For many individuals, incorporating life insurance into their financial strategy is essential. It serves as a protective measure for loved ones in the event of an unexpected demise, offering financial security or settling outstanding debts. Not only does it provide peace of mind, but it also enables individuals to leave behind a lasting financial legacy.
Nevertheless, navigating the world of life insurance can be intricate due to the various types available. Selecting the right type to suit individual needs is crucial. Term life insurance, which provides coverage for a specified number of years, is a popular choice for those with young families seeking cost-effective premiums. On the other hand, permanent insurance options like whole and universal life insurance policies ensure coverage throughout one’s lifetime and may even accumulate cash value.
To assist you in making an informed decision tailored to your specific situation, News.com evaluated numerous life insurance companies. The rankings were determined based on factors such as customer satisfaction, as assessed by JD Power’s Individual Life Insurance Study, excellent ratings for financial stability from the AM Best rating agency, online user-friendliness, and whether a medical examination is required. Refer to our methodology for more details on the criteria used to select the best life insurance companies.
Best overall life insurance
Northwestern Mutual Life Insurance
- Cost
The best way to estimate your costs is to request a quote - App available
Yes - Policy highlights
As the largest life insurer by market share in the U.S., Northwestern Mutual is an established choice with a proven record. And, it offers a number of types of policies across the country.
| Pros | Cons |
|---|---|
| Variety of life insurance products available | Policies must be purchased through a financial professional |
| Highly rated for customer satisfaction |
With a history spanning over 160 years, Northwestern Mutual has emerged as the leading provider of life insurance policies in the United States, as reported by the National Association of Insurance Commissioners (NAIC). The company distinguishes itself with an outstanding rating from AM Best, which gauges its financial well-being and the likelihood of meeting obligations and honoring claims.
Best for customer satisfaction
- Cost
The best way to estimate your costs is to request a quote - App available
Yes - Policy highlights
State Farm offers a variety of term, whole, and universal life insurance products to choose from, alongside other types of insurance. It’s rated highly for both financial stability and customer service.
| Pros | Cons |
|---|---|
| A++ AM Best financial strength rating | Low coverage limit for no medical exam option. |
| Highest rated for customer satisfaction | |
| No medical exam option available |
State Farm holds the top position for customer satisfaction among all the companies listed. It achieved an impressive rating of 839 out of 1,000 in the latest life insurance customer satisfaction assessment by JD Power. However, for individuals seeking coverage without a medical examination, there are limitations. State Farm provides a maximum coverage of $50,000 for individuals up to the age of 50 or a 10-year term, whichever occurs first.
Best for senior
Mutual of Omaha Life Insurance
- Cost
The best way to estimate your costs is to request a quote - App available
No - Policy highlights
Mutual of Omaha offers term, whole, indexed universal life and universal life policies, giving lots of options.
| Pros | Cons |
|---|---|
| Policies available up to age 85 | Limited to $25,000 for Guaranteed whole life policies |
| No medical exam options available |
Mutual of Omaha’s generous age limits can be beneficial for seniors facing difficulties in obtaining life insurance. Term life options are accessible until the age of 80, and whole life products are extendable up to the age of 85. Although the coverage for Mutual of Omaha’s whole life policies is capped at $25,000, there is no need for a medical examination.
Best for term life insurance
- Cost
The best way to estimate your costs is to request a quote - App available
Yes - Policy highlights
Guardian offers a variety of policies, including term, whole and universal. Guardian offers term policies that can be converted into whole or universal life policies.
| Pros | Cons |
|---|---|
| A++ AM Best financial strength rating | Ranks slightly below other top picks for customer satisfaction |
| Policies must be purchased through a financial professional |
Guardian stands out with an impressive A++ rating from AM Best, indicating top-tier financial strength. For individuals seeking term insurance, Guardian provides a user-friendly tool on their website to estimate the cost of coverage. Guardian’s level term insurance includes the complimentary option to convert to a whole life policy within the initial five years, offering flexibility if your needs change. This feature, typically an additional cost as a rider in other policies we evaluated, is provided at no extra charge by Guardian.
Best for whole life insurance
- Cost
The best way to estimate your costs is to request a quote - App available
Yes - Policy highlights
MassMutual has been in business for over 170 years, and carries the highest ratings for financial security from AM Best.
| ✅ Pros | ❌ Cons |
|---|---|
| Offers a number of policies to choose from | No online quotes available |
| Policies must be purchased through a financial professional |
MassMutual is an excellent option for individuals seeking whole life insurance policies. The company provides a diverse range of policies that can be customized to suit your specific needs. Additionally, MassMutual has a solid track record in terms of dividends, and it anticipates returning $1.9 billion to policyholders in 2023.
Best universal life insurance
- Cost
The best way to estimate your costs is to request a quote - App available
No - Policy highlights
Pacific Life offers permanent life insurance policies in addition to term insurance. A number of riders make it possible to customize the policy to fit your needs.
| Pros | Cons |
|---|---|
| Offers specialized products that tailor the coverage to your needs | Must be purchased through an advisor |
| No online quotes available |
Pacific Life distinguishes itself with a range of choices, offering universal, indexed universal, and variable universal life insurance policies. Tailored life insurance plans are designed to assist policyholders with particular needs, such as supplementing retirement income.
