A type of permanent life insurance, whole life insurance guarantees the insured person is covered as long as premiums are paid. This type of policy also guarantees a specific death benefit and offers a savings component called the cash value portion of your policy.
Whole life insurance provides significant benefits compared with other types of life insurance, but it also costs more. As a result, it’s crucial you pick the policy that best suits your needs. Here, we’ve listed the best whole life insurance companies to help you kickstart your research.
New York Life »
Best Whole Life Insurance (tie)
- AM best rating
- Online Tools
- Not Available
Variety of add-on riders available
Ability to customize payment schedule
Not the best if you want to purchase a policy online
New York Life
New York Life ties for No. 1 in our rating of whole life insurance companies. One of the oldest insurers, founded in 1845, this company has an A++ AM Best ranking — meaning it’s rated highly for its financial strength. Policyholders can customize both the coverage amount and payment schedule, and your coverage is guaranteed as long as you pay premiums.
To further customize your policy, you can choose riders such as disability waiver of premium, accidental death benefit, chronic care, and the living benefits option. You can also purchase paid-up additions, where you can keep your policy without making premiums for a certain amount of time once you’ve built up a sizable amount of cash value.
A potential downside to New York Life is that you can’t receive quotes or purchase a policy online. Instead, you’ll need to contact a New York Life agent.
A++ financial rankings from AM Best
Can choose how long you want to pay premiums
Need to purchase policy through agent
Limited information on their website
Northwestern Mutual ties for the No. 1 spot for the best whole insurance companies rating. Like New York Life, you’ll need to purchase a policy through an agent. The company’s website also isn’t that forthcoming in details about policies, though it shouldn’t be that big of a deal if you prefer to work with a professional.
This insurance company has also earned high rankings from AM Best with an A++ rating. It expects to pay out a total of $6.5 billion in dividends to its policyholders in 2022. Available death benefit coverage amounts start at $50,000, and you can choose premium payment periods anywhere from 15 to 25 years, or up to 65 or 100 years old.
- AM best rating
- Online Tools
- Available for all policies
Some policy amounts only up to $25,000
AIG ranks slightly below both New York Life and Northwestern Mutual and received an A rating from AM Best. Where it stands out from the first two companies is that you can receive online quotes, but you’ll still need to go through an agent to finalize your policy. Plus, depending on the policy you choose, you may not have to go through a medical exam, which will speed up the application process. If you’re between 50 and 80 years old, AIG guarantees your application acceptance for its Guaranteed Whole Life Insurance policy.
One of the downsides to AIG’s whole life insurance policies is that they have limited riders available. For example, AIG’s Guaranteed Issue Whole Life insurance only offers an accelerated death benefit rider. The upside is that the insurance company offers guaranteed level premiums, which means your premiums will remain the same throughout your policy.
Premium discounts available
Some policies have high minimum coverage amounts
State Farm is tied with AIG in the third spot in our whole life insurance rating. One perk with this insurance company is you can receive a quote and purchase a policy online or through its network of dedicated agents. Plus, you can choose from different options to pay your premiums — either monthly, quarterly, semi-annually, or annually — and may even receive multiline discounts if you purchase multiple State Farm insurance policies.
Policyholders can choose from a variety of riders, including some that are less common. For instance, you can select payor insurance, where premiums are waived for an insured’s policy in the event of death or total disability until he or she turns 25.
State Farm also offers other types of whole life such as limited pay, single premium, and final expense whole life insurance. However, some of these have higher minimum coverage amounts, so do your research to see which is the best fit.
Flexible coverage options
No online quotes available
Not as many riders compared to other insurers
Ranked fifth on our list of the best whole life insurance policies and ninth overall, Nationwide has an A+ AM Best rating. Policyholders can choose from two payment options, either fixed premiums for 20 years or until you turn 100 years old.
Though Nationwide doesn’t offer as many rider options compared to other carriers in our rating, you can choose from common ones such as chronic illness, accidental death, premium waiver, and guaranteed insurability riders. You’ll also get guaranteed level premiums with coverage amounts starting at $10,000.
You’ll need to go through an agent to receive a quote and move forward with the application process. Luckily, there are plenty of locations throughout the U.S. so you can easily find an agent near you.
What Is Whole Life Insurance?
Offers lifelong protection as long as premiums are paid
Policies accumulate cash value savings
Can use cash value to pay premiums
Generally more expensive than term life insurance policies
Beneficiaries can’t receive both the death benefit and cash value
Dividend earnings depend on company type
Whole life insurance is a type of permanent life policy that provides the insured with guaranteed lifelong protection as long as premiums are paid. There are two components to a whole life policy: the death benefit and a savings account called the cash value. You pay a certain amount towards your insurance premiums and receive a specific end-of-life benefit that goes to your beneficiaries when you pass. The savings component will accumulate based on earned interest the insurer pays you, although the specifics will depend on your policy.
The cash value that grows is tax-deferred and can accumulate substantially. For this reason, premiums for whole life tend to be higher compared to term life insurance, which only has the death benefit component. However, term life insurance premiums may go up each time you renew a policy, whereas with whole life you lock in your premium.
In addition, you can use your accumulated cash value for a variety of purposes, such as to pay premiums or borrow against. You can also choose to cash out and surrender your policy, though your loved ones will no longer be able to claim the death benefit.
According to the LIMRA, the number one reason most consumers don’t purchase life insurance is that they believe it to be too expensive. Over half of Americans believe that a life insurance policy costs three times more than it actually does.
“Over half of Americans believe that a life insurance policy costs three times more than it actually does.”
