Money’s Top Picks
Best Online Life Insurance 2020
Bestow: Best for no health exam – the best way to get coverage during COVID19.
Haven Life: Super fast access to MassMutual term life policies online.
Policygenius: Easily compare offers from multiple carriers.
HealthIQ: Your good health can lower how much you pay for coverage.
More on Money’s Top Picks
To find the best life insurance companies, we conducted over 200 hours of market research, interviewed experts in different areas of the industry, vetted 28 insurers, and analyzed over 200 data points including market share, customer satisfaction, complaint ratio, coverage options, and claims process.
Northwestern Mutual: Best for Customer Satisfaction
|JD Power Rating||Among the Best|
|Medical Exam Required||Yes|
Northwestern Mutual has the highest financial and customer satisfaction ratings awarded to any American life insurer, which is why it tops our list. It also has the largest market share out of all life insurance companies in the nation and an incredibly low NAIC complaint ratio of only 7 complaints for over $11 billion in premiums written.
While it’s a leading mutual insurance company, Northwestern has no shareholders, so its main focus is providing benefits to its policyholders. In fact, the company has already paid out a record $6 billion in dividends to its policyholders in 2020.
Northwestern offers two main types of life insurance: term and permanent, which can be combined. Its term policies can also be converted to permanent policies — regardless of your health status — and you can do this gradually over time as your needs change. The only catch is that there is a fixed window of time in which you can change your term policy into a permanent one, and it’s typically shorter than the term of the policy.
Northwestern has two term life insurance options: annually renewable and level premium. As the name suggests, annually renewable policies renew automatically for a set period (up to age 80) and have more affordable upfront costs. The level premium option, on the other hand, offers you 10 to 20-year terms for a fixed price. The company doesn’t increase rates above the guaranteed maximum, either, so you can rest assured your premium will remain the same.
Life insurance through Northwestern must be purchased through a licensed agent, but they can help you create a custom financial strategy based on your needs.
Northwestern Mutual and Covid 19
Northwestern is giving a 90-day payment grace period for active policies between March 1 and June 1 of 2020. Any claims submitted during this period will still be covered by your policy. If you can’t pay off your premium before the end of the grace period contact your financial advisor, or call 800-388-8123.
New York Life: Best Mutual Insurer
|JD Power Rating||Better Than Most|
|Medical Exam Required||Yes|
New York Life stands as one of the nation’s oldest mutual insurers. As with Northwestern Mutual, then, the company answers to its clients as opposed to stockholders. That means its shares are owned by permanent life policyholders (depending on the specific policy) who benefit from annual dividend payouts, and the company paid out 1.9 billion in dividends in 2020.
New York Life has both term and permanent life insurance options, and their term policies can also be converted to permanent ones later on. Its term coverage options include yearly convertible and level premium convertible. The yearly convertible policy starts with a low premium payment which renews annually, and the premium price gradually increases per year.
The level premium convertible option, on the other hand, has set terms of 10, 15 or 20 years. It also locks in a consistent premium payment for the duration of the term you select. When the term ends, the policy cost increases. Of course, if you choose to convert either of these term policies to permanent ones, you’ll have to pay a higher premium.
New York Life has a J.D. Power Customer Satisfaction Rating of Better Than Most and an NAIC complaint ratio well below the national average for a company of its size and market share.
As a leading mutual insurer of individual life policies, New York Life is a solid option if you’re looking for flexible policies.
New York Life and Covid 19
For policies issued prior to March 24, 2020 and policy owners who have already made their first premium payment, New York Life has initiated a payment flexibility period, granting a temporary pause on cancellations due to non payment of premiums until June 23, 2020. There won’t be any interest charges for late premium payments, late fees, returned payment fees, or negative credit reporting to the major agencies for any missed payments until said date. There is no action needed on the client’s end to benefit from this payment program. Once the grace period ends, all missed payments are due.
State Farm: Best for Immediate Term Coverage
|JD Power Rating||Among the Best|
|Medical Exam Required||Yes |
(Except for Instant Answer Term Insurance)
State Farm stands out for its top-ranking customer service record — Among The Best according to J.D. Power’s 2019 U.S. Life Insurance Study — and above par financial ratings. With just a single complaint, State Farm’s NAIC complaint ratio is also significantly lower than the national median for a company of its size.
