Best Whole Life Insurance

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    Best Whole Life Insurance: 6 Top Insurance Companies In 2021

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    According to Forbes, whole life insurance was the most common form of life insurance in the US for much of the 1900s. In contrast to term life insurance, this type of life insurance policy provides lifetime coverage and a cash value account that can build interest over time. 

    As such, whole life insurance can be a great option for people who want to leave behind a sizable trust for their kids or those with large estates that may exceed the current tax exemption. Whole life insurance can also be useful as a supplement in a pinch or as a source of income during retirement – with enough savings in the cash value, policyholders can loan against their accounts. 

    If this sounds appealing, perhaps whole life may be the best life insurance option for you. In this quick guide, we help you get to know more about the life policy and introduce you to the top life insurance providers that offer some of the best whole life insurance!

    What Is Whole Life Insurance? 

    Whole life insurance is a permanent life insurance policy that provides coverage for as long as the policyholder is alive. Unlike term life insurance, whole life insurance does not expire. Most whole life insurance policies also come with level premiums (meaning they never increase) and guaranteed death benefits that don’t decrease in value.

    Aside from this, the policy also comes with a cash value component – an investment account which can be used to set aside and even grow one’s money. Cash values are quite useful in a lot of ways. Policyholders can tap into the account via a loan to fund sudden expenses. And if you don’t want to pay for premiums, you can use your cash value to cover the costs.

    However, these advantages come at a literal price. According to Business Insider, whole life insurance costs an average of five to nine times more than most term life insurance policies. So if you’re on a tight budget, you may have to consider alternative options. 

    The cash value return rate is also often low, ranging from 1 to 2 percent for guaranteed rates and 4 to 6 percent for non-guaranteed rates. This means that it could take years – even decades – to build up cash values that exceed the amount paid in premiums. 

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    The Pros and Cons of Whole Life Insurance

    Because of its price and the amount of time it takes to actually make use of the cash value, whole life insurance isn’t always the answer to everyone’s personal finance needs. Here are the pros and cons to help you decide if whole life insurance is for you:

    ProsCons
    Lifetime protection: With whole life insurance, you’re covered up until the day you die. Whole life policies don’t expire unless you stop paying for premiums. You pay premiums for a long time: Since a whole life policy lasts a lifetime, it means you’ll be paying premiums – and losing money – longer than you would if you purchased term life. You can opt for shorter payment periods, but these will usually cost you more upfront.
    Level premiums: Premium rates stay the same till the end of the life insurance policy. That means no unexpected price hikes. High premium rates: Lifetime coverage comes at a cost. Whole life insurance can cost up to nine times more than a similar term policy. 
    Potential for dividends: Some companies offer policyholders the potential to earn dividends, meaning greater opportunities to build cash.Dividends are not guaranteed: While some companies have the potential for dividends, receiving a payout is not a guarantee.
    Cash value component: You get an account where you can save and allow your money to grow. This feature is unique to permanent policies.Slow cash growth: Though money is guaranteed to grow, it may take some time to build up to a useful amount. This means that you could be losing money for a long time from paying premiums before you actually start to feel cash growth.
    Potential to loan against cash value: If you find yourself in a bind, you can always take out a loan from your whole life policy. Outstanding loans reduce cash benefit: If you don’t pay your loans, your death benefit will decrease, leaving fewer benefits for your dependents. 
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    The Cost Of Whole Life Insurance

    Whole life insurance can cost five to nine times more than term life insurance. Unfortunately, if you want to find out exactly how much a life insurance policy could cost, you’ll have to do the math yourself as most insurance companies do not offer quotes online. 

    The price of premiums will also vary per applicant. No two people will receive the same quotes, simply because calculating for life insurance premiums depends on a variety of factors. Here are some personal factors that insurers look into: 

    • Age and gender
    • Height and weight
    • Family history of heart disease, diabetes, cancer, stroke
    • Past and current health condition (in most cases, you will be asked to take a medical exam)
    • Lifestyle
    • Tobacco use
    • Driving record

    Aside from these, your choice of coverage amount and payment periods will affect your rates. You’ll also find different guaranteed return rates from different companies, with higher premiums being charged for policies with higher guaranteed returns. 

    How We Chose Life Insurance Companies

    Most of the insurers on our list have been chosen from the National Association of Insurance Commissioners’ list of the top 25 largest life insurance companies by market share and direct written premiums. 

    Aside from this, we also took a look at each life insurance company’s customer service reviews, AM Best financial rating, Better Business Bureau ratings, and National Association of Insurance Commissioners complaint index score. 

