Life insurance is an important financial tool that provides peace of mind and financial security to individuals and their families. It offers protection against unexpected events, such as death, disability or critical illness, and can help ensure that your loved ones are taken care of financially in your absence.
In this article, we will provide an overview of life insurance, including the different types of policies available, the benefits they offer, and how to choose the right coverage for your needs. We will also discuss some key factors to consider when shopping for life insurance, as well as some common myths and misconceptions about this important financial product.
Whether you are just starting out in your career, starting a family, or planning for retirement, this article will help you better understand the importance of life insurance and how it can help you achieve your financial goals.
Criteria for Selecting the Best Life Insurance Companies
When it comes to selecting the best life insurance company, there are several factors to consider. These factors can vary depending on an individual’s unique circumstances and preferences, but there are some common criteria that can be used to evaluate companies.
One important factor to consider is the financial strength of the company. A life insurance policy is a long-term investment, so it’s important to choose a company that is financially stable and has a strong track record of paying claims. One way to evaluate a company’s financial strength is to look at its ratings from independent rating agencies such as A.M. Best, Moody’s, or Standard & Poor’s.
Another factor to consider is the company’s reputation for customer service. Life insurance can be a complex product, and it’s important to choose a company that has a reputation for providing clear and helpful information to its policyholders. One way to evaluate a company’s customer service is to look at reviews and ratings from current and former policyholders.
Other important factors to consider include the types of policies offered, the coverage limits available, the cost of premiums, and any additional features or benefits offered by the company. For example, some companies may offer riders that allow policyholders to add additional coverage for specific needs such as long-term care or disability.
Overall, selecting the best life insurance company requires careful consideration of a range of factors. By evaluating companies based on their financial strength, customer service, policy options, and additional features, individuals can choose a company that best meets their unique needs and preferences.
How To Find the Best Life Insurance Policy for You
There are many different types of life insurance to consider. But armed with the right information, you can quickly narrow down the options based on your needs in a life insurance policy.
There are some important things to consider when shopping for life insurance:
- Look at financial strength ratings
- Select life insurance as part of a larger financial plan
- Work with an experienced life insurance agent
- Don’t assume insurance companies offer competitive pricing for everyone
- Insist that cost disclosures for universal life insurance be included in any proposals
- Figure out if you want life insurance riders
Look at financial strength ratings
If you knew that your insurance company would likely be unable to pay out your beneficiaries’ life insurance claim in the future, you’d want to choose a different company. One way to make that kind of determination is to look at the insurance company’s financial strength rating.
The financial strength ratings available from agencies like AM Best and Standard & Poor’s help you assess a company’s ability to pay out claims in the future. Insurers with Superior (A+ to A++) or Excellent (A- to A) ratings are those you can have financial confidence in.
All of the best life insurance companies we have named have either Superior or Excellent financial strength ratings from AM Best.
Select life insurance as part of a larger financial plan
Life insurance helps your loved ones cover expenses and reach financial goals after you’re gone. Reviewing your financial goals with a financial advisor can help ensure you get a life insurance policy that helps you meet those goals. For example, a term life policy might be a good fit to ensure your children have money for college if a parent passes away. But a cash value policy might be a better choice if you want to supplement retirement income.
Work with an experienced life insurance agent
While it may be tempting to avoid the topic of dying, addressing life insurance needs as part of your overall financial plan can make the difference between your family thriving or living in financial hardship after you’re gone.
Working with a trusted financial advisor is a great way to make sure your life insurance matches up with your financial goals. For example, if you want to be able to supplement your future retirement income, a financial advisor can help to identify the right options for a cash value life insurance policy.
Don’t assume insurance companies offer competitive pricing for everyone
Every life insurance company has its own rules that determine the rates it offers. As a result, your premium can vary significantly depending on the insurer. The accumulation rate of cash value and the policy fees for cash value policies also vary between companies.
Insist that cost disclosures for universal life insurance be included in any proposals
A life insurance quote reflects what you’ll be billed for, but it doesn’t always tell you about a policy’s internal costs, such as expenses and fees.
