State Farm Life Insurance Review: Where There's A Policy For Everyone
Most people know State Farm for their home and auto insurance, with the company frequently topping "best of" lists since its inception in 1922. But State Farm has an impressive track record in life insurance as well. They've been listed as one of the best life insurance companies by sites like Forbes, CNet, US News, and Business Insider, sitting alongside major players like Northwestern Mutual, New York Life, and Pacific Life.
As a life insurance provider, State Farm is known for its wide range of policy options. In this State Farm life insurance review, we take a deeper look into what makes this company so special, and why it might be a good option for you.
What To Look For In A Life Insurance Provider
Before we dive into our review of State Farm life insurance, let's talk about the five factors every person should consider when choosing a life insurance company:
Policy And Coverage
What kinds of policies does a company offer, and how much coverage will you be able to get out of each one? Most companies will provide term, whole, and universal life insurance (with the exception of a few niche brands), with each company offering their own take.
Term life insurance gives you coverage for a set period. This can range from 5 to 40 years, depending on the company and their policies. Whole life insurance, on the other hand, gives you permanent coverage and a cash value component – however, whole life often costs five to nine times more than a term life policy. Finally, universal life insurance gives you permanent protection like whole life, plus flexible premiums and death benefits.
Application
How easy is it to request a quote and apply to a life insurance company? Some companies offer easy access to quotes online, while others require applicants to talk with an agent.
The underwriting process also varies from company to company. Some life insurance companies require applicants to undergo medical exams for all their policies, while other companies will offer guaranteed issue policies, or life insurance policies with minimal to no health-related requirements.
Finally, take note of how long it takes for a company to process applications. On average, it can take between six to eight weeks for a life insurance policy to be approved.
Price Range
Life insurance companies base their quotes on several factors, such as the policyholder's age, health, gender, and lifestyle. The basic principle is that the older and unhealthier you are, the more you can expect to spend on life insurance. This is because life insurance companies want to minimize risks and cut their losses, so they charge more when they feel that a client poses a bigger risk of getting ill or passing away young. This is also why most companies require customers to undergo medical exams, and why guaranteed issue policies are often far more expensive than regular policies.
Customer Service
When we review life insurance companies, we take a look at customer reviews online and ratings by third-party agencies like the Better Business Bureau and the National Association of Insurance Commissioners. Apart from these, we also look at how accessible a company is to its clients. Think 24/7 hotlines for concerns and agent availability across states.
Financial Strength Ratings
Financial strength ratings describe a company's ability to honor claims. This is measured and given out by third-party agencies such as Moody's, A.M. Best, and Standard & Poor's, among others.
State Farm Life Insurance Review
State Farm was founded in 1922 by retired farmer and insurance salesman George "GJ" Mecherle. The company began as a single-line auto insurance company, and has grown to offer a diverse range of insurance and financial products, like home and property insurance, health insurance, IRAs, mutual funds, annuities, and of course, life insurance.
Today, State Farm ranks number 36 on the Fortune 500 list, and has 84 million policies and accounts in force in the United States, with 8 million of those policies in life insurance.
Coverage
One of the things that truly sets State Farm apart from other insurance providers is its diverse range of policy options. State Farm offers nine types of life insurance policies:
Select Term Life Insurance
Perhaps their most basic policy, State Farm offers guaranteed death benefits starting at $100,000 for an option of 10, 20, or 30 years of coverage with the Select Term policy. Premiums remain level from day one, meaning you can expect to pay the same amount until the end of the term. Premiums only increase upon renewal.
Issue ages are 18 to 75 for a 10-year term life policy, 18 to 65 for a 20-year term life policy, and 18 to 45 for a 30-year term. And if you want to extend your Select Term policy after the initial term, you can keep it in force at an increased cost until the age of 95.
Return of Premium Term Life Insurance
Some people are put off by term life insurance because it offers nothing tangible in return. Essentially, if you don't pass away during the term, neither you nor your loved ones will receive any kind of death benefit.
