Best Life Insurance Companies
Life insurance is essential if you have anyone in your life who depends on your income. Unfortunately, many people don’t have the right type of coverage or the right amount. About half of all U.S. households have less life insurance than they should, according to the Life Insurance Marketing and Research Association.
The good news is that life insurance doesn’t cost as much as you might think it does. Some people even estimate that life insurance costs up to five times as much as it actually does, reports the Insurance Information Institute (III).
We make the process of shopping for life insurance as easy as possible by doing the research for you and rating the top life insurance companies. To create our rating, we evaluated dozens of companies, scoring each on elements such as financial strength, customer service, and cost. Read on to see which companies made our list of the Best Life Insurance Companies of 2021. Our Best Life Insurance Company ratings are based on information that was collected between June 1, 2020, and August 19, 2020.
Best Life Insurance Companies of 2021
Any rates listed are for illustrative purposes only. You should contact the insurance company or insurance agent directly for applicable quotes.
Northwestern Mutual: Our top-rated insurance company, Northwestern Mutual, has more than 160 years of experience in the financial services industry and offers a traditional approach to life insurance. Northwestern Mutual offers a variety of coverage options and a low-tech but personalized method of determining coverage needs, and its financial advisers are available to help customers through the process. Learn more in our Northwestern Mutual review.
Haven Life: Haven Life insurance company offers only term life insurance policies and utilizes an online application process without personal interaction with a traditional agent. While a relatively new player in the insurance business, it’s backed by the well-established MassMutual. Haven Life aims to offer affordable, easy-to-manage term life insurance policies online, without the usual hassles of insurance shopping. Learn more in our Haven Life review.
State Farm: Our No. 3 insurance company, State Farm, has almost 100 years of experience. State Farm offers discounts for customers who purchase multiple insurance policies, like homeowners insurance. It also offers a variety of ways to pay your premiums including online, by mail, or in person at a State Farm office. For some of its term life policies if you outlive the length of the policy your premiums will be returned to you. Learn more in our State Farm review.
Buying a life insurance policy is similar to buying a home in that you are paying for something that will be part of your life for many years to come. Just as you inspect a home before you buy it, you should evaluate any insurance company before buying a policy. Follow these tips to make sure the life insurance company you are considering is a sound business that will flourish decades into the future.
- Financial strength: Get a financial strength rating from at least one of the five independent agencies: AM
- Best, Fitch Ratings, Kroll Bond Rating Agency, Moody’s, and Standard & Poor’s. This rating is based on an assessment of a life insurance company’s financial stability. We base a portion of our Best Life Insurance Companies ratings on the AM Best financial strength rating, and every company on our list earned AM Best’s highest rating of Superior.
- Customer service: Working with your life insurer shouldn’t be a hassle. The best companies have easy-to-use websites, short hold times when you call, and agents who give you advice based on your needs and not their commission. Reading professional and consumer reviews can shed some light on what to expect when it comes to a life insurance company’s customer service.
- Policy types: Not all life insurance companies offer every type of policy. Rather than choosing the wrong type of policy because you like the company, start with a company that sells the kind of insurance that best fits your needs. We break down the differences between the types of life insurance and give a brief definition of other terms in our section below on Types of Life Insurance Policies.
- Policy options and add-ons: Other important considerations when buying a policy include the amount of the premium, choices of premium payment arrangements, selections for term periods (for a term life policy), and the rate of return on the cash value (for a universal or whole life policy). Start off on the right foot by getting a firm understanding of what each of these terms means. See our Types of Life Insurance Policies section below for more information.
- Company size: All else being equal, companies that hold the most assets are likely to be the most solvent, and therefore are less likely to run into financial trouble and possibly leave you or your loved ones holding a worthless policy. In addition, if you need a jumbo policy with a high payout, a large insurance company will probably be more willing to back it. Potential advantages of using a smaller life insurance company include more personalized customer service and a more congenial atmosphere.
See how we found the best life insurance companies by reading our methodology.
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One of the major barriers to understanding life insurance coverage can be the jargon. Terms like “indexed universal life insurance” and “whole life insurance” can seem a bit unclear. To make understanding life insurance easier we define some of the topic’s unique words and phrases. We go more in-depth on these in our How Does Life Insurance Work? and How to Buy Life Insurance guides.
- Permanent life insurance: a category of long-term coverage that includes whole life and universal life policy types. These are more expensive than term but offer more benefits. This category is sometimes called cash value life insurance because of the savings like a cash value account that’s built into the policy.
- Whole life insurance: a type of permanent policy that has consistent premiums and guaranteed accumulation of cash value. This policy type may be eligible for dividends from a mutual company and typically is expensive. See our Whole Life Insurance guide for more information.