Universal life insurance policies have premiums, like any other life insurance policy, but they also have other costs in the form of policy fees. When shopping for this type of policy, be sure to ask the insurer about premiums, fees and any other costs that may be associated with the policy.
“Current regulations in some states and for some products permit insurers to ‘quote’ a low premium while charging high costs—without disclosing that you may need to pay additional premiums later in order to avoid a lapse,” warns Barry Flagg, founder of Veralytic.
Figure out if you want life insurance riders
If you can’t seem to find a life insurance policy that seems perfect, you may want to check into the life insurance riders offered by the insurance company.
Life insurance riders allow you to customize your policy by adding extra coverages. Common riders include benefits you can use while you’re alive, such as accelerated death benefits, long-term care and waiver of premium if you become disabled.
Some riders are included in certain types of life insurance policies without extra charge, such as accelerated death benefit riders. If you’re interested in customizing and expanding coverage, ask your life insurance agent to explain your rider options.
Top 10 Life Insurance Companies of 2023
Choosing the right life insurance company is an important decision, as it can provide you and your loved ones with financial security and peace of mind. In 2023, the following five companies stand out as the best in the industry based on their reputation, financial strength, product offerings, and customer service.
- Pacific Life – Best for Variable Universal Life Insurance
- Penn Mutual – Best for Seniors
- Protective – Best for Universal Life Insurance
- AIG – Best for Recreational Marijuana Use
- Mutual of Omaha – Best for Gen x & Millennials
- Transamerica – Best for Reliable Policy Illustrations
- John Hancock – Best for Celebratory Cigar Use
- Lincoln Financial – Great For Estate Planning
- Securian Financial/Minnesota Life – Best For Indexed Universal Life Insurance
- Symetra – Best For Term Life insurance Rates
1. Pacific Life
Pacific Life is a well-known and trusted insurance company that has been around since 1868. It offers a wide range of life insurance products, including term life, universal life, and variable universal life insurance. One of Pacific Life’s strengths is its financial stability, with an A+ rating from AM Best. Additionally, it offers competitive rates and customizable policies. However, Pacific Life may not be the best option for those looking for a quick and easy application process, as their underwriting process can be lengthy.
2. Penn Mutual
Penn Mutual is another reliable life insurance company with a history dating back to 1847. It offers term life, universal life, and variable universal life insurance, with policies that can be customized to meet your unique needs. Penn Mutual is known for its exceptional customer service and strong financial stability, with an A+ rating from AM Best. However, its premiums may be slightly higher than some of its competitors.
Protective is a top-rated life insurance company that offers term life, universal life, and whole life insurance. Protective is known for its affordable rates, with policies starting as low as $7 per month. Additionally, it offers a hassle-free application process, with the ability to apply for coverage online. Protective also has an A+ rating from AM Best, indicating its financial strength. However, some customers have reported long processing times for claims.
AIG is a globally recognized insurance company that offers term life, universal life, and guaranteed issue whole life insurance. One of AIG’s strengths is its ease of application, with the ability to apply for coverage online or over the phone. Additionally, AIG offers competitive rates and customizable policies. AIG also has an A rating from AM Best. However, some customers have reported long wait times for customer service.
5. Mutual of Omaha
Mutual of Omaha is a well-established life insurance company that has been around for over 100 years. It offers term life, whole life, and universal life insurance policies that can be customized to meet your specific needs. Mutual of Omaha is known for its affordable rates and excellent customer service. Additionally, it has an A+ rating from AM Best, indicating its financial stability. However, its underwriting process can be more extensive than some of its competitors.
Transamerica is a well-established company with over 100 years of experience in the insurance industry. They offer a wide range of life insurance products, including term life insurance, whole life insurance, and universal life insurance. Their strengths include competitive pricing, strong financial ratings, and excellent customer service. However, their weaknesses include limited policy options and underwriting guidelines that may be stricter than other insurers.
