According to LIMRA’s 2018 Insurance Barometer, about 60% of Americans are covered by some form of life insurance. That leaves about 2 in 5 with no coverage at all. Are these people playing fast and loose with their surviving heirs’ finances?
The short answer is: possibly.
How much life insurance you should have — and what type of life insurance is most cost-effective for your family’s needs — depends on your age, income, family size, stage of life, and long-term financial goals.
Whatever type of policy you opt for, you’ll want to choose a life insurance company that’s both financially strong and dedicated to its policyholders’ well-being.
Best Life Insurance Companies for U.S. Policyholders
Hundreds of reputable life insurance companies serve U.S. consumers today, supporting a trillion-dollar (or more) market.
You can, and should, use an aggregator like Policygenius to quickly find providers and policies that fit your needs. But look out for these companies in particular — they’re among the best.
Best Overall: State Farm
State Farm offers term, whole, and universal life policies. It also offers some lower-cost niche products, such as final expenses insurance, which is suitable for older policyholders who want to ensure their death doesn’t create a financial burden for their survivors.
Notable State Farm life insurance products include:
- Return of premium coverage, a 20- or 30-year level term policy that eventually repays all premiums paid by policyholders who outlive the policy’s initial term
- Instant Answer term insurance, a $50,000 policy that provides coverage for 10 years or up to age 50, whichever is longer, without traditional underwriting requirements (such as a medical exam)
Additional features:
- Nearly 20,000 agents around the U.S.
- A++ (Superior) financial strength rating from A.M. Best
- 5 out of 5 (Among the Best) Overall Customer Satisfaction Rating from J.D. Power
Apply for Life Insurance With State Farm
Best for Value-Adds: Walnut
Walnut is a nontraditional insurer that offers what it calls “life insurance as a premium membership.” Starting at $10/mo, this includes:
- Price-first term life insurance (meaning see how much you’ll pay for coverage before you apply)
- No medical exam required for coverage
- Headspace Plus, a guided meditation and self-directed therapy library
- ClassPass Digital, a home workout video library
- Dashlane Premium, a password manager that auto-fills your passwords
Purchased separately, the bundle’s components cost more than $25 per month, not including the cost of insurance.
For an additional monthly fee, get even more value with a Digital Protection Membership that includes:
- Dashlane Premium
- 24/7 access to a cyber support helpline
- Up to $1 million in stolen funds reimbursement if you’re the victim of identity theft
Apply for Life Insurance With Walnut
Best for Fast Approval: Bestow
Bestow is another technology-driven term life solution that specializes in no-exam coverage. Its application process is even more streamlined than Ladder’s, with approval coming in about 5 minutes. Underwriting is fully algorithmic, meaning you can be approved for a policy as large as $1.5 million without taking a medical exam.
Additional features:
- Terms as long as 30 years
- 5-year term increments
- Open to applicants up to 60 years old
- A+ (Superior) financial strength rating from A.M. Best
Apply for Life Insurance With Bestow
Best for No-Exam Coverage: Ladder
Ladder is a technology-driven term life insurance solution that does away with traditional insurance trappings. Its signature benefit is an unusually high death benefit (up to $3 million) for no-exam life insurance coverage — that’s a term life policy that doesn’t require a medical exam as a condition of approval.
Additional features:
- Very low premiums thanks to Ladder’s low-overhead model
- Get a provisional approval decision within minutes
- All-online application for no-exam coverage
- In-home medical exam for policies above $3 million
- Option to scale down coverage over time as your need decreases
Apply for Life Insurance With Ladder
Best for Permanent Life Insurance: Pacific Life
Pacific Life offers an above-average variety of permanent life insurance products:
- Indexed Universal Life Insurance indexes the policy’s cash value to market instruments while offering guaranteed loss protection, increasing upside while limiting downside
- Variable Universal Life Insurance provides a wider (though potentially riskier) variety of cash-value investing options
- Standard Universal Life Insurance provides flexible premiums for more control over cash-value growth
You can also start with a term policy and convert to permanent later using the PL Promise Term product, which offers level 10- to 30-year options with fluidless (abbreviated medical exam) underwriting for older policyholders.
Apply for Life Insurance With Pacific Life
Methodology: How We Select the Best Life Insurance Companies
We use 6 key metrics to assess the life insurance companies on this list. Collectively, they offer a comprehensive picture of these companies’ likelihood of making good on their promises to pay death benefits — a critical consideration for any life insurance policyholder — and the overall customer experience.
Financial Strength Ratings
Third-party financial strength ratings assess insurers’ ability to pay out death benefits in the future. When possible, we use ratings from A.M. Best, a highly respected rating agency that specializes in the insurance industry.
Customer Satisfaction Ratings
Once your policy is in force, you shouldn’t have to interact with your life insurance company on a regular basis.
That said, it’s nice to know that someone will be there to address any concerns that arise. And your experience during the application and underwriting process will no doubt set the stage for the rest of the relationship.
When available, we use J.D. Power customer satisfaction ratings to assess companies’ customer service quality.