- Universal life insurance: a type of permanent coverage that builds cash value. It’s frequently offered with flexible premiums, although those premiums affect the cash value and death benefit. Find out more in our Universal Life Insurance guide.
- Indexed universal life insurance: a universal life policy that accumulates cash value based on the performance of a specific market index such as the S&P 500. This type of policy is typically less expensive and less risky than a variable policy because there is no actual investment in an index.
- Variable life insurance: a type of permanent policy that ties cash value to a number of investment options. These options may be based on whole life or universal life coverage.
- Term life insurance: a life insurance policy that covers the policyholder for a predetermined length of time, typically ranging from five to 30 years. When the term ends, there is no benefit to the policy. Though no cash value accumulates, the premiums for term life policies are usually substantially lower than premiums for permanent life policies. Learn more in our Term Life Insurance guide.
- No-exam life insurance: a life insurance policy that doesn’t require a medical exam, thus speeding up the approval process. We explain this specialized policy further in our guide on Life Insurance With No Exam.
- Death benefit: the money that the life insurance company pays your beneficiaries after your death. This is often a tax-free payment that can be paid as a lump sum or in installments, depending on your policy, and is usually only distributed if your premiums are paid up. You typically select the amount of the death benefit, also called your coverage level, when you apply for a policy, though some policies allow you to later change this amount.
- Cash value: a portion of your premium that the life insurance company sets aside in a separate account after paying administrative fees and other expenses. In general, this money grows tax-deferred based on a fixed rate, a market index, or other investments. Only permanent life policies have a cash value component.
Do I Need Life Insurance?
Most people will benefit from life insurance, but for some, the cost of the insurance might outweigh your need for it.
You should have life insurance if:
- You have family members who are supported by your income.
- You would like to leave your younger children a college fund.
- You have special needs children that may need very long-term assistance.
- Your spouse would not be able to support themselves financially without your income.
- You own a business.
- You have a lot of debt.
- You don’t have enough savings to cover all of your debts and final expenses.
- You would like to leave an inheritance for someone. You can even designate a charity as your beneficiary.
You might not need insurance if:
- No one but you depends upon your income.
- You have no debt.
- Your savings are sufficient to cover any taxes or expenses that would be incurred by your passing.
- Your spouse could maintain the same lifestyle without your income.
- Your children are grown and have no significant need for financial assistance.
How Much Life Insurance Do I Need?
How much life insurance you need depends upon how many people you support and your budget, among other things. These are some factors you’ll want to take into consideration when deciding how much life insurance you should get:
- Who is currently depending on your income? Make a list of the people depending on your income. They could include a spouse, children, aging parents, or business partners.
- How long will they rely on your income? While children often become self-sufficient after college and spouses may not need extra income once they start using their retirement, this isn’t always the case. How you answer this question will help determine what type of permanent or term insurance will best suit you.
- What large expenses do you want to pay for with life insurance proceeds? Common expenditures include paying off the mortgage on the family home, sending a child to college, or helping with a child’s wedding.
- What other debts do you want to cover? Some debts held in your name may disappear after your death, but you may want to pay off debts jointly held with your spouse or estate taxes that your heirs may owe.
- What end-of-life costs do you want to pay for? This may include funeral expenses or medical bills for an extended illness.
- What assets do you currently have? The amount and type of assets you have will help determine what level of coverage you will need. Do an inventory of assets like cash accounts, real estate, investment accounts, other life insurance policies, and retirement accounts. These are all assets that could help support your beneficiaries.
We walk you through the steps of assessing the right level of coverage in our How Does Life Insurance Work? guide. If you are crunched for time, a quick way to estimate the amount of life insurance you need is to multiply your annual salary by a number between five and 10.
Find the best life insurance for you
Get free quotes and compare life insurance policies without your contact information.
Our cheapest life insurance companies are based on sample monthly rates for a 20-year term policy with $1 million in coverage for a 35-year-old non-smoker female who falls in the Standard Plus risk class (average health).To learn more about affordable life insuranc, visit our guide to the Cheapest Life Insurance Companies of 2021 here.
Cheapest Life Insurance Companies
Any rates listed are for illustrative purposes only. You should contact the insurance company or insurance agent directly for applicable quotes. These sample rates were provided by Hallett/Quotacy, an insurance brokerage. When you use certain links on our pages, U.S. News may receive a commission from Hallett/Quotacy.
Learn More
For more information about life insurance, see the following guides:
For more information on other types of insurance, see the following guides:
The following describes our 360 approach to researching and analyzing life insurance companies to provide guidance to prospective consumers.
1. We researched the companies and products people care most about.
U.S. News analyzed and compared a variety of publicly available data, including internet search data, to determine which life insurance brands Americans are most interested in. We found 31 companies that stand out in terms of volume of searches and research among consumers, as well as across the different rating sources. Once we identified these companies, we reviewed insurance companies’ data to determine every available life insurance product offered by each company at the time of publication. We focused on companies with policies that are widely available, so we excluded a certain number of policies that are only available through employers and not available for individuals.
