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By Ana ReinaRuben Ramos and Heidi Rivera
Updated: July 29, 2021 1:42 PM ET | Originally published: July 2, 2021
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Best No-Exam Insurance
Bestow
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Term Policies

10-year, 15-year, 20-year, 25-year, 30-year

Coverage

$50,000-$1.5 million

Best for Fast Online Access to Affordable Term Policies
Haven Life
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Term Policies

10-year, 15-year, 20-year, 25-year, 30-year

Coverage

Up to $3 million

Best for Easy Comparison
Policygenius
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Term Policies

Depends on the insurer

Coverage

Depends on the insurer

Best for QL Index Determines Your Premium
Sproutt
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Term Policies

10, 15, 20, 30 years

Coverage

Up to $3 million

Best for Simple Process
Ethos
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Term Policies

10, 15, 20, 30 years

Coverage

$50,000 - $1.5 million

Term Policies

10-year, 15-year, 20-year, 25-year, 30-year

10-year, 15-year, 20-year, 25-year, 30-year

Depends on the insurer

10, 15, 20, 30 years

10, 15, 20, 30 years

Coverage

$50,000-$1.5 million

Up to $3 million

Depends on the insurer

Up to $3 million

$50,000 - $1.5 million

Find the best life insurance companies of 2021. Learn all about coverage options including policy types and premiums.

Our Top Picks for Best Life Insurance Companies of July 2021

Most Convenient Life Insurance During COVID-19

  • Bestow – Best No-Exam Life Insurance
  • Haven Life Insurance Agency – Best for Fast Online Access to Affordable Term Policies
  • Policygenius – Best Comparison Tool and Broker
  • Sproutt – Best New Independent Broker
  • Ethos – Best for Simple Online Application Process
  • HealthIQ – Best for People with Good Health
  • Lemonade – Best for Affordable Insurance
  • Ladder – Best for Innovative Coverage Options

Traditional Life Insurers

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Best Life Insurance Companies Reviews

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Why we chose this company

Bestow is designed for people who value a quick application process and simple term life options without a medical exam. If you’re not sure what that is, our What Is No-exam Life Insurance guide can help.

Pros
  • Complete the application process online in minutes
  • No medical exams, ever
  • Premiums start from $10/mo
  • Assistance through phone, email, and live chat
Cons
  • Only those between the ages of 18 and 59 may apply
  • 20-year term only available for under 45-year-olds
  • Bestow does not offer policies in New York

Bestow offers 10-, 15-, 20-, 25-, and 30-year term policies, with coverage from $50,000 to $1,500,000. Its policies are issued by top-rated insurer North American Company for Life and Health Insurance.

What makes this company stand out is its convenience and speed. By pulling available data (with your permission), the company uses algorithms to determine your rates and whether you qualify. Finally, it offers a comprehensive library of helpful information.

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Why we chose this company

Haven Life provides no-cost perks to eligible policyholders, including a customized, state-specific, and legally valid digital will, as well as subscriptions to a fitness app and online vault. Further, its online calculator determines your benefit amount based on annual income, household members, and combined debt.

Pros
  • Get a quote in minutes
  • Online calculator
  • Policies are underwritten by MassMutual or its subsidiary C.M Life
  • Complimentary rider with free or discounted access to digital perks
Cons
  • Doesn't allow spouse or child riders
  • Only offers term life insurance
  • Underwriting requires access to complete medical history

Haven Life is an excellent option for those looking to purchase term life insurance quickly and easily online, with the warranty and financial backing of MassMutual, one of the country’s oldest and most reliable insurers.

Haven Life offers 10-, 15-, 20-, 25-, or 30-year term life insurance policy options include guaranteed level monthly life insurance rates and coverage amounts from $100,000 to $3 million. Coverage amount available for people aged 20-59 is up to $3 million, with ages 60-64 up to $1 million. Haven Term is issued by C.M. Life Insurance Company in certain states, including North Carolina. In New York, California and others, Haven Term is issued by MassMutual.