If you’re in the 16-45 year old age range, you may qualify for State Farm’s Instant Answer Term Insurance, which features $50,000 in coverage and doesn’t require a medical exam. You can get rate quotes by talking to one of the company’s licensed agents, but policies can only be approved in the office.
State Farm also offers Select Term and Return of Premium life insurance. Select Term is available for 10, 20, or 30-year terms with a guaranteed benefit. Premiums stay the same for the initial term until it’s renewed. You can also customize this policy with optional riders such as children’s term rider (temporary insurance for children up to the age of 25) and waiver of premium with disability, which protects your income from an unexpected disability.
The Return of Premium option is available for either 20 or 30 year terms, and as the same suggests, you get back the value of your policy if you outlive the initial term. If you renew the policy for an additional term, however, your premium will increase. Unlike term policies, the Return of Premium option builds cash value, which you can borrow against during the level premium period. You can also convert this policy into a permanent one up to age 75, regardless of your health status.
State Farm agents can be reached by phone or email, although there is no live chat option available on the site. Note that this insurer is not licensed in NY, MA, or WI.
State Farm and Covid 19
State Farm is inviting life insurance policyholders who are going through financial hardship to contact an agent over the phone or through their mobile app. The company is offering auto policyholders a 25% policy return credit, which you could take advantage of if you have bundled auto and life policies through State Farm.
Liberty Mutual: Best for Quick Approval
|JD Power Rating||Better Than Most|
|Medical Exam Required||Yes (Except for Passport Term Insurance)|
Liberty Mutual excels in its simplified issue term offering, Passport Term. It’s a good choice if you’re looking for a quick turnaround on your policy application.
By completing a short medical questionnaire submitted online, your approval could be processed in as little as 10 minutes — with no medical exam required. No other company on this list offers immediate online approval of simplified issue insurance.
Liberty’s Passport Term policy features level premiums for 10, 15, 20, or 30 years with the option to renew the coverage at the end of the term and convert to a whole life policy.
With above-average customer satisfaction ratings, strong financial standing according to A.M. Best, and a below-average customer complaint ratio, Liberty Mutual a strong candidate for those looking to purchase term life insurance, and quickly.
Liberty Mutual and Covid 19
Liberty Mutual’s term life insurance is issued by Protective Life Insurance Company (PLICO), which will be granting a grace period to customers financially impacted by the pandemic. For additional information call 800-866-9933.
Best Online Options
If you’re looking for a simplified and more efficient way of shopping for term life insurance online, any of the options below could be a great alternative.
Bestow is a marketplace designed for those who value a quick application process and simple term life options. The company offers 2, 10, and 20 year terms, with coverage options from $50,000 to $1,000,000. The application can be completed online in minutes, with no medical exam required. Bestow’s policies are issued by North American Company for Life and Health Insurance. Note that Bestow does not offer policies in New York.
Bestow and COVID-19
Bestow states the pandemic is not affecting its rates and it is still issuing policies. If you have a policy through Bestow and have been economically impacted, call 1-833-300-0603 or reach out through its live chat feature.
Haven Life is another great option for those looking to purchase term life insurance quickly and easily online, with the financial backing of a well-established company. Its policies are underwritten by MassMutual, which holds an A++ A.M. Best rating and is one of the oldest insurers in the nation.
Haven Life offers 10, 15, 20 or 30 year term life options featuring guaranteed level premiums and benefit amounts of up to $3 million. Policies also include a complimentary rider, Haven Plus, which gives you free or discounted access to a fitness app, an app that helps you prevent jet lag, and a customized, state-specific and legally-valid will.
You can get a quote from Haven Life in minutes, even if you’re not sure how much coverage to purchase, as the company’s simple online form calculates a death benefit amount based on your annual income, number of household members, and combined debt. A 30-year-old female in excellent health, for example, can get a 30-year term policy from Haven Life starting at $37.12 a month for a $500,000 benefit or up to $99.36 for a 1.5 million benefit.
