the death benefit, whereas if you buy mortgage insurance, the death benefit will go to the lender.
- For estate planning or as a tax-shelter.
Whole life insurance can provide security in many of these situations giving your family peace of mind, flexibility, and the ability to maintain your current lifestyle.
What Does Whole Life Insurance Cost?
Whole life insurance is more expensive than term life insurance because, in addition to paying premiums for the death benefit, policyholders also contribute to the cash value of their policy. Starting at around 30 years old, you can expect to pay an average of $100 a month for $100,000 of whole life coverage. People who purchase coverage later or buy larger policies can expect to pay higher premiums. Finally, your health status and the type of plan your life insurance company is offering you, as well as the cash value options and riders, will impact the cost. These are some baseline sample premiums:
|30 years old||$89.44||$212.50||$420.65||$827|
|40 years old||$135.63||$327.99||$651.63||$1,289|
|50 years old||$216.80||$530.92||$1,057.49||$2,101|
|60 years old||$350.35||$864.78||$1,725.21||$3,436|
Is Whole Life Insurance Worth It?
Whole life insurance is ideal if you want to protect the financial security of your family while still building savings in cash value. Unlike term life insurance, which ends at the end of the term, whole life allows you to maintain savings in your policy that grow over time. These savings can be used to borrow money from if you ever need to, and because a whole life policy covers you for life, you can count on a death benefit as long as you pay your premiums. Whole life should be part of a financial strategy, it can have tax benefits and helps you build wealth while maintaining your life insurance.
How We Chose the Whole Life Insurance Companies
We looked at over 25 companies and evaluated them for financial stability, reputation, and customer satisfaction and complaints. We then checked into the policy options they offered, average pricing, and which ones offered the most value in riders or additional features. Life insurance companies that offered whole life policies with dividends and living benefits were considered as part of our evaluation. We ranked the top life insurers in our review to find you the best whole life insurance policies for 2020, highlighting the important features to help you ask the right questions when shopping for life insurance and make your best choice.
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