Best Life Insurance Companies

With a long list of options to choose your life insurance provider, it can be a bit of a chore just to start the search for the right choice.

Rankings for the best life insurance companies were identified in partnership with Insure.com, which analyzed the 15 leading issuers of life insurance and surveyed more than 1,700 life insurance customers.

Each company was rated based on price, customer service, website, and mobile app, and customer recommendation while also considering the ratings of A.M. Best. (A.M. Best financial ratings are assessed based on the insurer’s ability to fulfill their financial obligations to policyholders.)

MassMutual: Best for Standard Life Insurance Policies

MassMutual is one of the biggest life insurance issuers in the United States as it provides a comprehensive range of life insurance products.

In addition to the most common types of life insurance policies, MassMutual offers immediate-decision term life insurance and guaranteed issue life insurance policies.

MassMutual Insurance Pros & Cons

Pros
  • Customizable policies through riders
  • Dividend payments to eligible whole life policyholders
  • Strong financial ratings
Cons
  • Customizing policies may be time-consuming and require the help of an agent versus purchasing coverage online
  • Not many discounts advertised for their policies

Read our MassMutual insurance review.

Northwestern Mutual: Best for Customer Service

Northwestern Mutual is held in high regard due to excellent customer service and remarkable customer satisfaction.

Interestingly, the issuer is owned by policyholders who are paid dividends from the profits generated by the issuer.Additionally, term life insurance policyholders are allowed to convert to whole life insurance policies without a medical exam.

Northwestern Mutual Insurance Pros & Cons

Pros
  • Strong financial ratings
  • Many insurance and financial products to choose from
  • Potential dividend payments to eligible policyholders
Cons
  • Choosing and customizing policies may be time-consuming and require the help of an agent versus purchasing coverage online
  • Higher costs and fees associated with permanent life insurance policies

Read our Northwest Mutual insurance review.

Brighthouse Financial: Best for Hybrid Policies

Brighthouse Financial was formerly part of MetLife and now operates as an issuer of term life insurance and a hybrid life insurance policy.

The hybrid life insurance is an indexed universal life insurance policy that includes long-term care coverage for the insured.

Brighthouse Financial Insurance Pros & Cons

Pros
  • Indemnity payments for the LTC option
  • Many options to access living benefits
Cons
  • A limited selection of life insurance products; offering is annuities
  • No direct sales model; estimates and purchases go through financial advisors, banks, etc.

Read our Brighthouse Financial insurance review.

Transamerica: Best for Policy Flexibility

Transamerica offers a wide range of insurance policies, including term life, whole life, universal life, indexed universal life insurance, and supplemental life insurance. 

The issuer has flexible term life insurance policies, including one that can be converted to permanent life insurance without medical exams and one that also provides accelerated death benefits.

Transamerica industry ratings

Ratings Company
Better Business Bureau
Rating
A-

Read our Transamerica insurance review.

John Hancock: Best for Health Incentive Programs

John Hancock offers term life insurance, permanent life insurance, and final expense coverage.

The issuer’s Vitality program provides a financial incentive -- save up to 15% premiums, for example -- for policyholders to maintain a healthy lifestyle, such as exercising regularly.

John Hancock Insurance Pros & Cons

Pros
  • Insurance coverage and assistance for diabetic policyholders
  • Rewards and perks for healthy lifestyle choices
  • Multiple permanent life insurance options
Cons
  • No easy online quoting tool
  • Coverage amount and available riders may vary depending on how your purchase your policy (i.e. from the headquarters or a broker)

Read our John Hancock insurance review.

When Does It Make Sense to Buy Life Insurance?

Life insurance is designed to provide for those who rely on you for financial security.

So, if you happen to die tomorrow, you may worry about how dependents and loved ones would be able to survive financially. 

Typically, life insurance makes the most sense for those with young children and couples who have not yet accumulated large amounts of assets.

How Does Life Insurance Work

You pay a monthly or annual premium to maintain an active life insurance policy. If you die with an active life insurance policy, the designated beneficiaries will receive the payout amount specified for your policy.

Now:

There are many different types of life insurance policies available to best match a specific financial goal or outlook.

It’s important to consider each of their specialties, cost, and potential benefits.

Major Types of Life Insurance

Life insurance can come in many forms and each variety is designed to provide proper coverage to individuals who want to ensure the financial security of their loved ones.