Finally, Haven Life offers Haven Simple, a simplified issue term life insurance product, and AgeUp, a deferred income annuity also backed by C.M Life Insurance Company in certain states to guarantee income during late retirement.

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Why we chose this company

Policygenius is an online insurance marketplace that partners with a range of companies, and contrary to other comparison sites, this one won’t hand off your lead to a company.

Pros
  • Brokerage includes many types of insurance through major carriers including auto insurance and home insurance
  • Users can create a will or trust using attorney-approved tools
  • Live chat and phone assistance, 7 days a week
  • 24/7 email assistance
Cons
  • Policy premium quotes or ranges are non-binding
  • The final price takes time to get
  • Underwriting requires entire medical history

With this marketplace, if an insurer offers a different rate than what Policygenius was quoted, they’ll help find a comparable price to the original. Some of Policygenius’ partners include AIG, Banner Life, Brighthouse, John Hancock, Lincoln Financial, Mutual of Omaha, Pacific Life, Principal, Protective, Prudential, SBLI, and Transamerica, offering a variety of life insurance quotes and options for possible policyholders.

Contrary to other comparison sites, this one won’t hand off your lead to a company, their team will guide you through the entire process.

Finally, Policygenius provides a large library of educational resources, including recommendations for life insurance for people with depression, marijuana users, or diabetics.

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Why we chose this company

Sproutt matches consumers with insurers and determines life insurance rates through a short quiz covering physical and emotional health.

Pros
  • Fast approval
  • User-friendly web interface
  • Offers term and whole life insurance policies without medical exams
  • Licensed in all 50 states and Washington DC
  • Premiums are based on your overall well-being
Cons
  • No phone assistance over the weekend
  • Coverage may be denied based on BMI, previous bankruptcy, or specific medical conditions

Newcomer Sproutt Insurance is a new independent broker that matches consumers with insurers — such as Prudential, Nationwide, and AIG Direct — that provide standard term or whole, no-exam, or guaranteed policies.

What makes Sproutt different is its unique approach to determine users’ life insurance rates. The company uses an individualized “Quality of Life Index” determined by a short quiz covering healthy habits, exercise, and emotional wellbeing.

The quiz results are then tallied according to the following five factors:

  • movement
  • sleep
  • emotional health
  • nutrition
  • balance
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Why we chose this company

Ethos allows prospective customers to obtain a quote in seconds and apply just in minutes without talking to an insurance agent.

Pros
  • Medical exam not required in many cases, for coverage under $1 million
  • Policies provided by reputable companies, such as AAA Life and Ameritas
  • Easy application process is entirely online
  • 30-day money-back guarantee
Cons
  • Few available policies
  • Limited rider choices

Ethos offers term and life insurance policies from insurers with a long history in the industry, including Legal and General America, Ameritas, and AAA Life. The company aims to make life insurance simpler, allowing prospective policyholders to get a quote in seconds and apply in just minutes, without having to talk to an agent.

Their term life policies are standard, with 10- to 30-year terms, with fairly high coverage limits between $50k and $1.5 million. They also offer a Guaranteed Issue Whole Life insurance policy issued by AAA Life for people between ages 65 and 85. Applicants obtain instant approval, regardless of their medical history, for coverage between $10k-$25k.

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Why we chose this company

HealthIQ rewards policyholders for leading an active, healthy lifestyle. They consider your current health, health literacy, and activity levels to determine the monthly premium.

Pros
  • Find quotes from various insurance carriers and types of life insurance products in one place
  • Good health, health knowledge, and an active lifestyle results in lower prices
  • Live chat and phone assistance, 7 days a week
  • Compare rates against 30 different carriers
Cons
  • Online quotes require that users agree to calls from agents
  • All advertised rates and savings are hypothetical and subject to change
  • Website could be much more user-friendly to navigate

HealthIQ is the ideal option for the health-conscious consumer, as its mission is to reward those leading active, healthy lifestyles with lower life insurance rates. They do this by analyzing the answers potential policyholders give on the HealthIQ quiz, with over 30,000 data points covering integrative health concepts around medical, exercise, and nutritional issues.