FAQs
Is life insurance necessary?
Life insurance becomes essential when you have financial obligations that may go unmet in the event of your death. This often includes supporting dependents or a partner relying on your income, as well as addressing debts such as student loans or a mortgage. Permanent life insurance is also beneficial for those aiming to leave a financial legacy for their children or families.
How does life insurance operate?
The workings of life insurance vary based on the chosen coverage. Typically, you start by obtaining life insurance quotes and then proceed to apply for a policy. During the application process, your information undergoes underwriting, a procedure determining your life insurance rates and the eligible coverage amount. If necessary, a medical exam is conducted during this stage. Subsequently, your application is either approved or denied.
For term life insurance, you make monthly payments for a specified number of years. If you survive until the end of the term, there is no payout. However, if you pass away before the term concludes, your loved ones receive a payout from the policy.
Whole or permanent life insurance policies, such as universal life insurance, involve regular payments into the account, providing coverage throughout your entire life. Whole life insurance features fixed premiums and death benefits from the policy’s initiation. On the other hand, universal life insurance allows for changes in both premium and death benefit over the policy’s duration. Upon your passing, as long as there is value in the policy, a payout is made to your family and loved ones.
Various policy options, known as riders, can be added to customize your coverage. Riders like accelerated death benefit or long-term care provisions can enhance your policy to better suit your needs.
What are the various life insurance types?
Here’s an overview of several common life insurance types:
- Term Insurance: This type typically offers the most affordable premiums and provides coverage for a specified number of years. Once the term expires, there is no further coverage or death benefit.
- Whole Life Insurance: Whole life insurance policies extend throughout your lifetime, accumulating a cash value. Designated beneficiaries, whether family or organizations, receive a payout upon your death.
- Indexed Universal Life Insurance: Similar to whole life insurance, this policy spans a lifetime and builds cash value, with its value linked to index funds.
- Guaranteed Universal Life Insurance: Resembling term policies, this form of permanent life insurance usually has a high age limit for policy continuation, typically between ages 90 and 100. However, it typically does not accumulate significant cash value, if any.
- Variable Universal Life Insurance: In this life insurance type, you have control over how the account is invested. Unlike some other policies, variable universal life insurance often lacks a guaranteed death benefit.
If uncertain about the most suitable life insurance coverage, consulting with a financial advisor or insurance agent can assist in making an informed decision.
How much life insurance is necessary for an individual?
There is no fixed amount of life insurance applicable to everyone. Instead, the adequacy of insurance depends on factors such as your income, debt, and whether others rely on your financial support. A commonly recommended guideline is to secure enough life insurance to cover ten times your annual expenses.
How much does life insurance typically cost?
The cost of life insurance varies significantly based on factors such as gender, age, health status, and the chosen coverage amount. While smaller guaranteed-issue policies may have lower premiums, larger whole life policies generally come with higher premium costs.
For term policies, known for their lower premiums, Policygenius data suggests that the average premium for a $500,000 term policy is approximately $26 per month for a 35-year-old female and around $30 per month for a male of the same age.
On the other hand, premium payments for whole life policies are higher. Policygenius estimates that a 35-year-old male may pay about $571 per month to cover premiums until age 99.
At what age is it advisable to purchase life insurance?
Life insurance becomes more costly as you age, so obtaining it at a younger age is recommended. Acquiring life insurance sooner rather than later can potentially result in long-term cost savings.
What is final expense insurance?
Final expense insurance is a coverage option specifically designed to assist your family and loved ones in covering expenses after your death, such as funeral or burial costs. Typically, these policies are smaller whole life policies and may be offered as guaranteed issue or no-exam policies.
Can I utilize life insurance coverage while still alive?
Certain life insurance policies offer options that can be beneficial during your lifetime. Some policies come with insurance riders, additional features that can help cover expenses like long-term care or terminal illness.
One such provision is the accelerated death benefit rider, which can assist if you are diagnosed with a chronic or terminal illness while still alive. Additionally, some permanent coverage permits borrowing against the cash value component built into the policy.
More Category
I have life insurance through my employer—is that sufficient?
While some employers provide life insurance as a benefit, the coverage may not be adequate for individuals with dependents or loved ones relying on their income. Obtaining an individual life insurance policy can supplement the coverage provided by a workplace policy.
In conclusion, life insurance is a crucial element of financial planning. When obtaining life insurance, it is essential to assess your specific needs and select the appropriate type of insurance. Additionally, choosing a highly-ranked life insurance company for customer satisfaction and financial strength ensures that your policy will meet your requirements.
Our methodology: To identify the best life insurance companies, CNBC Select gathered data on numerous U.S. life insurance companies offering various policies. Our focus was on companies providing individual policies, considering ratings from JD Power’s life insurance customer satisfaction ratings, AM Best financial strength ratings, and market share data from the National Association of Insurance Commissioners. We also considered factors such as the types of life insurance products offered, the availability of riders, online quote availability, and medical exam requirements. Following these considerations, we categorized recommendations based on the best companies for term life insurance, whole life insurance, universal life insurance, customer satisfaction, life insurance for seniors, and the best overall life insurance company. Stay updated with Select’s in-depth coverage of personal finance, technology, wellness, and more by following us on Facebook, Instagram, and Twitter.