Here are the main types of life insurance that you’ll find available:

Term life insurance

Term life insurance will insure you for a specified number of years (often ranging from 10 to 30 years), after which no payout is issued if you do not die during the term.

Premiums are often higher on longer policy terms and for older people or those with major health conditions.

This type of insurance is ideal for younger people who are working on building financial assets.

Permanent life insurance

Permanent life insurance represents policies that remain active as long as you are paying your premiums.

It has a cash value component that can be cashed out if you’d like to terminate the police.

By comparison, permanent life insurance costs more than term life insurance

There are several types of permanent life insurance that have unique features to them

Here are the most common types of permanent life insurance: 

  • Whole life insurance
  • Indexed universal life insurance
  • Variable universal life insurance
  • Guaranteed issue life insurance

Whole life insurance

Whole life insurance is a basic type of permanent life insurance that requires you to pay premiums for your entire life or until you reach a specific age.

The benefit is paid out as long as you’ve paid your premiums and haven’t cashed out the policy.

Indexed universal life insurance

Indexed universal life insurance adds an investing feature to the cash value of your policy.

The cash value may increase in accordance to an index, such as any particular stock market index.

Variable universal life insurance

Variable universal life insurance also has an investing component for the cash value of the policy.

The cash value may be invested in various investments and it could increase or decrease based on the terms of the policy.

These types of policies can be very complex when accounting for the investing piece of the policies.

Guaranteed issue life insurance

Guaranteed issue life insurance is designed for people who likely have major health issues and cannot get approved for the more standard types of life insurance.

The biggest note here is that guaranteed issue life insurance does not require any medical exams -- you are guaranteed to be issued a policy.

Not surprisingly, payout amounts are usually very small with high premiums.

Medical Exam

The truth is:

Life insurance companies issued policies and set their premiums largely based on the likelihood that you’ll die while the life insurance policy is active.

That’s why they often require a medical exam.

The exam is not conducted by your doctor. Rather, the life insurance company will find a medical professional to meet you for a health exam (which normally takes about 30 minutes to complete).

Be prepared for:

  • a physical exam
  • an interview on you and your biological family’s health history
  • blood to be drawn
  • collection of urine samples

With this information, the life insurance company will put you in a life insurance health classification, which will ultimately determine the premiums of your policy or deny a policy altogether.

Waiting Period

A life insurance policy may have a waiting period during which your beneficiaries will receive reduced payouts if you die.

Typically, the waiting period is two years.

Issuers want to protect themselves from having to pay out full benefits on a newly-issued, last-minute life insurance policy due to an unknown health condition.

How to Choosing Your Policy Coverage Amount

Determining the right amount of life insurance to purchase is important because it can affect both your current financial situation (monthly premiums) and the beneficiaries who will receive funds should something happen to you.

The amount of coverage will depend mainly on your life circumstance and how you want your affairs handled in the event of your death. If you are a single 30s-something professional with very few assets and even fewer responsibilities, you probably won’t need a lot of coverage. If you are a middle-aged business owner with a spouse, children, mortgage and a vacation home, you’d probably need more coverage.

You can use a few formulas to come up with a ballpark figure on the amount of life insurance coverage you should purchase. The first formula simply takes a multiple of your income. If you earn $75,000 per year and multiply it by 10-12, you should have at least $750,000-900,000 of life insurance coverage. Another formula, DIME, takes your existing debt obligations into consideration:

  • Debt + Income + Mortgage + Education costs = Total coverage

As you pay off assets and your children age beyond college, you may feel comfortable reducing the amount of coverage you need. Ideally, the money you save on life insurance premiums could be invested at much better returns to increase your estate’s value for your heirs.

In either case, a knowledgeable insurance agent or broker can guide you to the right amount of coverage based on your life and personal circumstance.

Life Insurance Ratings

When you apply for health insurance, you’ll be placed in a category or classification based on your demographics. In essence, the younger and healthier you are, the better your life insurance rates will be. Nonsmokers, with an ideal height-to-weight ratio and good bloodwork, will get the most cost-effective rate.

The four life insurance health classifications are:

  • Preferred Plus
  • Preferred
  • Standard Plus
  • Standard

With a Preferred Plus rating, you’ll get the best insurance rates, and with a standard rating, your insurance premiums will be substantially higher. However, other factors can have a bearing on your premium, including your family’s health history, driving record, hobbies, occupation and even criminal history.

