Cost & Coverage
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Learn what makes a good life insurance company for every situation.
When you’re shopping for life insurance, you might be concerned about the policy more than the carrier. But choosing the right life insurance company is just as important as choosing the right policy.
The best life insurance companies are affordable, have strong financial stability and are rated highly by financial and consumer institutions, guaranteed to pay out death benefits and provide features and services you need to build a financial safety net.
|COMPANY||POLICYGENIUS RATING (OUT OF 10)||J.D. POWER RATING, 2019||BBB RATING||A.M. BEST RATING|
|Mutual of Omaha||7||795||A+||A+|
Term life insurance lasts for a set number of years, known as the term. If you die during the term, your beneficiaries will receive the policy’s death benefit.
For most people, the best term life insurance company is the one that is the most affordable. Below are sample quotes for a healthy male applying for a 20-year, $750,000 term life insurance policy at ages 25, 35, and 45 years old.
|COMPANY||25 YEARS OLD||35 YEARS OLD||45 YEARS OLD|
|Mutual of Omaha||$39.56||$42.14||$93.74|
Sample quotes. Actual costs will vary.
A denotion of n/a is listed for life insurance companies that do not offer coverage amount.
Your age, health, and hobbies determine how risky you are to insurance, and that’s the driving factor behind how much your policy costs.
Each life insurance carrier will weigh these risks differently. That means health conditions like cancer, diabetes or a history of smoking, along with other factors like dangerous hobbies and military service, can raise your premium considerably if you don’t choose the best company.
Life insurers will take into account pre-existing conditions and whether or not you’re a marijuana user. These factors can lead to higher premiums, so finding the right company is key. Use our guides above to find which companies offer the cheapest and most accommodating policies for you.
The coverage amount is the size of the death benefit (reminder: the amount of money your family will get if you die) and the term length is how long the policy lasts before it expires. This calculator can help you find the ideal benefit and term.
The higher the coverage amount and longer the term, the more expensive the policy. Most people choose a term and benefit that will cover their biggest and longest debt; for many, that’s their mortgage, but also consider the cost of sending kids to college, caring for aging parents, and retirement for your partner.
Finally, while term life insurance is simple, it can be customized with riders, which are optional, additional terms and conditions that you can add to your policy. For example:
Customizing a policy helps it fit your needs, but some riders are unnecessary and others come at an additional cost. Know what riders you need, what riders a particular company offers and what, if anything, it costs before you settle on a policy.
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What is the right policy for you? Most people will need to decide between term and whole life insurance (and choose term) but there are other options like return of premium, no-medical exam, and variable policies. A licensed agent can help you decipher your options.
Companies also offer different riders. Every carrier won’t offer every rider, and riders aren’t always necessary and may increase the cost of your policy. If you’re just looking to care for your family or cover funeral expenses, a basic policy will work.
Finally, look at the coverage limits. Some carriers have a minimum term length, and some only let you choose terms in increments of five or 10 years. There might also be death benefit minimums to take into account.
Whole life insurance is a type of permanent life insurance. It doesn’t expire, and it has an investment-style cash value, which is a tax-deferred savings component that grows over time at a rate specified by your policy and insurer.
Whole life can be a good option for people with complex financial situations, so you should know how to pick the best company and policy.
The first important consideration with whole life insurance is cost; a whole life policy is five to 15 times as expensive as a comparable term life policy, so be sure it fits into your budget.
As you can see, whole life insurance costs considerably more for less coverage compared to term.
Second, consider the financial strength of whole life carriers. This is important to keep in mind regardless, but unlike term life, you can own a whole life policy for as long as you need it. That means it’s even more important to know that a company will still be around for a long time when you’re talking about whole life.
Be sure to know the terms of the cash value component. Every whole life policy has a guaranteed interest rate; know what it is with the company you’re considering.
Also take dividends into account. The strongest whole life policies are usually from mutual companies (like MassMutual, Guardian or Northwestern Mutual) that pay dividends, that can be used to increase the cash value, pay for the policy, or for retirement.