Customer Complaints
We don’t put much stock in anonymous online reviews, which can be difficult to assess objectively and aren’t always relevant to the average user’s experience. Instead, we look for patterns of complaints with state regulators and reputable consumer protection organizations, such as the Better Business Bureau.
The National Association of Insurance Commissioners compiles policyholder complaints. Note that bigger insurance companies draw more complaints overall because they serve more customers, so pay attention to the relative proportion of complaints rather than the absolute number.
Policy Types
All life insurance policies can be characterized as one of two types: term or permanent. Term policies have no cash value and expire at the end of the term if not renewed. Permanent policies build cash value over time and last indefinitely (until the policyholder dies or the policy lapses due to nonpayment or cancellation).
Term policies are defined primarily by their initial term length — typically 10 to 30 years — and by their optional or mandatory riders (modifications), such as accelerated death benefit or the option to convert to permanent coverage.
Permanent policies can be structured as:
- Whole
- Universal
- Variable
- Variable universal
Each structure differs in its treatment of the cash value component, among other factors.
Many life insurance companies, especially leaner online insurers, offer term life coverage only. If you’re looking for permanent coverage, you’ll have fewer options — though still plenty to choose a policy that fits your needs.
Application and Underwriting Process
Applying for life insurance can be tedious and time-consuming. Some insurers haven’t fully embraced digitization, resulting in a cumbersome paper-pushing process that involves multiple mailings and long wait times.
Other insurers are more responsive to modern applicants’ needs. Some make it easy to complete an application in a single sitting and provide provisional approval within minutes. While recognizing that some old-fashioned insurers do offer great products, we prefer companies with more streamlined approval and underwriting processes.
No-Exam Option
When required, the medical exam is usually the biggest sticking point during the life insurance application process. It can take days or weeks to schedule and longer still to produce results. But fully medically underwritten policies also tend to have lower premiums, so the ordeal is worthwhile for relatively healthy applicants.
If you don’t want to deal with a medical exam or worry that a health issue could affect your chances of approval or premiums if approved, opt for a no-exam policy instead. These are increasingly common and much easier to apply for, though they tend to cost more on average.
Life Insurance FAQs
You have questions about life insurance. We have answers.
How Much Does Life Insurance Cost?
Numerous factors affect life insurance premiums. The most important include:
- Policy Type. Permanent life insurance is more expensive than term life insurance because its protection continues indefinitely. A policy with the same death benefit could cost five to ten times as much.
- Age. Older life insurance applicants pay higher premiums than younger applicants because they’re more likely to die during the policy term.
- Length of Coverage. Longer-term policies tend to have higher premiums because risk of death increases as you age.
- Policy Size (Death Benefit). Policy premiums increase in relation to the death benefit.
- Tobacco Use. If you currently use tobacco or have in the past, your life insurance premiums will be higher than if you never smoked.
- Family Health History. Any known health issues in your immediate family could increase your perceived risk and result in higher premiums for the same amount of coverage.
- Personal Health History. Both your personal medical history and the result of medical exam during underwriting (if needed) could affect your policy premiums.
- Driving Record. If you’re a risky driver with multiple accidents and infractions on your record, you’ll pay more for life insurance due to the inherent risk of aggressive driving.
How Much Life Insurance Do You Need?
Many experts recommend buying enough life insurance to multiply your current income tenfold. For example, if you earn $100,000 per year today, you’d want a $1 million life insurance policy.
In some cases, more life insurance is warranted. This is true if you have significant debts or expected future expenses that could outlive you or if you’re the primary income-earner in your household. You can multiply your income by the expected length of time in years that you’ll need coverage and add in the value of all expected future expenses using a future value calculator.,
Who Should You Name As Your Life Insurance Beneficiary?
You must name at least one life insurance beneficiary. Most people name immediate family members, such as spouses or children, but you can also name:
- A business entity
- A trust (this is common if the intended beneficiary is a minor child)
- A charity of your choice
- Certain other qualifying organizations
You can name as many primary beneficiaries and contingent beneficiaries as you’d like. Contingent beneficiaries only receive proceeds if all named primary beneficiaries are deceased when the policy pays out or disclaim (refuse) the benefit.
Note that married policyholders may need to get spousal permission to name someone other than the spouse as the primary life insurance beneficiary.
Can You Convert a Term Life Insurance Policy to a Permanent Life Insurance Policy?
Many term life insurance policies include a conversion rider that lets you convert the policy to permanent status once a certain amount of time has passed (usually five years from the effective date). Doing this will significantly increase your monthly premium, but you can often reduce the death benefit to compensate.
How to Choose the Best Life Insurance Company
Which life insurance company is best for you?
That depends on what you want out of the relationship. If you’re looking for a smallish term policy that doesn’t require a medical exam, your shortlist of insurers will look very different than if you’re hunting for a whole life policy that you hope establishes generational wealth for your heirs. Or a fully medically underwritten term policy large enough to replace your income for the next 30 years, for that matter.
To find the insurer that best suits your needs, consider:
- Whether they offer the policy type you need
- Their policy coverage limits, if any
- Whether the application process requires a medical exam
- How flexible the policy is when it comes to life changes — for example, can you convert a term policy to a permanent policy?
Fortunately, you can’t go wrong with any of the insurers on this list.