The company partners with over 25 national insurance companies, including Prudential, Mutual of Omaha, and Transamerica.

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Lemonade Life Insurance: Best for Affordable Insurance

Why we chose this company

Lemonade life insurance stands out from other online insurers because its low premium pricing starts at less than $10 per month.

Pros
  • Premiums start from $9/mo
  • Approval in as little as 5 minutes
  • No medical exam required
  • Full refund if you cancel within the first 30 days
Cons
  • Only people 18-60 years old can apply
  • Term life is offered to most healthy individuals who don't have a history of cancer, heart conditions, drug or alcohol abuse, or that engage in life-threatening activities
  • Term life not available in NY

Lemonade offers term and whole life insurance policies through North American Company for Life and Health Insurance in terms of 10-, 15-, 20-, 25-, and 30- years.

This insurer can provide approval in just 5 minutes without the need for a medical exam or talking to an agent. All of their processes are entirely online, and you’ll receive a summary of benefits after your approval and before you have to pay.

Lemonade’s life insurance policies offer up to $1.5 million in coverage.

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Why we chose this company

Ladder offers the unique option of laddering, which means you can increase or decrease your coverage to better fit your life insurance needs. In addition, you can make changes to your application and coverage through your online account.

Pros
  • Starts at $5/mo
  • $100,000 to $8 million in coverage
  • Online application in 3 steps
  • No medical exam required
Cons
  • Only offers term coverage
  • Insures only people from 20-60 years old

Ladder offers 10, 15, 20, 25, or 30-year term life insurance. This insurer doesn’t charge any policy, processing, or cancellation fees, allowing their policyholders to cancel their coverage whenever they want.

Unlike other insurers, Ladder offers laddering, which allows people to change their policy coverage at any time. Policyholders are not required to make changes in their policy; however, it’s an available option for those who see fluctuations in their budget and don’t want to cancel their insurance or leave family members without a safety net. With laddering, your premiums will only go up if you increase your coverage and will lower if you decrease your policy coverage.

Ladder doesn’t provide riders for their term policy, or provides coverage for multiple individuals or families.

Traditional Life Insurers

Northwestern Mutual Review: Best Overall

Why we chose this company

Our top-rated traditional insurance company, Northwestern Mutual, consistently obtains high customer satisfaction rankings and low complaint numbers.

Pros
  • Term and permanent life policies can be combined
  • Term policies can be converted to permanent policies regardless of health status
  • Premium 10- to 20-year term length have a fixed price
  • All policy types can earn dividends
Cons
  • Fixed window of time for changing term policy into a permanent one
  • Must be purchased through a licensed agent

Though it doesn’t publicly list all its offerings, we found 17 different policies. Their CompLife and Whole Life Plus policies make them the only insurer on our list offering blended protection with a term and permanent benefit.

Northwestern’s unique term life insurance plans have 10-, 20-, or 80-year renewable terms. They also offer whole life and universal life insurance policies, including some rarer options such as Executive Variable Universal Life (for employers), and Survivorship Variable Universal Life.

Finally, Northwestern has a large suite of available riders available. Be aware that these aren’t always available in every state or on every policy.

  • A.M. Best: A++
  • JD Power Rating: 790/1000
  • Medical Exam Required: Yes
  • Buy Online: No

Nationwide Review: Highest Customer Satisfaction

Why we chose this company

Nationwide has one of the highest customer satisfaction ratings on our list with an A.M. Best rating of A+, and 3rd place in JD Power’s 2020 U.S Life Insurance Study.