7. John Hancock
John Hancock is a reputable insurance company known for its innovative products and services. They offer term life insurance, universal life insurance, and variable universal life insurance. Their strengths include flexible policy options, excellent customer service, and competitive pricing. However, their weaknesses include limited underwriting guidelines, making it difficult for some individuals to qualify for coverage.
8. Lincoln Financial
Lincoln Financial is a top-rated insurer with over 100 years of experience in the industry. They offer a wide range of life insurance products, including term life insurance, whole life insurance, and universal life insurance. Their strengths include excellent financial ratings, competitive pricing, and flexible policy options. However, their weaknesses include limited underwriting guidelines and less innovative product offerings compared to other insurers.
9. Securian Financial/Minnesota Life
Securian Financial/Minnesota Life is a well-established insurer known for its strong financial ratings and customer service. They offer term life insurance, universal life insurance, and variable universal life insurance. Their strengths include competitive pricing, excellent customer service, and strong financial ratings. However, their weaknesses include limited policy options and underwriting guidelines that may be stricter than other insurers.
Symetra is a highly rated insurer known for its innovative life insurance products and services. They offer term life insurance, universal life insurance, and indexed universal life insurance. Their strengths include innovative policy options, excellent customer service, and competitive pricing. However, their weaknesses include limited policy offerings and underwriting guidelines that may be stricter than other insurers.
In conclusion, choosing the right life insurance company is an important decision that requires careful consideration. These top 5 best life insurance companies of 2023 are all excellent options, each with their own unique strengths and weaknesses. Ultimately, the best life insurance company for you will depend on your specific needs and preferences.
Types of Life Insurance
There are two primary types of life insurance: term life and permanent life.
What is term life insurance?
Term life insurance is a policy where you choose the length of coverage, such as 10, 15, 20 or 30 years. If you die within that term, your beneficiary will receive the death benefit. If you outlive the term and don’t renew the policy (at a higher cost), there is no death benefit.
Term life insurance is good for folks who want to cover a specific financial concern, such as income replacement during your working years.
What is permanent life insurance?
Permanent life insurance is good for folks who want a death benefit paid out no matter when they pass away. Permanent life insurance policies also have a cash value component that can accumulate money on a tax-deferred basis. Permanent life insurance is usually significantly more expensive than term life.
People who choose permanent life insurance usually have specific goals in mind, such as supporting financial dependents, funding a trust for heirs, or building cash value to supplement retirement savings.
Permanent life insurance can be broken down into main subtypes:
Whole life insurance
Whole life insurance is predictable because the premiums, rate of cash value growth and amount of the death benefit are fixed and guaranteed.
Universal life insurance
This type offers more flexibility and you may be able to adjust premium payments and death benefits within certain parameters. The cash value growth will depend on the insurer and the performance of the invested assets that are underlying the policy. Types of universal life insurance are fixed-rate universal, guaranteed universal, indexed universal or variable universal.
Permanent life insurance policies can be difficult to understand from quotes or hypothetical illustrations. Simply comparing life insurance quotes or some projection of cash values won’t reveal whether the policy is a good value. “Look under the hood,” advises Flagg of Veralytic. For example, a life insurance agent or financial advisor can request a Veralytic report to see how the policy you’re considering compares to industry benchmarks.
“Ultimately, the premium you’ll have to pay and/or the cash value growth you’ll see depends on what the insurer actually charges and how well the investments do. You want to confirm that internal policy costs are competitive and that the investments within the policy fit your risk tolerance,” cautions Flagg.
Variable life insurance
Variable life insurance offers flexibility not found in whole life insurance, but with a safety net so your death benefit can’t drop below a certain amount.
That flexibility includes deciding on where to invest your cash value. The investments you choose play a vital role in the success of your policy, which makes this an option if you want to play an active role in your life insurance. Unlike a variable universal policy, a variable life insurance policy offers a safety net so that your death benefit won’t fall under a specific dollar figure.
A variable life insurance policy doesn’t let you change your premiums, which also makes it unlike variable universal life.
Similar to other types of permanent life insurance, a variable life policy offers cash value, which you can tap into while you’re alive. You need to make sure your policy maintains at least a minimal level of cash value or your policy could lapse.