Finally, ask how the policy handles lapse prevention. A whole life policy can automatically pay premiums using the cash value. This keeps the policy from expiring, but also lowers the cash value amount available to you, so it’s important to know how your policy handles a lapse.
When selecting a life insurance company, take into account:
Term life insurance is typically very affordable — less than $40 a month for many people. Other types of life insurance, like whole life, cost considerably more.
Be sure to get life insurance quotes for multiple companies. Captive agents work for only one insurance company and have limited options available. An independent agent or broker like Policygenius, who works with multiple life insurers instead of just one, can help you with this. Comparing insurance policies to find the best price can save you tens of thousands of dollars over the life of the policy.
And remember, your age, health, and hobbies affect your cost, so use our guides above to find the companies that work best for your individual situation.
Not all life insurance companies operate the same way. It’s important to find one that fits your needs so dealing with them isn’t a hassle.
Depending on the carrier, some steps in applying for or updating policies are only done via paper mail or on the phone, while some are done online. Be sure to find a life insurance company that works the way you do. This might mean deciding between a more modern company like Haven Life or an established old-school carrier like Northwestern Mutual or Mutual of Omaha.
Besides the paper versus phone versus electronic consideration, shoppers should take into account the carrier’s:
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There are many third-party groups that provide ratings and reviews based on different criteria. Some provide customer service-related ratings, like J.D. Power scores and Better Business Bureau (BBB) ratings.
Other groups, like A.M. Best, Fitch Ratings, Moody’s, Standard & Poor’s and Weiss Ratings are judges of financial strength.
The most common life insurance ratings come from:
Most of the biggest life insurance companies are financially secure, and while you should look at BBB ratings, keep in mind some reviews may be from customers who had particularly positive or negative experiences that aren’t necessarily representative of the company in general. The best-rated life insurance companies have high marks all around to provide peace of mind.
Shoppers can also see how big a company is by looking at its market share and number of policyholders. Size is typically a good indicator of how well a company is doing, but shoppers shouldn’t be afraid to go with a smaller insurer, like a regional carrier or a membership carrier (like USAA), if it fits their needs.
Most concerns about life insurance – and insurance in general – is that a company won’t be there to pay out when it’s needed. After all, what’s the point in having life insurance if the death benefit isn’t available?
But companies going bankrupt or not paying out are two things you don’t need to worry about.
Financial ratings are a good indicator of the likelihood of bankruptcy, but they don’t tell the whole story. Even if a company does go bankrupt, there are three safety nets in place.
Keep in mind that there are certain scenarios where a life insurance company doesn’t have to pay out the death benefit. During the first two years of the policy, known as the contestability period, the carrier can dispute a payout if there’s suspected fraud.
Suicide also isn’t covered in the first two years, and carriers may not have to pay out in the case of criminal activity (like murder). Learn more about when and how life insurance covers suicide.
But companies not paying the death benefit shouldn’t be your concern when you’re looking for a life insurance carrier. You should focus on the policies they provide, the cost of coverage and customer service.
For most people, the best life insurance company is the one that offers the coverage they need at the cheapest cost. After you know how long your policy should last and how big the benefit should be, use price as the starting point.
You can also look at different factors like third-party financial ratings, customer reviews, and what tasks you're able to do online if you're having trouble deciding between companies.
Find the cheapest company by comparing policies from multiple companies.
Life insurance cost is based on your age, your health, and the policy's term length and death benefit amount. Some companies are more lenient than others for certain health conditions, and you can save up to 40% by making sure you're going with the right company for your individual circumstances.
Third-party ratings from firms like A.M. Best and Moody's can give you peace of mind that a company is financially stable and will be around for a long time.
You can also look at customer reviews from the Better Business Bureau and J.D. Power. These should be taken with a grain of salt, but you can be on the lookout for recurring complaints.
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