Pros
  • Term policies can be converted to whole life ones with no fee and no medical exam
  • Credit wellness points can be put towards the underwriting ratings
  • Hybrid YourLife Care Matters combines universal life with long-term care coverage
  • Several policies have different investment options
  • Multiple available riders
Cons
  • Most policies don't have online quotes available
  • 6 different universal life policies make for a confusing process
  • No guaranteed acceptance policies

Nationwide offers term, whole, universal, and variable life insurance policies. Nationwide’s term life policies have 15- to 30-year periods, all of which feature level monthly premiums, and usually have coverage starting at $100k. These policies have several available riders, including accelerated death benefit, premium waiver, and children’s term insurance.

NY residents have access to three universal life policies, whereas people in other states can choose between four options. These include a hybrid universal/long-term care policy called YourLife CareMatters, a Survivorship Indexed UL, an Indexed Universal Life Accumulator with a death benefit and tax advantages, and an Indexed Universal Life Protector with multi-layer tax protection. These policies are generally available up to ages 80-85 for people between ages 0-18, depending on tobacco use.

Lastly, Nationwide also offers a whole life policy with a lifetime coverage period, level monthly premiums and coverage starting at $10k

  • A.M. Best: A+
  • JD Power Rating: 803/1000, 3rd place
  • Medical Exam Required: Sometimes
  • Buy Online: Yes

Mutual of Omaha Review: Best for Complex Medical Histories

Why we chose this company

Mutual of Omaha stands out from the competition thanks to its competitive rates for people with preexisting medical conditions, underwriting according to some specifics. For cancer survivors, this includes the tumor grade, cancer stage, and time in remission. Tobacco use won’t necessarily influence whole life premiums.

Pros
  • Apply for term coverage without a medical exam
  • Quotes available online
  • Affordable underwriting for health conditions
  • Very customizable policies, with many available riders
  • High cap on the face value of their policies
Cons
  • Policies for healthy individuals are more expensive than the average
  • Must apply to discover whether you require a medical exam
  • Sparse website resources
  • New York residents have limited options

The company has a wide selection of 11 term, whole, and universal life insurance policies. Their riders include not just the basics (accelerated death and accidental death), but also disability income, waiver of premium, chronic illness, terminal illness, critical illness, and residential damage, among others. Some policies refund all premiums, plus 10%, if the policyholder dies during the contestability period.

However, this insurer may not be a great choice for healthy individuals or elderly people, however, as premiums are higher than the industry average. Further, application and processing times can be a bit slower than with other insurers, with their website itself stating that it usually takes about a month to get covered.

  • A.M. Best: A+
  • JD Power Rating: 789/1000
  • Medical Exam Required: Yes, except for Term Life Express policies
  • Buy Online: Yes, but this may reduce your options

New York Life Review: Best for Mutual Insurance

Why we chose this company

New York Life has a good selection of both term and permanent life insurance options, and their term policies can also be converted to permanent ones later on. This insurer also underwrites the AARP life insurance program.

Pros
  • Flexible life insurance plans
  • Term coverage include yearly and level premium convertibles
  • Yearly convertible policy starts with a low premium payment which renews annually
Cons
  • Policy cost goes up once the level premium convertible option term ends
  • Higher premium for converting yearly or level term policies to permanent

New York Life stands as one of the nation’s oldest mutual insurers. As with Northwestern Mutual, the company’s shares are owned by their policyholders (depending on the specific policy), who benefit from annual dividend payouts. The company paid out 1.9 billion in dividends in 2020.

New York Life has a good selection of both term and permanent life insurance options, and their term policies can also be converted to permanent ones later on.

AARP Life Insurance Review

New York Life also underwrites the AARP Life Insurance Program, which offers both term and permanent group coverage without a physical exam. The program provides three different options to choose from: Level Benefit Term Life Insurance, Permanent Life Insurance, and Easy Acceptance Life Insurance. The latter two have guaranteed rates, while the first’s premiums do increase over time.

  • A.M. Best: A++
  • JD Power Rating: 784/1000
  • Medical Exam Required: Yes
  • Buy Online: No

MassMutual Review: Best for COVID-19 workers

Why we chose this company

MassMutual stood out for us for their completely free 3-year term life insurance policy for frontline healthcare workers, helping keep us safe from the COVID-19 pandemic.

