Best Life Insurance Companies: A Guide To The Best Insurance Providers In 2021
Buying life insurance is one of the best financial decisions you can make. As the insurance nonprofit Life Happens puts it, it’s a simple answer to the question “How will my loved ones cope when I pass away?” Think of it as a financial safety net – something your dependents can fall back on in the worst-case scenario.
But shopping for life insurance isn’t exactly a walk in the park. Between choosing the right type of policy, figuring out how much coverage you need, and finding the best life insurance company, there is a lot to take in.
With this article, we make the task easier by laying everything down in a more digestible way. We’ll walk you through the basics of buying life insurance and provide a list of some of the best life insurance companies in the US. By the end, you should be able to find the best provider for you!
Understanding Life Insurance
Life insurance is a contract between a policyholder and an insurance provider. With this contract, an insurer guarantees a policyholder an agreed-upon lump sum (called a death benefit), which will be paid out to the insured’s beneficiaries when they pass away.
In exchange for this, the policyholder makes payments to the insurance company. These payments are called premiums and can be done weekly, bi-weekly, monthly, quarterly, or yearly. Some types of life insurance also come with a cash value – an interest-earning savings account which policyholders can withdraw from or loan against while they’re alive.
There are several different types of life insurance. Here are some of the most common ones:
Term life insurance: This is a short-term insurance policy that typically lasts for 10, 20, or 30 years. If you outlive your term policy, you can either apply for a new one or convert to a whole life plan. According to Forbes, term life insurance is the most popular form of life insurance, accounting for about 71 percent of purchases.
Whole life insurance: This is a type of permanent life insurance. Aside from lifelong protection, whole life insurance also provides policyholders with a cash value, which can be used for savings, loans, and investments.
Universal life insurance: Just like whole life, this type of life insurance provides lifetime coverage and a cash value. However, unlike other permanent life insurance options, it also comes with flexible premiums and benefits. This means that you can adjust the frequency and amount of your payments.
Indexed universal life insurance: This is a type of permanent life insurance wherein the cash value is tied to certain market indices. This gives policyholders more potential for cash growth.
Variable universal life insurance: This is a type of permanent life insurance wherein the cash value can be tied to several investment opportunities. This provides even greater potential for cash growth compared to indexed universal insurance.
Guaranteed issue life insurance: Most life insurance policies require a medical exam and health questionnaire. But with this policy, applicants can skip these two steps and immediately qualify without submitting a health profile. The caveat here is that most guaranteed issue policies tend to be more expensive.
Final expense insurance: This is a low-coverage whole life insurance policy that is meant to be used to pay off final expenses such as outstanding medical bills, debts, hospice care, and funeral costs.
Survivorship life insurance: This type of policy insures two people – usually spouses – under one account. Beneficiaries receive the death benefit when the last insured person passes away.
How We Chose The Top Providers
To come up with our life insurance company ratings, we first consulted the National Association of Insurance Commissioners’ list of the top 25 largest life insurance companies by market share and direct written premiums. We reviewed most of these companies individually, assessing them on five main factors:
Policy and coverage
Financial strength rating (from third-party agencies like AM Best, Moody's, and S&P)
While making our list of the best life insurance companies, we narrowed down our options with a more stringent methodology. In a nutshell, we evaluated the companies on the aforementioned factors, assigning 1 (lowest) to 5 (highest) points for the following criteria:
Diversity of insurance products
Diversity of rider options
Maximum coverage limit
Average cost (relative to the average cost for a specified profile)
Ease of application (based on user experience and our own experience)
Customer service options
Better Business Bureau ratings (third-party agency rating customer satisfaction, financial strength, etc.)
AM Best Ratings (third-party agency rating financial strength)
National Association for Insurance Commissioners Complaint Index score
We then averaged the scores and came up with a list of our top life insurance companies of 2021.
The 8 Best Life Insurance Companies of 2021
Here are our picks for the best life insurance companies of 2021, based on NAIC’s list and our own methodology.
Principal Financial Group: Best Life Insurance Company Overall
Why we chose it: It’s the full package. Principal Life offers a variety of life insurance policies, including four types of universal life, a standard term life insurance policy, and a one-year term policy that isn’t often seen in other life insurance companies. Aside from this, the company has a decent customer satisfaction track record and financial strength ratings, plus accelerated underwriting for certain policies.