    Finally, to find the best companies, we narrowed down our options by looking at those with standout offerings in terms of coverage amount, rider options, and special features. We also looked for companies that offered a no medical exam option.

    If you’ve read our list of the best term life insurance policies, you’ll notice that we considered cost as a deciding factor. However, since most life insurance companies do not provide online quotes for whole and universal policies, we chose not to focus on this aspect for this review. Besides, most people do not consider cost as a deciding factor when looking for whole life insurance. 

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    Best Whole Life Insurance Companies Of 2020

    These are the best life insurance companies that offered whole life insurance in 2020:

    State Farm: Multiple Payment Options

    State Farm is a financial company best known for its home and auto insurance, for which the company has ranked on “best of” lists by Forbes, CNet, and Business Insider. The company was founded in 1922 by retired farmer and insurance salesman George “GJ” Mecherle as a single-line auto insurance company. Eventually, State Farm expanded its product line, offering everything from home and property insurance, health insurance, life insurance, and even pet insurance to IRAs, mutual funds, and other investment options.

    State Farm offers three distinct whole life insurance policies, which we’ll explain in detail below. One great feature about State Farm is that they are one of the few life insurance companies that provides online quotes for whole life policies. Additionally, some policies may be bundled together for discounts (i.e. whole life plus auto insurance).

    Limited Pay Whole Life

    Some policies come with payment period options, which gives policyholders the choice to finish their premium payments over a limited number of years. State Farm offers three – 10, 15, and 20-year options. With this policy, you can get lifetime protection without feeling tied down to premium payments as you get older.

    Minimum coverage: $250,000 payable within 10 years, $100,000 payable within 15 years, $50,000 payable within 20 years.

    Eligible to earn dividends: Yes. However, dividends are not guaranteed.

    Rider options: Waiver of Premium for Disability, Guaranteed Insurability, Payor Insurance

    Single Premium Whole Life

    If you have the money and don’t want to space out your payments annually, you can opt for this policy. It provides life insurance coverage with only one premium payment. This policy is available to those between the ages of 0 to 80 years old.

    Minimum coverage: $15,000

    Eligible to earn dividends: Yes

    Rider options: n/a

    Final Expense Whole Life

    Final expense insurance is a type of whole life insurance policy designed to pay off end-of-life and funeral costs. This includes outstanding medical bills, debts, hospice care, and funeral services. This kind of policy helps families prepare for the loss of a loved one and cope financially during the difficult grieving period. 

    State Farm final expense insurance is available to those aged 50 to 80 (50 to 75 in New York). Coverage is guaranteed until the insured reaches age 100.

    Coverage limit: $10,000 only

    Eligible to earn dividends: Yes

    Rider options: n/a

    MassMutual: Opportunity to Earn Dividends

    MassMutual, or Massachusetts Mutual Life Insurance Company, has been around since 1851. The mutual company is known for its work in “strengthening communities” and has a free life insurance program for low-income families who could use the coverage to help pay for their children’s tuition. MassMutual offers term, whole, and universal life insurance along with annuities, IRAs, 529 plans, and mutual funds.

    MassMutual’s Participating Whole Life policy provides policyholders with lifetime coverage, an interest-earning cash value, and the chance to earn dividends from the company. According to the company website, although dividends are not guaranteed, the company has been paying eligible policy owners every year since 1869. 

    Coverage limit: Not specified

    Eligible to earn dividends: Yes

    Riders: MassMutual does not specify which policies have rider options. However, these are their general offerings: Extended Conversion Period, Life Insurance Supplement, Long-Term Care Access (also known as Accelerated Death Benefits), Guaranteed Insurability, Yearly Term Purchase, Waiver of Premium for Disability

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    Guardian Life: A Wellspring of Information

    The Guardian Life Insurance Company is a mutual company founded in 1860. The New York-based company now serves around 29 million customers each day. Guardian Life also offers health insurance, investment options, and annuities, among other products. 

    As part of its social responsibility, Guardian Life conducts projects like the Accessibility Empathy Lab, which helps tech developers better understand the needs of disabled users. One standout feature of Guardian Life is its resource-rich website where you can learn about the basics of life insurance and investing. 

    Guardian Life’s whole life insurance comes with lifetime coverage, a guaranteed death benefit, and an interest-earning account which policyholders can withdraw from or loan against. Premiums remain level for the duration of the policy. Policyholders can also choose a limited payment scheme option, which lets them complete payments for a shorter period.