Pros
  • Excellent options for building cash value
  • Wide selection of optional riders
  • Free nation-wide policy for COVID-19 workers
  • Policyholders can earn dividends
  • Direct Term life insurance can be purchased immediately online
  • Young and/or healthy applicants may not need a medical exam
Cons
  • Several features are only available as riders
  • Considerable overlap between benefits and features
  • Pricing not stated online
  • Time limits on conversion, and not all term policies allow it
  • High rates for smokers

MassMutual offers a wide selection of life insurance policies, including term, whole, and universal. Where they stood out for us is in their completely free 3-year term life insurance policy for frontline healthcare workers helping keep us safe from the COVID-19 pandemic. Death benefits are up to $25k for applicants ages 18-50, and $10k for ages 51-60, and there’s no physical exam or lab testing required.

Aside from that special offer, MassMutual’s standard term policies have 10-, 15-, 20-, 25-, and 30-year terms, with guaranteed level premiums. Eligibility is up to age 75 for a ten-year term. Overall, for every five years added to the term, the maximum age goes down five years.

The insurer’s whole life coverage is particularly comprehensive, as customers can choose between 10 different policies. Two of these, CareChoice One Hybrid Life and Select Hybrid Life, accumulate cash value guaranteed to increase year over year. These don’t have any available riders, and are the only whole life policies from which money can’t be drawn. Minimum coverage levels vary by policy, starting at $25k for some and $100k for others.

Finally, MassMutual offers three universal life insurance policies with flexible premiums, within some limits, allowing customers to build cash value. Depending on the policy, you can also get a guaranteed death benefit.

  • A.M. Best: A++
  • JD Power Rating: 769/1000
  • Medical Exam Required: Yes, though they will offer temporary coverage with the Direct Term policy until you can get a medical exam
  • Buy Online: Yes, offers immediate term life insurance

State Farm Review: Best Life Insurance for Immediate Term Coverage

Why we chose this company

StateFarm offers Instant Answer Term Insurance for which you can apply online and receive an underwriting decision and approval, all on the same day.

Pros
  • Monthly premium stays the same for the initial term until it's renewed
  • Optional add-ons and riders such as children's term rider or waiver of premium with disability
  • State Farm agents can be reached by phone or email
  • Convert into permanent one up to age 75, regardless of health status
Cons
  • If you renew the policy for an additional term your premium will increase
  • No live chat option available on the site
  • Not licensed in Massachusetts

State Farm stands out for its top-ranking customer service record. 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 to 45 age range, you may qualify for State Farm’s Instant Answer Term Insurance, which features a $50,000 amount of coverage that doesn’t require a medical exam for the underwriting process. 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. The Return of Premium option builds cash value, which you can borrow against, and gives back the value of your policy if you outlive the initial term. Select Term is available for 10-, 20-, or 30-year term lengths with a guaranteed benefit.

  • A.M. Best: A++
  • JD Power Rating: 838/1000, 1st place
  • Medical Exam Required: Yes, except for Instant Answer Term Insurance
  • Buy Online: No

Guardian Life Review: Good Survivorship Policies

Why we chose this company

Guardian Life offers an uncommon survivorship policy, which covers both spouses in one policy, and only pays out after both spouses pass away.

Pros
  • Online quotes and account management
  • Large selection, including hard-to-find survivorship life
  • Policies available for people living with HIV
  • Website has great educational resources
  • Customers with whole life policies can receive dividends
  • Whole life policies up to age 121
Cons
  • Must apply (and cancel) through an agent
  • Basic term life options
  • No non-medical exam (guaranteed issue) options
  • High cap on the face value of their policies
  • No discounts for bundling

Guardian really stands out in three ways. First is its Survivorship policy, relatively rare in the life insurance industry. It’s usually used by married couples jointly setting up their estate, since it covers two people on one policy, and only pays out after both spouses have passed away.