On top of all this, Principal’s website is one of the most comprehensive resources of life insurance tips, guides, and tools outside of typical financial blogs.
Company overview: The Principal Financial Services company is an Iowa-based company that was founded in 1879. It currently serves all 50 states in the US, along with a number of countries around the globe. Life insurance aside, Principal also offers IRAs, mutual funds, retirement plans, and annuities as well.
Principal’s One-Year Term life insurance policy is a standout feature, providing policyholders with 12 months of coverage starting at $200,000. The policy is open to those aged 20 to 99 years old.
Principal offers a one-year term life insurance policy for short-term protection.
The company also offers four different types of universal life insurance.
Applicants in good health are eligible for accelerated underwriting.
The company offers competitively-priced term rates.
Principal does not offer whole life insurance.
While Principal’s website is a good resource on all things life insurance, you may find it a little challenging to find a lot of information on its universal policies.
Mutual of Omaha: Best For Seniors
Why we chose it: Mutual of Omaha has some of the best senior-friendly provisions. As you get older, you’ll find it more difficult to buy life insurance – premiums go up as you age, age restrictions for applying and renewing can limit your options, and medical exam requirements could be tricky for older applicants with high blood pressure, diabetes, and other similar conditions.
While Mutual of Omaha may not offer the most competitive rates for seniors, they do have high age limits, guaranteed issue whole life insurance for those who want to skip the medical exam, and a living benefits plan that allows policyholders access to a portion of their policy if they are diagnosed with a terminal illness or confined in a nursing home. This makes Mutual a great choice for aging individuals who still need coverage.
Company overview: Mutual of Omaha is a Fortune 500 company that has been around since 1909. The life insurance company is also known for its wildlife conservation efforts – from 1963 to 1988, Mutual sponsored a wildlife documentary TV show called “Wild Kingdom”.
Mutual of Omaha offers a whole life policy with coverage of up to $999,999, a guaranteed whole life policy, a living benefits plan, and three universal life insurance policies – including two indexed universal options.
The age limit for whole life coverage is 85 years old. Policies can be renewed till age 95.
Mutual offers guaranteed issue whole life insurance.
Living Promise policyholders will be eligible for accelerated death benefits if they are diagnosed with a terminal illness or are confined in a nursing home.
Applicants can get online quotes and applications for term and whole life policies.
Despite being a mutual company, Mutual does not offer dividends.
The underwriting time is slower than average.
John Hancock: Best Incentives
Why we chose it: Committing to healthy habits isn’t always fun. But what if eating better and exercising could yield discounts on fresh produce, free fitness devices, and even annual savings on your life insurance premiums? John Hancock offers these incentives with all of their life insurance products, making it an excellent choice for those who want to lead healthier lifestyles.
Company overview: John Hancock is a Boston-based life insurance company that has been around for over 150 years. The company currently has over 2.6 million policyholders.
Recently, John Hancock partnered with the Vitality Group to launch a wellness-based rewards program for its policyholders, which helps people improve their health and extend their lifespans.
It comes in two options – Vitality GO and Vitality PLUS. The latter costs $2 a month and gets you up to 15 percent in annual premium savings, a free Fitbit (or Apple Watch on discount), and up to $600 in annual savings on fresh produce.
The company’s wellness program incentivizes healthy living.
John Hancock offers some of the highest life insurance coverage limits – up to $65 million, to be exact.
John Hancock also offers guaranteed issue final expense insurance for those who want to prepare their loved ones for the financial burden of end-of-life expenses.
John Hancock’s website does not provide enough information on their policies.
Lincoln Financial Group: Fastest Turnaround Time
Why we chose it: Applying for life insurance can be tedious and time-consuming. The average application takes about three to eight weeks, which includes conducting phone interviews, answering a health questionnaire, and submitting samples for a medical exam. At Lincoln, you can fast track your application if you apply for TermAccel – a term policy that can be approved within two days.
Company overview: Lincoln Financial Group was founded in 1905 and named after former US president Abraham Lincoln. The company is known as one of the best life insurance companies in the US, having reached $100 billion in force by the mid-‘80s.
Aside from its two term policies, Lincoln offers a variety of universal life options, including one basic universal life plan, a survivorship plan, and several indexed and variable universal options.
