Best Life Insurance Companies
With a long list of options to choose as your life insurance provider, it can be a bit of a headache just starting the search for the right choice.
Here are the top life insurance companies to consider:
- Mass Mutual
- Northwest Mutual
- Brighthouse Financial
- John Hancock
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 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.
Read our MassMutual insurance review.
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.
Read our Northwest Mutual insurance review.
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.
Read our Brighthouse Financial insurance review.
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.
Read our Transamerica insurance review.
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.
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.
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 ranges 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.
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.
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.
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 life insurance premiums for decades only to find out that the policy wasn’t the best fit for your financial goals.