Best Life Insurance Companies in 2024 | Bankrate (2024)

PROS

• Live agent support available

• Online tools

• Plentiful rider options

• Variety of term and universal life policies

  CONS

  • Medical history required for quotes

  • Limited online quotes

  • Selective policy options

  • Below-average J.D. Power customer satisfaction score

Best for

Term life insurance

State Farm review

State Farm is a three-time Bankrate Award winner for Best Term Life Insurer in 2022, 2023 and 2024, thanks to its top-notch customer service and accessibility tools. As one of the top life insurance companies, State Farm also received the highest customer satisfaction score from J.D. Power.

State Farm boasts a 24/7 customer helpline, an easy-to-use mobile app and online portal and more than 19,000 exclusive local agents across the U.S. With an A++ (Superior) rating from AM Best, State Farm has a history of financial stability, as well. The carrier offers a variety of term life insurance options, plus whole, universal and variable universal options.

What is life insurance?

Life insurance serves as a cornerstone of financial security for your loved ones, offering a beacon of support in the wake of your passing. It operates on a simple premise: in return for regular premiums, the life insurance company commits to providing a death benefit—a sum of money designed to ease the financial burdens that may arise. This benefit is not just a monetary gesture; it's a shield against the immediate financial implications of loss, covering essential costs from funeral expenses to outstanding medical bills.

What sets life insurance apart is the unique advantage that the death benefit is generally paid out tax-free and avoids the probate process. This means that your beneficiaries can access the full intended amount more swiftly and without the deduction of taxes. They have the flexibility to use these funds however they wish—be it clearing debts, investing in educational futures or managing daily expenses.

Furthermore, certain policies offer the flexibility of disbursing funds under specific circ*mstances during your lifetime, such as following the diagnosis of a serious illness or reaching a milestone age, adding a layer of versatility to the financial protection life insurance can provide.

What does life insurance cover?

Life insurance covers the financial risk associated with the policyholder's death. Depending on the type of policy, the life insurance payout usually provides a death benefit for payment toward funeral expenses and final medical bills. It can also be used as income replacement for the policyholder’s family. Usually, life insurance covers a range of causes of death, but there can also be some exclusions.

Here are some causes of death covered by life insurance:

• Accidental deaths, such as car accidents and unforeseen injuries, are typically covered.
• Natural causes of death, such as old age, diseases and illness, are usually covered.
• Death from terminal illness is covered; in addition, when a policyholder is diagnosed, some life insurance policies may allow the policyholder to access the funds while they are still alive.
• Suicide, if it occurs after the contestability period, may be covered.

What does life insurance not cover?

There are exceptions and exclusions where some causes of death do not afford coverage. Here are a few examples:

• Criminal activities are a common exclusion, so if a policyholder dies while doing something illegal, the insurance company may deny the claim.
• Hazardous activities, such as skydiving, extreme sports or other high-risk activities are common exclusions in life insurance policies.
• Material misrepresentation is when a policyholder lies or withholds information from an insurance company to secure a policy. If this is discovered, the insurance company has grounds to void the policy or deny the claim.
• Suicide is not covered by life insurance if it occurs within the contestability period, which is usually two or three years from the start of the policy. However, death by suicide may be covered after this timeframe, but it will depend on the insurance provider.

How to choose the best life insurance company

When you are ready to buy life insurance, taking a few extra steps can ensure you find the best policy based on your wants and needs. Here are some things to look for when choosing the best life insurance company for you:

• Ask for recommendations: Your friends and family may have life insurance with a company they love. You may want to ask them about their experiences with customer service at these companies.
• Review customer satisfaction ratings: You can visit the J.D. Power website or check the carrier reviews in this article to review each insurance company’s customer satisfaction ratings. J.D. Power assigns each company a score out of 1,000 possible points.
• Assess financial stability: We recommend looking at a company’s financial strength rating from a third-party agency such as AM Best, (S&P) or Moody’s. A company with a low financial stability rating may have a poor history of being able to meet financial obligations and may struggle to pay life insurance death benefits to policyholders if a high volume of claims are filed simultaneously. It is important to have the assurance that your insurer has a history of strong financial stability.
• Look at customer reviews: Dozens of consumer-oriented sites such as Google, Yelp and Consumer Affairs provide reviews from insurance companies’ customers. It may be most helpful to ignore the outlier reviews and focus on the overall average instead. What did the average customer say about the company you are considering? Are the items they complained about important to you? For example, if someone complained that the company does not offer a mobile app, but a mobile app is unimportant for your needs, you may not need to consider that review in your assessment.
• Get multiple life insurance quotes: It can be beneficial to compare life insurance quotes from multiple carriers to help you find the best cheap life insurance policy. Keep in mind that prices will vary more widely for different policy types, although additional policy features could be another cost-influencing factor.
• Seek professional counsel: While a life insurance calculator can be useful, you may be better able to determine your needs by talking with a financial advisor or a licensed life insurance agent if you have more complex needs or questions. A life insurance agent can help you decide what type of life insurance coverage is right for you and how much life insurance you need. When choosing between the many types of life insurance, it may help to get a second opinion from a professional.

How much does life insurance cost?

You may notice that we don’t include average rates in our analysis. That’s because rates vary widely based on each policyholder’s age and health metrics, as well as the type of policy they choose, their death benefit level and any riders they add on. Life insurance companies don’t reveal average rates, since that information reflects the general health of its policyholders and could put privacy at risk.

Life insurance rates are incredibly personal, so average rates aren’t a helpful metric when choosing a company. Generally, insurance experts recommend that you choose a life insurance company based on the specific product you need, rather than the rate. That said, the premium will vary between providers. Comparison shopping life insurance companies can help you find coverage that works for your family at a price that fits your budget.

How much life insurance do I need?

The appropriate level of life insurance is different for everyone. Insurance experts recommend enough coverage to pay off any outstanding obligations the loss of your income might leave behind. Typical debts include mortgages, car loans, credit card debt, student loans, medical bills and funeral expenses. If you have a family with young children, consider future financial needs you may want to plan for.

For policyholders unable to afford typical life insurance, burial insurance may be a more cost-effective option. This type of policy would provide coverage for final expenses related to your funeral, such as cremation costs, a burial plot, flowers, etc. Coverage is usually available between $5,000 and $25,000 with a lower premium and fewer underwriting restrictions than standard life insurance.

Bankrate’s take:Finding life insurance can be challenging if you have declining health or pre-existing conditions, but options are still available. Many employers offer group insurance to employees, which typically does not require a medical exam or individual underwriting. If this is not an option, guaranteed life insurance plans are another avenue worth exploring. While they can be costly, your medical status is not a qualifier for coverage.

Types of life insurance policies

There are many types of life insurance policies, but they all fall under two categories: term life insurance, which is only in force for a set time, and permanent life insurance, which is in effect as long as premiums are paid in most circ*mstances. Permanent life insurance comes with a cash value component. Depending on your individual needs and preferences, having one or both of these types of policies could be an integral part of your financial plan.

Term life insurance

With a term life insurance policy, you and the life insurance company enter into a contract for a specified death benefit amount for a set number of years. Unlike permanent life insurance, a term life insurance doesn’t have the savings-life component or investment potential, and because it’s only active for a set number of years, it’s possible to outlive your policy and receive no benefits. However, you may be able to convert it into a permanent life policy at the end of your term.

Permanent life insurance

In contrast to term coverage, permanent life insurance stays in place for your entire life, as long as you pay the premiums. There are many types of permanent coverage, but the two main forms are whole and universal.

Whole life insurance

A form of permanent life insurance, whole life insurance usually comes with set premiums and a cash value account. While you may not be able to change the policy after it is active, having the cash value component can be useful, although the money accumulates relatively slowly.

Universal life insurance

Another form of permanent life insurance, universal life insurance is known for its flexibility. The premium and death benefit can be adjusted as needs or lifestyles change. It also has a cash value component and can come with different investment strategies to help you grow the value of the policy.

Bankrate’s take:The premiums paid toward a permanent life insurance policy are portioned into three groups: the insurance company's cost and profits, the death benefit payout and lastly, the policy's growing cash value. Policyholders can access the cash value of the policy when needed by making a withdrawal, loan or canceling the policy in full. When money is withdrawn or the policyholder cancels the policy during the surrender period, most companies initiate a surrender fee, typically around 10 percent of the contributed funds. The surrender period varies between providers and can last up to 15 years.