Haven Life and COVID-19
Haven Life continues to issue term life policies despite the pandemic. If you’re approved, your policy would be effective immediately and cover death from a pandemic like COVID-19, as long as you were honest about your health and travels during the application process. However, there may be additional questions about international travel in the underwriting process and potential waiting periods for a decision. Eligible applicants may either qualify for InstantTerm, no medical exam insurance or get temporary coverage in place while they complete a medical exam and get their results.
While it doesn’t issue policies, Policygenius is an independent insurance broker that partners with a range of companies, which increases the opportunities to find a policy that meets your needs and budget. Insurers whose policies it offers are AIG, Banner Life, Brighthouse, John Hancock, Lincoln Financial, Mutual of Omaha, Pacific Life, Principal, Protective, Prudential, SBLI, and Transamerica.
Policygenius and COVID-19
Policygenius states its partners are taking measures for customers who have been financially impacted by the pandemic. AIG, Mutual of Omaha, and Pacific Life are granting temporary extensions on payment grace periods. Banner Life has rolled out a completely online application, and Lincoln Financial, Prudential, SBLI, and Transamerica are asking customers to reach out by phone if they need special assistance.
HealthIQ is the ideal option for the health-conscious consumer. The company partners with over 25 national insurance companies. Among the insurers they partner with are Prudential, Mutual of Omaha, and Transamerica. HealthIQ’s mission is to reward those leading active, healthy lifestyles with lower insurance premiums. Rather than looking only at your health history, HealthIQ takes into account your current health, health literacy, and activity levels.
HealthIQ and COVID-19
HealthIQ’s partners, Prudential, Principal, Mutual of Omaha and Transamerica, are either granting grace periods on premiums payments or urging policyholders to reach out if they’ve been financially impacted by the pandemic.
Our research into the best life insurance companies takes into account such factors as financial strength as evidenced by each company’s market share and A.M. Best rating; customer experience based on J.D. Power’s 2019 U.S. Individual Life Insurance Study; the NAIC’s National Complaint Index Report; and feedback from experts across the industry.
We consulted with life insurance researchers, independent consultants, insurance agents and brokers, along with economists specializing in the insurance sector – and representatives from LIMRA. After those consultations, we narrowed the scope of our research to focus on the life insurance products that everyday Americans are most often seeking: term life insurance with simplified underwriting.
Life Insurance Companies by Market Share
- Northwestern Mutual: 6.48% – An industry leader with a flair for customizing coverage.
- New York Life: 6.35% – The oldest life insurance company in the nation.
- MetLife: 6.19% – Life policies for small business owners who want to keep their employees covered.
- Lincoln Financial: 5.54% – Ideal for whole life insurance policies with an investment component.
- Prudential: 5.54% – Good for cancer survivors and others with health concerns.
- MassMutual: 4.59% – Solid financial strength across a variety of life insurance types.
- Transamerica (AEGON): 2.80% – Excels with living benefits coverage.
- John Hancock: 2.77% – Offers coverage for those with managed diabetes.
- State Farm: 2.76 – Personalized attention for those who’d prefer an expertly-guided experience.
- Securian Financial (Minnesota Life): 2.71% – Ideal for those looking for estate planning tools, like investment products to supplement their life insurance.
- Guardian Life: 2.40% – Whole life policies for healthy individuals living with HIV.
- Pacific Life: 2.23 – Wide variety of permanent policies; long term care benefit.
- AIG Direct (American International Group): 2.03% – This huge company offers the perfect combination of financial strength, stability, and flexible underwriting.
- Nationwide: 1.91% – Most robust set of online management features.
- AXA Financial (Equitable): 1.78% – Offers tools/guidance for life insurance as part of a larger financial plan.
Your Life Insurance Questions Answered
We asked experts to address your queries about life insurance and the process of shopping for it.
1) When is the best time to get life insurance?
2) I have life insurance through my employer, is that enough coverage?
3) What’s the best way to calculate how much term insurance I need?
4) What can a life insurance death benefit cover when I die?
A life insurance death benefit can cover final expenses (funeral, burial, outstanding medical bills), mortgage payments, debt, a child’s college tuition, domestic labor expenses, estate taxes, and living expenses for surviving dependents.