Second, Guardian offers policies to people living with HIV, under certain circumstances. Lastly, they also allow customers to convert their term policies into a whole or universal policy.

Guardian Life offers term life policies for 10 to 30 years, with online quotes available for ages 18 to 75, after which age limits may apply. Coverage limits for term life range between $250k to $5 million, and can cover you until age 85, depending on your age when the term began.

Guardian’s whole life policies benefit from it being a mutual company, which means these are eligible for dividends. Further, they also have guaranteed cash values that accumulate over time and which you can draw from as a loan. Issue ages ranges from 0 to 90, with minimum values beginning at $25k, $100k, or $250k.

Finally, Guardian also offers universal and variable universal life policies. These offer several advantages, including certain tax advantages, flexible premium payments, a guaranteed 2.5% interest rate on some plans, and several available riders.

  • A.M. Best: A++
  • JD Power Rating: 743/1000
  • Medical Exam Required: Yes
  • Buy Online: No

USAA Life Insurance Review: Best for Military & Veterans

Why we chose this company

USAA insurance offers options specifically for military members and their families. These include a Military Future Insurability Rider that increases your coverage after leaving the military and a Military Severe Injury Benefit, which pays out $25k for injuries sustained during active duty.

Pros
  • Designed specifically for military members, includes coverage during war
  • Lower complaint ratio than other comparably-sized insurers
  • High cap on the face value of their policies
  • Obtain quotes online for term, whole, and universal policies
  • Survivor Relations Team
  • Designed specifically for military members, includes coverage during war
Cons
  • Medical exam required for all policies
  • Some policies unavailable in New York

While the design of USAA’s term, whole, and universal life insurance policies are fairly standard, they offer some benefits tailored explicitly to active-duty military and veterans. For instance, their riders include a Military Future Insurability Rider that increases your coverage after leaving the military, and a Military Severe Injury Benefit which pays out $25k for injuries sustained during active duty.

USAA offers the option to add $100k for major life events such as having a child, getting married, or buying a house between ages 18 to 35. Should you leave the military, you can also convert your service member group policy to individual term life insurance.

We decided to review USAA despite its non-inclusion in the latest J.D. Power study, because of its extremely low complaint ratio (0.11, well below the national average of 1.0), and its strong reputation in the insurance industry.

  • A.M. Best: A++
  • JD Power Rating: N/A
  • Medical Exam Required: Yes
  • Buy Online: Yes

Liberty Mutual Review: Best Life Insurance for Quick Approval

Why we chose this company

We chose Liberty Mutual as the best life insurance for quick approval because of its Passport Term policy. This policy doesn’t require a medical exam, just filling out an online form, after which approval can take as little as ten minutes.

Pros
  • Approval process in as little as 10 minutes with no medical exam
  • Immediate online approval of simplified issue insurance
  • Passport Term is an excellent simplified issue term offering
Cons
  • Web interface could provide a better user experience
  • Monthly rates are higher than average

Liberty’s Passport Term policy doesn’t require a medical exam, just filling out an online form, after which approval can take as little as ten minutes. The policy comes in 10-, 15-, 20-, and 30-year terms 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.

  • A.M. Best: A
  • JD Power Rating: N/A
  • Medical Exam Required: Yes, except for Passport Term Insurance
  • Buy Online: No

Other Life Insurance Companies We Considered

To determine our list of the top life insurance companies, we looked at three key areas: financial stability, customer experience, pay-out warranty, and product offerings.

This eliminated many companies from making our limited cut. For instance, despite being one of the ten largest insurance companies in the United States, TransAmerica didn’t make it onto our list. Its financial stability grade with A.M. Best was recently downgraded, and its score in the J.D. Power survey was considerably lower than the average of 763/1000. Even worse, their NAIC complaint ratio is very high, even considering their size.

Prudential didn’t make our cut either, for many of the same reasons — their satisfaction score was barely below the average, but their NAIC complaint ratio was worrying. Other companies that we eliminated included MetLife, Lincoln Financial, AIG, Amica, and Northwestern Mutual.