Choosing a Beneficiary

If you think that you have to choose just one life insurance beneficiary, don’t let that decision bring you stress and worry. Nowadays, insurers offer multiple options for designating one or more beneficiaries.

For starters, you can choose a primary beneficiary who will get 100% of the policy’s death benefit. Then, you can also select a contingent beneficiary who will get 100% of the policy proceeds should the primary beneficiary die or be otherwise ineligible to receive the policy funds. There are other, more complex designations and combinations, but these are the most common ones to start with.

The life insurance company will ask you for information to identify your beneficiaries. The information they request about beneficiaries can include their:

  • Name
  • Birthdate
  • Address
  • Social Security Number

Funeral and Burial Insurance

Typically, burial insurance is a policy that covers final costs like funeral and burial costs along with other small remaining bills. They are not designed to meet the financial needs of your loved ones after your passing but rather tie up loose financial ends for yourself upon your death.

The coverage amounts for these policies are much lower and range from $10,000 up to $50,000. Normally, these policies do not require a medical exam and last as long as the premiums are paid.

Speak to an Advisor

Life insurance is a major financial commitment and certain types of policies can be rather complex.

So, be sure to consult professionals about the right life insurance policy for your needs.

A fee-only financial advisor can be an excellent resource to evaluate your entire financial situation before recommending the ideal type of life insurance for you.

An estate-planning attorney is also worth considering to discuss life insurance and how your assets will be handled upon your death.

With this advice, you can avoid paying exorbitant life insurance premiums for decades only to find out that the policy wasn’t the best fit for your financial goals.

Key Terms

Insured person(s)

The person covered by an insurance policy.

The policyholder(s)

This is the person that owns the insurance policy. They can make changes to the policy and are authorized to designate beneficiaries.

In most cases, the policyholder and insured person are the same person.

Life insurance premium

This is the amount you pay for your insurance policy. You can pay the premium annually, quarterly or monthly.In some cases, like with whole life insurance, you may have a single premium you pay once to activate the policy for life.

Cash value

Permanent life insurance policies can accumulate a cash value as premiums are paid.

This cash value can be disbursed as a loan to the policyholder. Any loans taken against the policy’s cash value may be deducted from the death benefit if they are not repaid before the insured’s death.

Policy surrender

This applies to permanent life insurance policies.

When a policy is surrendered, the policy owner receives the remaining cash value in the policy, or the cash surrender value.

This amount may be less than the total cash value in the policy because of surrender charges assessed by the policy. People may do this if they no longer need their policy or have immediate financial needs.

Dividends

Mutual insurance companies, which are member-owned, tend to pay out dividends on their permanent life insurance policies if they experience a financially successful year.

If you purchase a “participating” policy with this type of insurer, you are eligible to receive a dividend payment.

You can take the dividend as a cash payment or reinvest the proceeds back into your life insurance policy, which increases the policy’s cash value even quicker.

Insurable interest

Insurable interest means that you would suffer some detriment or loss if a person dies, becomes incapacitated or disabled.

Without an insurable interest, an insurer will most likely not approve or issue a life insurance policy.

Rider

Also known as an endorsement, a rider is a modification to an insurance policy that increases or adds more coverage to a basic life insurance policy.

For life insurance, common riders include coverage for children, spouse, accelerated death benefit in case of terminal illness and more.

Contestability period

A life insurance contestability period is a period after opening a policy when the life insurance agency can investigate claims for validity and fraud.

The contestability period is typically one to two years and may depend on your state of residency.

Industry Ratings of the Top U.S. Life Insurance Companies

Company A.M. Best Financial Strength Rating A.M. Best Issuer Credit Rating J.D. Power Score (2022)
Northwestern Mutual A++ aaa 794
New York Life A++ aaa 775
MassMutual A++ aa+ 780
Prudential A++ aaa 773
Lincoln Financial A+ aa- 764
State Farm A++ aa+ 839
John Hancock A+ aa- 749
Guardian A++ aa+ 787
Transamerica A a+ 740
Pacific Life A+ aa 793
Sammons (Midland National) A+ aa- 752
MetLife A+ aa- 786
Protective Life A+ aa- 759
AIG A a 744
Nationwide A aa- 791
Equitable A a+ 737
Brighthouse Financial A a+ 741
Prudential A+ aa- 773
Primerica A+ aa- 766
Principal Financial A+ aa 772