5) What type of life insurance is best for me? Term or whole life?
The Basics of Life Insurance
When You Need It
Life insurance is a policy taken out on your life, and paid out in the event of your death, that protects those that depend on you financially. It can cover anything from funeral costs to your kid’s college tuition, or even a mortgage.
There are two main types of life insurance: term and permanent. Term lasts for a predetermined period (most commonly 10, 15, 20 year terms) and then it expires. If you were to pass away before the term is over, a death benefit would be paid to your designated beneficiaries to cover funeral expenses, help replace your lost income, and leave your family an inheritance.
The death benefit can be paid out as a lump sum, in installment, or as an annuity. When you choose a lump sum payout, your beneficiary receives the whole benefit at once. Conversely, if you choose to annuitize your benefit payout, it’s spread out when into fixed installments.
Term insurance, according to Alison Salka from LIMRA, is the most easily accessible insurance policy and the easiest one to understand.
The other option available is permanent insurance, which includes whole and universal life. This option is commonly used as a tax-free investment for its cash value component. According to Chris Huntley from InsuranceBlogByChris, “whole life insurance is oversold and not needed in 90% of cases. It’s sold as more of an investment than as life insurance.”
The main difference between term and permanent is that term doesn’t accrue a cash value, whereas permanent (whole, universal, and other variations) does. Depending on the policy, you can borrow against that money and use it as a savings tool or an investment vehicle. But keep in mind that, according to Huntley, it could take seven to ten years to break even on whole life policies because of their upfront fees.
Another important factor, brought up by Salka, is that consumers often overestimate the cost of life insurance. That’s why, in her opinion, term life insurance is the appropriate and understandable option for average consumers looking for standard coverage.
When You Don’t Need It
You could be asking yourself, “well if I’m single and don’t have kids or outstanding debt, do I really need life insurance?”
If no one would be financially burdened by your passing, then you can go without much or any life insurance. But Salka encourages consumers to reach out to a financial professional to discuss options in case you need, at the very least, a final-expense policy.
Final-expense policies can cover funeral and final costs and are divided into two types: guaranteed issue life and simplified issue life. These policies don’t require an extensive application process and usually forego the traditional medical exam.
Talk To A Financial Professional
A life insurance policy should be an important element in the financial plan of most families. That’s why experts across the industry recommend you talk to a licensed insurance professional.
Someone who is knowledgeable about these products “can ask consumers questions that will help them better understand their needs, says Salka. “And from there, they can make a purchase based on what works for them and their family.”
While it doesn’t hurt to speak to an expert, many consumers opt to avoid the topic of life insurance altogether, perhaps due to misperceptions about its cost. According to LIMRA’s 2019 Insurance Barometer Study, people, and especially Millennials, are prone to overestimate the price of life insurance.
Four in 10 of Millennials who responded to the LIMRA survey estimated high on the cost of a $250,000 term life policy for a healthy 30-year-old. On average, they estimated the policy would cost $1,000 per year more than the actual average cost, which is $160 per year for a term policy on a healthy young person.
How Your Policy is Priced
Besides speaking to a life insurance agent, it’s helpful to understand the factors that go into determining a life insurance premium.
Life Insurance Industry Trends
From Buying Life Insurance to Saving for Retirement
A recent Gallup survey found that over half of non-retired Americans don’t think they have enough money saved up for a comfortable retirement. And the percentage was even higher for those in the age range of 30 or older.
LIMRA’s research corroborates this. When asked about purchasing a policy, LIMRA says, the majority of Americans “who oppose the idea say they’re saving for retirement or just don’t have extra money right now.”
We asked Alison Salka, expert at LIMRA, to shed light on how advances in technology have changed the way customers shop. We also sought their insights into how those advances are affecting the way insurers underwrite their policies.
Salka says one of the biggest shifts she’s documented in the customer experience is due to the ubiquity of online shopping. That includes shopping for and purchasing life insurance.
“Insurance companies have been updating their technology and investing in other types of data analytics to make the [online] process easier and faster,” she says.