Still, there are still plenty of companies that offer the right life insurance plans that can fit your needs, budget, and standards.

Life Insurance Guide

In a nutshell, life insurance is a contract between a policyholder and an insurer, in which the latter guarantees to pay a sum of money to the former’s named beneficiaries, on the policyholder’s death. This is paid in exchange for the premiums paid during the insured person’s lifetime.

The idea behind life insurance coverage is to protect family members and loved ones from the financial hardships attendant on losing the policyholder’s income. It’s more common for parents with young children or with special-needs adult children to consider taking out a policy.

However, even younger people without dependents can benefit, especially if they have considerable student debt with their parents as co-signers. Furthermore, by getting a policy young, they can take advantage of lower rates.

At its most basic, life insurance has two main components, a death benefit and a premium.

  • The death benefit, also called the face value, refers to the lump sum of money the insurer agrees to pay out to named beneficiaries once the policyholder passes away.
  • Premiums are the payments the policyholder makes to the insurer in exchange for the policy. Premiums are determined by the insured’s projected life expectancy. They tend to be higher in policies for high-risk individuals, ones that have larger death benefits, or for permanent coverage policies that accumulate cash value. Part of the premium also goes toward paying the insurance company’s expenses.

Permanent and whole life insurance policies also include a cash value component that can serve two functions:

  • As a savings account where cash accumulates on a tax-deferred basis, and which the insured can access during their lifetime. Some policies may have restrictions on withdrawals depending on how the money will be used.
  • The cash value can also be used to pay premiums or get additional insurance.

It’s important to note that the cash value is a living benefit that stays with the insurance company when the policyholder passes. Any outstanding loans against it will reduce the policy’s death benefit.

What is the difference between term and universal life insurance policies?

Term Life Insurance

Term life insurance products last for a predetermined period (most commonly 10-, 15-, 20-year terms), and then it expires. If you were to pass away before the term length is over, a death benefit would be paid to your designated beneficiaries to cover funeral expenses, help replace lost income, and leave your family 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 life insurance is the type of policy that’s most easily accessible and the easiest one to understand, according to Alison Salka, Senior Vice President and Research Director at LIMRA.

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Whole and Universal Life Insurance Policies

Both of these are permanent life insurance policies that last the entire span of a person’s lifetime, from the moment of purchase. These options are commonly used as tax-free financial products for their 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.”

Whole Life Insurance:

  • Pays out a death benefit, and a savings portion called “cash value,” where interest may accumulate on a tax-deferred basis
  • Savings component can be accessed while alive, either through borrowing or withdrawals
  • Savings component can be invested
  • Policyholders can make payments over the premium and accumulate more

Universal Life Insurance:

  • Consists of two components: the COI (Cost of Insurance) amount, and a savings portion called the cash value
  • COI is the minimum premium amount that must be paid to keep the policy active, anything paid in excess goes to the cash value component
  • COI includes the mortality costs, administrative fees, and other expenses
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Keep in mind that, according to Huntley, it could take seven to ten years to break even on whole life insurance 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.

What affects your life insurance premiums and costs

Besides speaking to your financial advisor or a life insurance agent, it’s helpful to understand what factors go into determining your life insurance rates.

 

AGE

Your premiums will increase with the risk of disease as you get older.

 

GENDER

Women have a higher life expectancy than men, so their rates tend to be lower.

 

HEALTH

Compromised health means higher premiums, and excellent health the opposite.

 

FAMILY MEDICAL HISTORY

A family history of cancer or heart disease can increase rates.

 

HABITS

Smokers will pay higher premiums than non-smokers.

 

LIFESTYLE & OCCUPATION

High-risk jobs or hobbies (mining, fishing, transportation, rock climbing, skydiving) can mean higher premiums.