Lincoln TermAccel applicants can enjoy as little as two days’ processing time.
Lincoln offers some of the most competitive rates across the industry.
The company also provides multiple universal policy options.
Lincoln does not offer whole policies.
The Lincoln website doesn’t feature online quotes or calculators, making it difficult to compare policies from other companies.
New York Life Insurance: Best For First-Time Buyers
Why we chose it: New York Life Insurance has everything you could ask for from a life insurance company – and more. The insurer has a variety of policy options, excellent customer service and financial strength ratings, plus “better than most” pricing (according to JD Power’s Price Rank). On top of all this, applicants can consult financial professionals for tailor-made insurance advice before making a decision.
Company overview: New York Life Insurance has been around for 175 years. Over the years, it has built up a reputation as one of the best mutual life insurance companies in the US.
In 2019 alone, the company wrote over $8 billion in direct life insurance premiums. Like Northwestern and MassMutual, New York Life Insurance pays policyholders dividends and has been doing so every year since 1854.
New York Life is known for providing personalized financial advice and service.
The company also offers accelerated death benefits.
New York Life has a Spouse’s Paid-Up Option that allows spouses to convert their death benefit into payments for their own insurance policies.
Unfortunately, New York Life’s website does not provide much detail on its policies.
There are no online life insurance quotes or applications at New York Life. Applicants must consult with financial professionals.
Northwestern Mutual: Best Customer Service
Why we chose it: Northwestern Mutual ranks number one on NAIC’s list of the largest life insurance companies by market share and direct written premiums. The company’s success lies partly in its wide selection of policy options and excellent customer service. Northwestern Mutual also boasts exceptionally high ratings from both the BBB and AM Best.
Company overview: Northwestern Mutual is a 163-year-old financial company with over 4.5 million clients. The company offers four types of term life insurance, including a policy with level premiums and a split premium payment method; two types of whole life insurance which can be paid through age 65 or 90; two traditional universal life policies; two variable universal policies, and a survivorship variable universal life plan. Policyholders can also blend term and life insurance policies through the CompLife program.
As a mutual company, Northwestern Mutual gives policyholders the opportunity to earn dividends for all three policy types.
Northwestern offers a diverse selection of policies and riders.
All policy types at Northwestern have the potential to earn dividends.
The company offers customizable and blendable policies.
The company is known for its excellent customer satisfaction ratings.
Northwestern Mutual has exceptional financial strength ratings as well.
The website lacks specific information on policy features.
Northwestern Mutual does not offer online life insurance quotes or applications.
MassMutual: Best For Earning Dividends. Offers Simplified Insurance
Why we chose it: Through MassMutual’s participating whole life insurance policy, customers have the opportunity to earn dividends from the company. Dividends aren’t guaranteed, but MassMutual says it has paid “eligible participating policyowners every year since 1869”.
Company overview: MassMutual was founded as the Massachusetts Mutual Life Insurance Company in 1851. The company is invested in strengthening communities, with initiatives like its Life Bridge program that provides free life insurance to low-income families.
At MassMutual, you can get annuities, investment options, 529 plans, and several different types of life insurance. Aside from the participating whole life plan, the company offers a standard term life insurance plan with up to $3 million of coverage, a standard universal life plan, a variable universal life plan, and free life insurance coverage of up to $50,000 for select low-income families.
MassMutual is also the parent company of Haven Life, a relatively new life insurance company that aims to make shopping for life insurance easier with a simple, straightforward, and mostly online application process. Haven Life offers online payments – which can be debited from the policyholder’s bank account – making the life insurance-owning experience simpler than ever. Haven Life has a good customer service track record as well.
MassMutual boasts strong financial ratings.
The company offers free life insurance for low-income families through its Life Bridge program.
MassMutual provides the opportunity to earn dividends.
You can get simple and mostly online life insurance services via Haven Life.
The website has limited information on its policies.
A medical exam is required for most policies.
Haven Life only offers term life insurance policies.
State Farm: Offers Multiple Payment Options
Why we chose it: State Farm has a lot to offer, but one of its standout products is its Limited Pay Whole Life policy. Policyholders can choose between 10, 15, and 20-year payment options, which means that you won’t have to be tied to paying premiums all your life. You can also opt for the Single Premium whole life policy, which allows policyholders to make one single premium payment up front.