Whole life insurance policies typically cost more than term life because of the cash value component that results from interest you accumulate inside the policy. However, the exact cost of your premium payments may surprise you. The cost of your policy will depend on a few factors, including your coverage amount (or death benefit) and your risk profile.
Generally, the higher your desired death benefit, the higher your premiums will be. Your medical history and current health condition will also be taken into account when determining premiums.
The more high-risk you are, the more likely you’ll need to pay higher premiums because of the perceived risk. People who are considered low-risk tend to pay lower premiums.
For instance, if a medical exam determines that you are at risk for heart attacks, insurers will charge higher premiums because they’re more likely to pay out a death benefit. Conversely, if you’re a non-smoker with an excellent health history, you may not pay as much as some who are at higher risk, even if both of you choose the same death benefit amount.
However, you won’t know the exact amount you pay until you go through the application process.
Here are several ways to choose the best whole life insurance company for you:
- Determine choice of add-ons and riders: When considering your death benefit, look at the type of protection you need and whether an insurance company will provide it. For instance, if you want riders that provide long-term care, pay accelerated death benefits, or account for inflation, then make sure you can include those when doing your research.
- Look at the insurance company’s financial ratings: Make sure that your cash value will be around if you need it and the insurance company will have enough money to pay out death benefits to your beneficiaries. Look at an insurance company’s financial ratings (such as those provided by AM Best) to determine whether they’ll be financially sound for years to come.
- Research the company’s customer service: In addition to looking for a well-established company, find out whether a company you’re considering answers questions, processes transactions (such as if you want to borrow money from your cash value), and services claims promptly.
- Shop around: Finding a cost-effective policy means digging into the fine print to determine premium costs and any other relevant fees. For instance, you want to see how much you’ll get paid in dividends, or what the interest rate may be if you were to borrow from your accumulated cash value.
How long does a whole life policy last?
A whole life policy lasts for the duration of your lifetime as long as you keep the policy in force or until you surrender the policy.
What are dividends?
Whole life insurance policies may offer dividends, depending on several factors including the type of insurance company your policy is with, which represent part of the insurer’s profits paid to you, the policyholder. They’re similar to investment dividends, which represents the profit from a public company. The dividends you receive typically depend on how much your policy is worth. Not all whole life policies offer dividends.
What is the cash value?
Cash value is the savings component of your policy which accumulates in value, separate from your death benefit. Policyholders can withdraw funds from the cash value or borrow against it. Some policies may also allow policyholders to use part of the cash value to pay premiums. The exact rules and regulations on how you can use your cash value will depend on the insurance company and your policy.
Can you borrow money from a whole life policy?
Yes, you can. You’ll borrow from the cash value component of your policy — how much will depend on the insurance company and the cash value you’ve accumulated. Policyholders won’t need to go through a credit check, though the cash value will act as collateral for your loan. You will need to pay back the loan plus interest or else your policy may lapse.
If you die before you’ve repaid the loan, the insurance company will subtract the outstanding loan amount when calculating how much of the death benefit will go to your beneficiaries.
Who is the beneficiary?
A beneficiary is a person or entity that receives the death benefit from an insurance policy when the insured passes away.
Who is the policyholder?
The policyholder is the person or entity who owns an insurance policy. The policyholder can make adjustments such as naming and changing beneficiaries, have full access to the cash value, and is responsible for paying the premiums.
What is a death benefit?
A death benefit is a sum of money paid out to beneficiaries when the insured dies, assuming the policy is still active.
How long do you have to claim life insurance?
Generally, life insurance companies need to adhere to state laws on how long a beneficiary has to claim insurance benefits. Talk to your agent or the company that the policy was purchased from if you have questions.
Does life insurance pay for death by suicide?
Most life insurance policies have a suicide clause thatstates that the insurer won’t pay a death benefit if the policyholder dies by suicide within a certain time period (usually two years). However, some insurance companies may pay beneficiaries the amount of premiums paid if the suicide took place within the suicide clause if the insured commits suicide within the first two years.
If you are contemplating suicide, help is available. Call any time of day for free, confidential support from the National Suicide Prevention Lifeline at 800-273-8255. The organization also operates more than 150 crisis centers that offer encouragement and local resources. Please reach out to them if you are in crisis.
Does life insurance cover a drug overdose?
Life insurance may cover a drug overdose depending on your policy. If your policy specifically excludes paying the death benefit for a drug overdose it won’t be paid, but otherwise the death benefit should be paid.
Can you get life insurance if you have cancer?
Some insurance companies offer life insurance for those who have been diagnosed with cancer. The types of policies available to you will depend on your diagnosis, and whether you want term or whole life insurance.
Best Life Insurance Companies of 2022
Below is a list of the top-rated life insurance companies of 2022. To find out more about each one, head to our Best Life Insurance Companies of 2022 page, where you’ll find an overview about each company, why they’re highly rated, and the types of policies offered.
Other Ratings From 360 Reviews
Why You Can Trust Us: 25 Life Insurance Companies Researched
At U.S. News & World Report, we rank the Best Hospitals, Best Colleges, and Best Cars to guide readers through some of life’s most complicated decisions. Our 360 Reviews team draws on this same unbiased approach to rate the products that you use every day. To build our ratings, we researched more than 25 life insurance companies and analyzed 14 reviews. Our 360 Reviews team does not take samples, gifts, or loans of products or services we review. All sample products provided for review are donated after review. In addition, we maintain a separate business team that has no influence over our methodology or recommendations.
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.
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