What is no-exam life insurance?
Life insurance companies sometimes offer policies without a life insurance medical exam. These no-exam life insurance policies don’t require an exam but you may be asked to answer health-related questions.
Types of life insurance policies include:
- Accelerated underwriting: Life insurance companies primarily use information from third-party sources and algorithms to set your rate. The insurance company will review your prescription drug history, criminal record and driving record to gauge your risk. With that information, the insurance company will set your life insurance rates.
- Guaranteed issue life insurance: There’s no medical exam, no health questions asked and you can’t be turned down.
- Simplified issue life insurance: There’s no medical exam, but you likely have to answer a handful of health questions.
Guaranteed issue and simplified issue policies can cost much more than policies that are fully underwritten, but they’re a way to get life insurance quickly and may be the only option for older people and those with health issues.
Other types of life insurance
Other types of life insurance include:
- Burial insurance: Also called funeral insurance or final expense insurance, a burial insurance policy typically has a small death benefit meant to pay off final expenses, such as $10,000. They are typically whole life insurance policies and will have a high cost for the amount of coverage.
- Survivorship life insurance: A survivorship life insurance policy, also called second-to-die life insurance, offers coverage for a husband and wife. The death benefit isn’t paid out until both people die.
- Mortgage life insurance: A mortgage life insurance policy pays off your mortgage if the policyholder dies. The payment goes directly to the mortgage lender.
- Supplemental life insurance: Supplemental life insurance is a free or low-cost group policy that may be offered by an employer or group. If a supplemental policy is connected to an employer, you will likely lose that coverage if you quit or are terminated.
Cheapest Life Insurance Companies
Life insurance rates vary based on your age, health and more. We analyzed term life insurance rates for a $500,000 policy to determine the cheapest life insurance companies, based on the insurers in our analysis.
|Company||Term life policy name||Term life insurance cost per year for a40-year male||Term life insurance cost per year for a 40-year female||Forbes Advisor Rating|
|Equitable||Term Series 160||$350.00||$320.00|
|Pacific Life||PL Promise Term||$341.74||$289.98|
|Penn Mutual||Guaranteed Convertible Term||$342.20||$291.60|
Best Term Life Insurance Companies
|Company||Term life insurance policy name||Minimum face amount||AM Best financial strength rating||Forbes Advisor Rating|
|Pacific Life||PL Promise Term||$50,000||A+ (Superior)|
|Principal||Term Life||$200,000||A+ (Superior)|
|Protective||Classic Choice Term||$100,000||A+ (Superior)|
|Transamerica||Trendsetter Super||$25,000||A (Excellent)|
Best Whole Life Insurance Companies
|Company||A.M. Best financial strength rating||Forbes Advisor Rating|
|Northwestern Mutual||A++ (Superior)|
|Ohio National||A (Excellent)|
|State Farm||A++ (Superior)|
|Penn Mutual||A+ (Superior)|
Best No-Exam Life Insurance Companies
|Company||Median time for no-exam application approval||Maximum coverage available for ano-exam policy||Forbes Advisor Rating|
|Brighthouse Financial||Same day||$2 million|
|Legal and General – Banner Life||8 days||$2 million|
|Lincoln Financial||5 days||$1 million|
|Jenny Life||Instant||$1 million|
|Transamerica (Trendsetter Super policy)||12 days||$2 million|
After careful research and analysis, we have identified the top 10 best life insurance companies of 2023. These companies have demonstrated exceptional performance in terms of financial stability, customer satisfaction, and product offerings. We encourage you to consider these companies as you shop for life insurance.
In choosing the right life insurance company, it’s important to consider your unique needs and circumstances. Some factors to consider include the type of coverage you need, your budget, and your health status. By doing your research and comparing different options, you can find a policy that meets your specific requirements.
In conclusion, we urge our readers to take the time to research and choose the best life insurance company for their needs. Don’t wait until it’s too late to protect yourself and your loved ones. With the right life insurance policy, you can have peace of mind knowing that your family will be taken care of in the event of your unexpected passing.