We compared available coverages and packages from top life insurance companies across several criteria, including cost, coverage limits, policy features, and availability. Research shows that these criteria are among the most important considerations tofor people shopping for life insurance. We compared costs across companies using two types of estimated cost information per company: a summary cost relative to the company in our main review page, as well as more detail about costs by specific policy in our company profiles. At the company level, we offer what we call a “base cost”: a cost representing a 25-year-old Virginia woman in excellent health getting a typical 10-year term, $250,000 life insurance policy from a given company. By keeping certain criteria consistent, such as state of residence, we make it easier for readers to compare costs by company. In our company profiles, we show cost estimates regarding every specific policy for which online quote information was available at the time of publication. Where available, quote information has been provided from each company. We provided the same information to each company, and got the quote either using publicly available online quoting tools, direct conversations with the companies, or both. In addition, we show the costs for a range of typical individuals, including 25-, 35- and 45-year-old males and females residing in Virginia and in excellent health. All prices shown are for $250,000 policies, with a 10-year-term for term life insurance and no term for permanent life and whole life insurance policies. This range of choices allows readers to understand insurance costs, although the best way to get an accurate estimate is to use a company’s online tools as well as speak to company agents.
2. We created objective 360 Overall Ratings based on an analysis of third-party reviews.
U.S. News’ 360 Reviews team applied an unbiased methodology that includes opinions from independent life insurance experts and third-party reviews.
Our scoring methodology is based on a composite analysis of the ratings and reviews published by credible third-party professional and consumer review sources. The ratings are not based on personal opinions or experiences of U.S. News. To calculate the ratings:
(a) We compiled two types of third-party ratings and reviews:
- Professional Ratings and Reviews. Many independent life insurance evaluating sources have published their assessments of life insurance companies and products online. We consider several of these third-party reviews to be reputable and well-researched. However, professional reviewers often make recommendations that contradict one another. Rather than relying on a single source, U.S. News believes consumers benefit most when these opinions and recommendations are considered and analyzed collectively with an objective, consensus-based methodology.
- Consumer Ratings and Reviews. U.S. News also reviewed published consumer ratings and reviews of life insurance providers. Sources with a sufficient number of quality consumer ratings and reviews were included in our scoring model.
Please note that not all professional and consumer rating sources met our criteria for objectivity. Therefore, some sources were excluded from our model.
(b) We standardized the inputs to create a common scale.
The third-party review source data were collected in a variety of forms, including ratings, recommendations, and accolades. Before including each third-party data point into our scoring equation, we had to standardize it so that it could be compared accurately with data points from other review sources. We used the scoring methodology described below to convert these systems to a comparable scale.
The 360 scoring process first converted each third-party rating into a common 0 to 5 scale. To balance the distribution of scores within each source’s scale, we used a standard deviation (or Z-Score) calculation to determine how each company that a source rated was scored in comparison to the source’s mean score. We then used the Z-Score to create a standardized U.S. News score using the method outlined below:
- Calculating the Z-Score: The Z-Score represents a data point’s relation to the mean measurement of the data set. The Z-Score is negative when the data point is below the mean and positive when it’s above the mean; a Z-Score of 0 means it’s equal to the mean. To determine the Z-Score for each third-party rating of a company, we calculated the mean of the ratings across all companies evaluated by that third-party source. We then subtracted the company’s rating from the mean and divided it by the standard deviation to produce the Z-Score.
- Calculating the T-Score: We used a T-Score calculation to convert the Z-Score to a 0-100 scale by multiplying the Z-Score by 10. To ensure that the mean was equal across all data points, we added our desired scoring mean (between 0 and 10) to the T-Score to create an adjusted T-Score.
- Calculating the common-scale rating: We divided the adjusted T-Score, which is on a 100-point scale, by 20 to convert the third-party rating to a common 0-5 point system.
(c) We calculated the 360 Overall Score based on a weighted-average model.
We assigned “source weights” to each source used in the consensus scoring model based on our assessment of how much the source is trusted and recognized by consumers and how much its published review process indicates that it is both comprehensive and editorially independent. The source weights are assigned on a 1-5 scale. Any source with an assigned weight less than two was excluded from the consensus scoring model.
Finally, we combined the converted third-party data points using a weighted average formula based on source weight. This formula calculated the consensus score for each product, which we call the 360 Overall Rating.
All life insurance data displayed on this page was collected between June 1, 2020 and August 19, 2020
U.S. News 360 Reviews takes an unbiased approach to our recommendations. When you use our links to buy products, we may earn a commission but that in no way affects our editorial independence.
https://www.usnews.com/insurance/life-insurance/best-life-insurance-companies
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