Company overview: State Farm is known as a high-rated home and auto insurance provider. It was founded in 1922 and has gone on to provide a selection of insurance and financial products, from home and property insurance to IRAs and mutual funds. State Farm used to offer banking services such as deposit and credit card issuance, but they have since exited the business and focused on insurance in 2020.
State Farm currently ranks 36th on the Fortune 500 list and boasts 84 million policies and accounts in force. Eight million of those are life insurance policies.
State Farm has a variety of payment options for whole life policies.
The insurance provider also offers final expense insurance.
You can get online insurance quotes for term life insurance.
You can add a return of premium policy.
The company has middling customer satisfaction ratings.
State Farm has a surplus of options that may confuse first-time buyers.
Frequently Asked Questions
Still feeling lost? Here are the answers to some of the most frequently asked questions about life insurance.
How do I know if I need life insurance?
When considering getting life insurance, ask yourself this question: Do I have anyone depending on me and my income to survive? If the answer is yes, then you need life insurance.
Think of life insurance as a financial safety net for your loved ones. While you may not feel the benefits of an insurance policy (unless you’re investing in a universal plan), your beneficiaries will appreciate it if you pass away suddenly.
When you pass, your family won’t have to scramble to pay for your outstanding medical bills and/or funeral costs. Through the death benefit, they’ll have a source of income to stay afloat for the next months or even years.
You may put off buying life insurance if you’re single and/or have no spouse, children, or elderly relatives depending on you. However, life insurance can still benefit single people, especially if you or your family have loans or debts that need to be paid off. When you die, your remaining relatives can pay off those debts with your benefit.
How much life insurance coverage should I get?
You'll find lots of tools for calculating coverage online. But we have one simple formula you can follow when computing for life insurance coverage:
[Financial obligations] - [existing assets] = The insurance you need
Financial obligations are the expenses that your dependents will have to shoulder when you pass away. These are costs like monthly living expenses, mortgage balances, auto loans, childcare, tuition fees, credit card debt, and even final expenses.
Existing assets, on the other hand, are things that your dependents can use to offset the cost of replacing your income. This includes investments, retirement funds, savings, existing insurance policies, and burial insurance.
How much should I be paying for premiums?
Life insurance costs will vary from person to person. This is because life insurance companies assess an individual’s age, health, lifestyle, and even gender before providing a quote. Life insurance companies are always looking to minimize risks, which is why they charge higher-risk clients higher premiums.
Aside from these factors, how much and what kind of insurance you need will also influence the cost of your premiums.
What does life insurance cover? What doesn’t it cover?
Typically, life insurance will cover many kinds of death, be it natural causes, old age, accidental injury, or illness. Suicide is only covered if the insured passes away two years after the policy was purchased.
There are certain exclusions or circumstances that can result in companies withholding benefits from beneficiaries. A company can withhold benefits if they discover that the policyholder had lied on their application about health conditions, alcohol and drug use, or high-risk hobbies like base jumping or car racing. Life insurance companies will also withhold benefits if a policyholder is murdered by their own beneficiary. This is known as the “slayer rule”.
What is the application process like?
Depending on the company you’re applying to, you may or may not be able to request quotes and start an application online. With some companies, you may be able to answer a form with some preliminary questions, then go through a more comprehensive interview with an insurance agent.
Applications forms usually require the following information:
Date of birth
Height and weight
After you submit your initial application, you’ll be interviewed via phone or possibly asked to come in for a face-to-face interview. Then, you may be asked to fulfill a medical exam. The examiner will ask you questions about your personal and family medical history; your lifestyle habits such as tobacco, alcohol and drug use; and what kind of policy you’re interested in getting. As for the tests, you will likely have the following taken:
Height and weight measurement
You’ll also need to send a document providing proof of income, like a tax return or a letter of employment. Once you’ve submitted all your documents and completed the medical exam, all you have left to do is to wait. The typical life insurance application takes about three to eight weeks to process.
Find The Best Insurance Company For You
Want to learn more about the companies mentioned in this list? Looking for advice on how to buy life insurance in the most cost-efficient way? Our website has got everything you need, from guides on the basics of insurance to reviews of some of the best financial companies in the United States. And if you’re looking for something more personalized, don’t hesitate to contact us for a consultation.