    Coverage limit: Maximum of $5 million

    Eligibility to earn dividends: Yes

    Rider options: Guardian Life does not specify which policies have rider options. However, these are their offerings: Waiver of Premium, Accelerated Terminal Illness Benefit, Extended Conversion, Charitable Benefit, Long-Term Care, Guardian Index Participation Feature, Joint LTC

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    Mutual of Omaha: Guaranteed Issue And Living Benefits Policies For Seniors

    Mutual of Omaha was established as the Mutual Benefit Health & Accident Association in 1909. The life insurance company has a reputation for being a wildlife conservation champion, thanks in part to its widely popular wildlife show, “Wild Kingdom”. Mutual of Omaha also opened its own Wildlife Heritage Center in 1992. 

    Mutual of Omaha is a Fortune 500 company with a variety of product offerings, from life insurance to Medicare to long-term care insurance. Mutual offers two whole life insurance policy options:

    Guaranteed Whole Life

    This whole life insurance policy is an excellent option for those who are older and/or have been diagnosed with a chronic condition, as it requires no medical exam or health questionnaire to qualify. Premiums and coverage are fixed till the end of the policy. According to the website, 85 percent of claims are paid out within 24 hours. 

    Mutual’s Guaranteed Whole Life policy is available to those aged 45 to 85 years old. 

    Coverage limit: $2,000 to $25,000

    Eligibility to earn dividends: No

    Rider options: Accelerated Death Benefit, Chronic Illness, Terminal Illness, Critical Illness, Residential Damage, Waiver of Premium for Unemployment, CommonCarrier Death Benefit, Disability Income, Disability Waiver of Premium, Accidental Death Benefit, Dependent Children’s Coverage

    Living Promise Whole Life

    Mutual offers another similar policy called the Living Promise plan, which is only available through a life insurance advisor. The plan comes with two benefit options:

    • Level Benefits: With this, policyholders get between $2,000 and $40,000 in coverage and an accelerated death benefit for terminal illnesses or nursing home confinement. 
    • Graded Benefits: Policyholders get up to $20,000 worth of coverage and no accelerated/nursing home riders. However, if the policyholder passes away due to natural causes within the first two years, their beneficiaries can receive all paid premiums plus 10 percent. Otherwise, beneficiaries receive the full benefit.
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    Northwestern Mutual: Most Policy Options

    Northwestern Mutual is considered one of the best life insurance companies in the country. The 163-year-old company has 4.5 million clients and has paid over $4.8 billion in life, disability, and long-term care insurance claims. 

    It currently holds the number one spot on the National Association of Insurance Commissioners' list of largest life insurance companies by market share and direct premiums written. It’s also got one of the most impressive scores on NAIC’s complaint index, marking excellent customer service all around. 

    Northwestern Mutual offers a wide range of whole life insurance policies, including an individual whole life plan which comes with the option of paying premiums until the age of 65 or 90 years old, a survivorship policy that insures two people, and a “CompLife” series which offers blended term and whole life policies with dividends. 

    Minimum coverage: $25,000

    Eligible to earn dividends: Yes

    Riders: Not all riders are available with all policy options. These are the riders we found: Early Payment Benefit, Waiver of Premium, Indexed Protection Benefit, Additional Purchase Benefit

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    New York Life: Customization Options

    At the number two spot on both the NAIC and AM Best's lists of the best life insurance providers is New York Life. The company has been around for 175 years, providing everything from life insurance to long-term care solutions, investment options, and wealth management services. The mutual company has paid dividends every year since 1854 and is looking to pay $1.8 billion in dividends in 2021.

    New York Life has three whole life insurance options:

    Value Whole Life

    This is a great option for seniors and people who are entering their sunset years. With this policy, you get fixed premiums and guaranteed coverage, all rolled into a budget-friendly plan. The minimum death benefit for this policy is $25,000.

    Whole Life Insurance

    This is New York Life’s standard policy. With this, you get guaranteed coverage and cash growth. Minimum coverage is $25,000.

    Custom Whole Life

    With this policy, you can choose how long you want to pay premiums for and schedule payments. In fact, you can complete your premium payments within five years if you like. With this, you get to grow your money in your cash value faster as well.

    Eligible to earn dividends: Yes

    Riders: Accidental Death Benefits, Chronic Care, Disability Waiver of Premium, Living Benefits

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    Learn More About Life Insurance 

    Unsatisfied with the coverage options listed above? Itching to know more about different kinds of life insurance? Find the best whole life insurance policies, the winningest options in universal life insurance, and more – head over to our website to learn everything you need about life insurance and best practices in personal finance!

    Written By Cameron McDowell
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