State Farm offers something of a solution to this with its Return of Premium term life policy. According to their website, if you outlive your level premium payment period, you "get all the policy premiums you've paid back at the end of the term".
Coverage starts at $100,000 and is available for either 20 or 30 years. Issue ages are 18 to 60 for 20-year coverage (18 to 55 for tobacco users) and 18 to 45 for 30-year coverage.
This policy is renewable for policyholders until the age of 95.
Instant Answer Term Life Insurance
For those who need life insurance right away but are in a financial pinch, State Farm's Instant Answer Term may be a good fit. It's a guaranteed issue term life policy which requires no medical exam and budget-friendly conditions.
With this policy, State Farm promises $50,000 worth of coverage for up to 10 years or age 50 (whichever comes first). The policy can be approved within minutes, and can be paid on a monthly or annual basis. Issue ages are 16 to 45 years old.
Apart from being a good option for those in a pinch, Instant Answer would also work for people who may have medical conditions that may otherwise exclude them from getting a good life insurance policy.
Limited Pay Whole Life Insurance
If you're looking for permanent coverage, State Farm also offers three whole life insurance options: Limited Pay, Single Premium, and Final Expense whole life insurance. The Limited Pay insurance policy is distinct in that it gives customers the choice to pay premiums for a limited number of years (10, 15, or 20 years). This means that customers can get lifetime protection without being tied to making premium payments all the way until their retirement.
As for the death benefit, customers can get a minimum of $250,000 payable within 10 years, $100,000 payable within 15 years, and $50,000 payable for 20 years.
Like most whole life policies, this option comes with a cash value that builds interest over time.
Single Premium Whole Life Insurance
Perhaps you don't want to be bogged down by premium payments at all – State Farm offers a whole life policy that provides a lifetime of coverage after just one payment. The Single Premium policy provides lifelong coverage for just a minimum face amount of $15,000. This is available to those between the ages of 0 to 80.
Again, like most whole life policies, Single Premium Whole Life Insurance comes with a cash value component.
Final Expense Whole Life Insurance
When we pass away, we leave our friends and family to deal with the difficult and expensive task of arranging our funeral and burial or cremation. According to the National Funeral Directors Association, this can amount to $7,640 to $9,135 on average.
State Farm's Final Expense whole life insurance can help policyholders lift that burden from their friends and family by providing a fixed death benefit of $10,000 upon your passing. Your beneficiaries can decide to use it however they like, as well.
State Farm issues this policy to those within the ages of 50 to 80 or 50 to 75 in New York. Levels remain premium and are payable until the policyholder reaches 100 years old.
Universal Life Insurance
Universal life insurance is similar to whole life in that it provides permanent protection and a cash value component to the policyholder. However, unlike whole life insurance, universal life comes with flexible premiums and coverage.
State Farm offers three types of universal life insurance policies – the basic universal life, survivorship universal life, and joint universal life. With the basic universal insurance policy, State Farm gives lifetime coverage for one policyholder at a minimum of $25,000 for those within the ages of 0 to 17, $50,000 for those ages 18 to 54, and $25,000 for those ages 55 to 85.
Premiums and coverage can be raised or lowered as long as the customer reaches the monthly or annual minimum, and any extra premiums go directly to the account value. Policyholders can also loan against the cash value to use the money as "living benefits" – a great way to grow money for retirement.
Survivorship Universal Life Insurance
For those who want to fund a special needs trust, preserve their estates, or make a charitable donation upon their death, you can opt for Survivorship Universal Life Insurance.
With this life insurance policy, you get coverage starting at $250,000 for two people. The death benefit is only released to the beneficiaries when the last person insured under the policy passes away. That way, you get to cover two individuals for the price of one policy.
Policy issue ages are 18 to 90 years old (18 to 78 in California).
Joint Universal Life Insurance
Similar to the Survivorship option is the Joint Universal policy, which provides a minimum of $100,000 worth of coverage for two people. The difference is that the death benefit is paid upon the first death. The policy is issued to those between the ages of 18 and 85 years old.