One of the ways insurers are accomplishing this is through streamlining the underwriting process. Accelerated underwriting has made purchasing life insurance easier and faster for those looking for fully-underwritten term life insurance without a medical exam. Automated underwriting is also being used. It’s a method that employs predictive modeling and algorithms to review risk and approve life insurance applications more quickly.
Americans Are Waiting Longer To Get Married
According to the U.S. Census Bureau, the median age for marriage has increased since the 1960s from 21 to 27 for women and from 23 to 29 for men. Couples are waiting longer to marry and have children. And marrying and having children are big catalysts for purchasing a life insurance policy.
Market Projections Timeline According to Experts
It Will Get More Expensive
Technology Will Continue to Shape The Process
Coverage Will Be More Accessible
Our research into the best life insurance companies began with the National Association of Insurance Commissioners’ Life and Fraternal Insurance Industry report, which lists the 25 groups and companies that underwrote the most life insurance policies by countrywide premium in 2019. This report identifies the average market share for all the major life insurers in the U.S. (3.02%). We eliminated companies whose share was well below that level.
While market share doesn’t shed light into a company’s insurance offerings or customer service standards, it can be a good measure of financial stability. We further gauged financial stability by considering each company’s A.M. Best rating, an independent measure of an insurer’s financial strength and ability to meet its ongoing insurance policy and contract obligations. With the exception of marketplaces and brokers, we picked only companies with financial strength ratings of A or above.
Another important selection criteria is customer experience. Unless you have to file a claim or make changes to your policy, your interactions with your insurance company should be few and far between. Still it’s a plus if they’re as hassle-free and uncomplicated as possible. To measure customer experience, we took into account J.D. Power’s 2019 U.S. Individual Life Insurance Study scores, prioritizing companies that had an Among the Best or Better than Most rating.
As an added step to ensuring our life insurance top picks were indeed among the best, we took into account each company’s NAIC complaint ratio for individual life insurance. We didn’t consider any company with a complaint ratio above the national average. The life insurance companies that made our list have the same number or fewer complaints than other companies of their size.
That left us with a list of nine companies that surpassed industry standards in the number of direct premiums written, A.M. Best Ratings, J.D. Power rankings, and low number of complaints with the NAIC.
As a final step, each company was evaluated based on its product offerings. We paid special attention to the most important features according to industry experts: the ability to modify policies, flexible medical exam requirements, and convenient simplified issue options.
It’s when shopping for quotes or making changes to a policy that you most appreciate a company that offers superior customer service. That’s why the most important factor to consider when shopping around for life insurance is the insurers’ track records for customer satisfaction. We used J.D. Power’s 2019 U.S. Life Insurance Study and the National Association of Insurance Commissioners’ (NAIC) Complaint Ratio Report to measure each company’s performance with regard serving customers efficiently.
J.D. Power’s 2019 U.S. Life Insurance Study ranks the overall customer satisfaction of the largest life insurance providers in the United States. It uses an index model that measures insurers’ performance in: application and orientation, communications, interaction, product offerings, price, and statements. The companies are then ranked on a scale of: Among The Best, Better Than Most, About Average, and The Rest.
The National Association of Insurance Commissioners’ (NAIC) Complaint Ratio Report catalogues the number of complaints filed against an insurer, compared with the other companies in the market.
Money favored companies with high customer satisfaction ratings, and a low complaint ratio.
Policies and Coverage
Life insurance offerings are fairly similar across the board, so we favored companies that offer a convenient purchase process and the flexibility to customize a policy. We also prioritized companies that offered innovative term insurance products and a variety of riders.
An insurer’s financial strength is another important factor when shopping for life insurance. We used A.M. Best ratings to determine each company’s ability to pay out claims, selecting only those that were deemed superior and excellent in financial strength. Companies with ratings below B (fair), were eliminated.
While this factor is often overlooked by consumers, financial stability matters. When an insurance company declares bankruptcy, for example, their client and product portfolios are sold to other insurers, delaying any payouts for claims that are being processed when the change takes place. When you choose a company with a high A.M. Best rating, you’re betting on their ability to pay out your claim on time, without major hassles.