Life Insurance Glossary

Underwriting

The underwriting process is used by insurance companies to get a picture of how much your policy will cost based on health and family history, among others, by assigning an underwriting class that determines the life insurance rates.

Beneficiary

Person, organization, or charity that receives the payout of the death benefit.

Rider

Coverage add-ons to your policy at an increased price, such as an accelerated death benefit, chronic illness, or long-term care.

Disclaimer

When a beneficiary is not interested in accepting the benefits of a policy. The insurance proceeds will go to the person that would have inherited the benefits had the disclaiming beneficiary predeceased the person insured.

Life Insurance Companies FAQs

What is the best life insurance?

There’s no simple answer to determine which is the best life insurance for everybody. Your life insurance choices should be made according to your specific situation and needs. That said, our list of the best 15 life insurance companies for July 2021 is a good place to start.

How much life insurance do I need?

There’s no such thing as a hard and fast rule for figuring out a price tag on your life insurance needs and peace of mind. Still, a basic starting point is determining your financial obligations and future expenses and subtracting any liquid asset you may have. In any case, it’s a good idea to consider life insurance within a larger financial context. If you can, talking it over with a financial planner is a great idea.

How does life insurance work?

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. The funds can serve to pay your final medical expenses or be used to set a trust fund for your children’s tuition, estate planning, or to pay off remaining debt and mortgages.

How much is life insurance?

On average, life insurance is a lot more affordable than people may think, with some estimates averaging between $26 and $55 per month. How much you’ll pay will depend on a number of factors, as we mention above.

What is the difference between term and whole life insurance?

The main difference between term and whole life insurance is that the former type of policy only lasts for a set period (its term), while whole or permanent policies cover a policyholder for (essentially) their entire lifespan. Older policies generally matured when the policyholder hit age 100, but newer ones have extended that "expiration date" to age 121, to account for longer life expectancies.

In regards to the difference between term or whole life insurance, insurance strategist David Gastwirth has to say: “I have a philosophy about insurance. If there are people who depend on you financially, who will have a financial issue if you are no longer here, I want you to concentrate on death benefit protection only, and that would be term insurance. (...)

"If you would like to have a vehicle by which you can accumulate and distribute cash in a tax-efficient manner," he continued, "whole life insurance is a wonderful product for that purpose, but not if you’re focused on the death benefit.”

What is supplemental employee life insurance?

Supplemental employee life insurance is coverage you can purchase through your work which is additional to any life insurance they may offer. It may cover things such as burial costs, accidental death and dismemberment, or others — and it’s usually paid for out of your paycheck, though there may be a reduced fee.

Employer-provided group insurance plans are usually limited to five times your base salary, which insurance strategists such as David Gastwirth say is not enough. "My rule of thumb is that your life insurance should be 10 to 15 times what you make," said Gastwirth.

What type of life insurance incorporates flexible premiums and an adjustable death benefit?

Most adjustable life or universal life (UL) insurance policies offer flexible premiums and the ability to adjust your death benefit without taking out a new policy. Some may require a single premium or fixed premiums. Unlike term life, a UL policy can also accumulate cash value.

What is the death benefit on life insurance policy?

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.

How We Chose the Best Life Insurance of 2021

For our methodology, 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.

Customer Satisfaction

We used J.D. Power’s 2020 U.S. Life Insurance Study, which measures insurance providers’ performance in application and orientation, communications, interaction, product offerings, price, and statements on a scale of 1000 possible points.

We also used The National Association of Insurance Commissioners’ (NAIC) Complaint Ratio Report, which catalogs and compares the number of complaints filed against an insurer.

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.

Financial Strength

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 insurance providers, delaying any payouts for claims that are being processed when the change takes place.

Most of our choices are companies with high A.M. Best ratings, since this speaks directly to their ability to pay out your claim on time, without major hassles. Some of the companies on our list, such as our online life insurance marketplaces, don’t have A.M Best ratings themselves — but they do partner with insurers who do have high financial strength ratings.

Summary of Money’s Best Life Insurance Companies of July 2021