Application Process
Getting a quote and applying for any of State Farm's life insurance products is fairly easy. You can request a term life insurance quote online – simply input the following information:
- Your state
- Your date of birth
- Tobacco use
- Height and weight
- Contact information
Unfortunately, you can't get online quotes for whole and universal life insurance. State Farm requires applicants to get in touch with State Farm agents for these two life insurance options.
In most cases, you'll need to undergo a medical exam to complete your application. Then you can expect an underwriting process of about four to six weeks, which is average for most life insurance companies.
Price Range
As mentioned, premium rates are affected by factors such as the applicant's age, gender, health, and lifestyle. The older you are, the more expensive your insurance will be. The same goes for your health – the unhealthier you are, the more you can expect to pay for premiums.
You can get sample quotes straight from their website, which is good if you want to compare prices across different companies. For a Select Term policy, a 25-year-old female in excellent health can expect a starting rate of $15.22 a month or $175.00 annually for $250,000 worth of coverage for 20 years. This is slightly higher than the average rate on PolicyGenius' price index, which notes an average monthly rate of $14.22 for the same conditions.
Customer Service
Clients can pay for insurance via a 24/7 phone line. They can also reach a representative for general inquiries via phone or email. If you have a more complicated concern, you can also research nearby agents on the website.
While the above may make it seem like the company provides a seamless customer experience, reviews and ratings suggest otherwise.
The National Association of Insurance Commissioners (NAIC) has a complaint index which shows how often a company receives complaints compared to other companies in the US. While the national average is 1.00, State Farm is at a slightly higher 1.20. While this doesn't seem too bad, the company's records on TrustPilot and Better Business Bureau tell a different story. Despite an A+ rating at BBB, customer reviews put it at an average of 1.32/5 stars, with consumer complaints noting uncooperative agents and poor systems. On TrustPilot, State Farm has two stars and a "poor" customer satisfaction rating.
It should be noted, however, that the State Farm life insurance company issues other types of life insurance policies as well, such as vehicle insurance and home insurance.
Financial Strength Ratings
- A.M. Best rating: A++
- Better Business Bureau rating: A+
- Standard & Poor's rating: AA
- Moody’s rating: Aa1
Pros
- Variety of policy options: If you don't know what kind of life insurance policy you need, you'll have a lot of options to choose from at State Farm. They have nine different life insurance policies in total, including a guaranteed issue policy for those who want to skip the medical exam.
- Life insurance quotes available online: If you're looking for term life insurance, State Farm makes it easy to find and compare quotes online. However, if you need quotes for whole and universal life policies, you'd need to contact an agent.
- Return of premium available: Life insurance is not cheap, and shelling out hundreds of dollars each year with no reward can dishearten some people. If you're one of those, you can opt for State Farm's Return of Premium insurance policy, which guarantees that you get back your money if you outlive your term.
- Offers survivorship life insurance: This is one of those life insurance products you don't often see in your standard insurance provider. This policy is great for people who want to fund special needs trusts or preserve their estates.
Cons
- Too many options may be confusing: While some people will appreciate the surplus of options, others may feel overwhelmed and confused. If you want something simple and straightforward, perhaps you should look elsewhere.
- Limited term lengths: Other life insurance providers offer terms from five to 40 years, whereas State Farm only offers term lengths of 10, 20, and 30 years.
- Poor customer satisfaction ratings: Despite the company's impressive financial strength ratings, consumer reviews paint a less than savory picture of their customer service.
The Bottom Line
Beyond its home and auto insurance, State Farm has a lot to offer in the realm of life insurance. With nine policies to choose from, online quotes for select term life policies, and a relatively straightforward application process, State Farm Insurance makes for a decent first choice. However, you may have to exercise some patience when it comes to customer service since online reviews prove that the company is lacking in that department.
Still confused? At Wesley LLC we can provide consultation and help you find the best options for your life insurance policy. Contact us to learn more.