Life insurance is a contract between an insurance policyholder and an insurer, where the insurer guarantees payment of a death benefit to named beneficiaries upon the policyholder’s death. In exchange for this payment, the policyholder pays premiums to the insurer.
The death benefit can help provide financial security for the policyholder’s loved ones, such as to cover funeral costs and outstanding debts or to provide income for the family.
There are different types of life insurance policies, including term life insurance, which provides coverage for a set period, and permanent life insurance, which provides lifelong protection.
Things to consider while choosing a life insurance company
There are several things to consider when choosing a life insurance company. Here are some essential factors to consider:
- Financial stability: Choose a financially stable company with a strong track record of paying out claims. You can check the company’s credit rating from Moody’s and Standard & Poor’s.
- Range of policies: Make sure the company offers a range of policies that meet your needs. For example, if you have a young family, you may want a term life insurance policy that provides a high death benefit for a set period.
- Customer satisfaction: Check the company’s customer satisfaction ratings and reviews to see how they handle claims and policyholder inquiries. You can find this information on companies or independent consumer review websites.
- Cost: Compare quotes from multiple companies to find the most affordable policy that meets your needs. Remember that the cheapest policy may not always be the best option, as it may not provide the coverage you need.
- Reputation: Research the company’s reputation and history to see how they have handled claims and other policyholder issues. A reputable company will have an account of fair and prompt claim payments.
Overall, choosing a life insurance company that is financially stable, offers a range of policies that meet your needs, and has a good reputation for customer service and claim payments is essential.
How much life insurance should you have?
There is no one-size-fits-all answer to how much life insurance you should have. The coverage you need depends on several factors, such as your income, debts, and the number of dependents you have.
Some financial experts recommend having a life insurance policy worth 10-12 times your annual income. However, this is just a general guideline, and you may need more or less coverage depending on your specific situation.
It’s a good idea to work with a financial advisor or use an online life insurance calculator to determine the amount of coverage that is right for you.
Best Life Insurance Companies for U.S. Policyholders
According to LIMRA’s 2018 Insurance Barometer, nearly 60% of Americans are covered by some life insurance. About 2 out of 5 do not provide any information. Are these people playing fast and loose with the finances of their surviving heirs?
Short answer: probably.
How much life insurance you should have – and what type of insurance is best for your family’s needs – depends on your age, income, family size, life stage, and long-term financial goals.
Whatever type of policy you choose, you’ll want to choose a life insurance company that is both financially strong and dedicated to the well-being of its policyholders.
Hundreds of well-known life insurance companies serve U.S. consumers today, supporting a trillion-dollar (or more) market.
You can and should use an aggregator like Policygenius to find providers and policies that fit your needs quickly. But pay special attention to these companies — they’re some of the best.
Best Overall: State Farm
State Farm offers term, whole, and universal life policies. It also provides some low-cost niche products. For example, final expense insurance. This is appropriate for senior police officers who wish to ensure that their death does not place a financial burden on their survivors.
Notable State Farm life insurance products include:
- Return of premium coverage is a 20 or 30-year level term policy that ultimately returns all amounts paid by policyholders beyond the original policy term.
- Instant Answer term insurance, a $50,000 policy that provides coverage for ten years or up to age 50, whichever is longer, without traditional underwriting requirements (such as a medical examination)
- About 20,000 agents around the US
- A++ (Superior) financial strength rating from A.M.Best
- 5 out of 5 (Out of the Best) Overall Customer Satisfaction Rating from C.D.Power
Best for Term Life Insurance: Haven Life
Haven Life is another technology-driven life insurance startup specializing in super-affordable term life insurance policies from 10 to 30 years. The underwriting process is fast. Digital application takes no more than 10 minutes. And it’s transparent – the reception screen shows the actual amounts paid by real (anonymized) customers.
Applicants over age 59 may be eligible to apply for up to $1 million in coverage without a medical exam, depending on their health history and lifestyle.
If you want more from Haven Life, add the optional Haven Life Plus rider and get free or discounted perks:
- An adaptive fitness app with thousands of original exercises and an impressive digital music library
- Timeshifter, an app designed to combat jet lag — a lifesaver for frequent international travelers
- A private, legally defined comment that you can create and store (securely) on the Internet
Life suite, a secure digital storage tower
- Discounted services at MinuteClinic locations inside thousands of CVS and Target stores
Haven Life Plus is available in most states. Check the fine print on Haven’s website to confirm your eligibility.
Best for value-addition: Walnut
Walnut is an unconventional insurer that offers what it calls “life insurance” “as a premium membership.” Starting at $10/mo, it includes:
- Cost-upfront term life insurance (how much you’ll pay for coverage before you apply)
- No medical examination is required for coverage
- Headspace Plus, guided meditation, and self-directed therapy library
- ClassPass Digital, a home training video library
- Dashlane Premium is a password manager that auto-fills your passwords
The components of this kit purchased separately, cost more than $25 per month, not including insurance costs. For an additional monthly fee, get more value with a Digital Defense Membership. This membership includes the following:
- Dashlane Premium
- Access to 24/7 cyber support helpline
- Up to $1 million in stolen funds if you are a victim of identity theft
Best for quick approval: Bestow
Bestow is a technology-driven alternative life solution specializing in non-test coverage. It makes the application process even neater than Ladders. It takes about 5 minutes to agree. Underwriting is fully algorithmic, meaning you can be approved for a policy as large as $1.5 million without a medical exam.
- Terms up to 30 years
- Increasing and decreasing 5-year terms
- Open to applicants under 60 years of age
- A+(Superior) financial strength rating from A.M.Best
Best for no-exam coverage: Ladder
Ladder — a technology-driven term life insurance solution that can overcome traditional insurance pitfalls. His signature benefit is an unusually high death benefit (up to $3 million) to cover non-life insurance – this is a term life policy does not require a medical examination as a condition of consent.
- Very low premiums thanks to Ladder’s bottom-up model
- Get a provisional consent order in minutes
- Apply all online for coverage without an exam
- Home medical examination for policies above $3 million
- Option to reduce coverage over time as your need decreases
Best for permanent life insurance: Pacific Life
Pacific Life offers an above-average range of permanent life insurance products:
- Indexed Universal Life Insurance indexes the policy’s cash value to market instruments while offering guaranteed loss protection, with a limit on the downside and upside
- Variable Universal Life Insurance provides a more comprehensive (albeit potentially risky) range of cash-value investment options
- Standard Universal Life Insurance provides discounted amounts for more control over cash growth
You can also start with a term policy and convert to permanent later using the PLPromise Term product. The P.L. Promise term product offers 10-30 year level options with non-liquid (specialized medical exam) underwriting for older policyholders.