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Best Life Insurance Companies Of April 2022
Editorial Note: We earn a commission from partner links on Forbes Advisor. Commissions do not affect our editors' opinions or evaluations.
Life insurance is one way to bolster your financial plan and protect your family’s financial future.
The best life insurance for you will depend on your financial goals, budget and how much cash value you want to build within a policy. We used data provided by Veralytic, an independent provider of life insurance research and analysis, to find the best life insurance companies.
Read more
Show Summary
- The Best Life Insurance Companies
- Summary: Best Life Insurance Companies
- What Is Life Insurance?
- How to Find the Best Life Insurance Policy For You
- Types of Life Insurance
- What Does Life Insurance Cover?
- What Does Life Insurance Exclude?
- Do I Need Life Insurance?
- How Much Life Insurance Do I Need?
- Is Life Insurance Worth It?
- Life Insurance Sales Are Surging
- Covid Prompts Plans to Buy Life Insurance
- Lacking Sufficient Life Insurance
- Consumer Satisfaction With Life Insurance Is Up
- People Make More Wills Because of Covid
- Methodology
- Best Life Insurance Companies FAQ
Our Guides to Life Insurance
The Best Life Insurance Companies
- Lincoln Financial – Best for Boomers
- Mutual of Omaha – Best for Indexed Universal Life Insurance
- Pacific Life – Best for Retirement Planning
- Protective – Best for Universal Life Insurance
- Prudential – Best for Senior Life Insurance
- AIG – Best for Recreational Marijuana Use
- Equitable – Best for Variable Universal Life Insurance
- Nationwide – Best for Gen X & Millennials
- Northwestern Mutual – Best for Whole Life Insurance
- Penn Mutual – Best for Estate Planning
- Transamerica – Best for Term Life Insurance
- John Hancock – Best for Celebratory Cigar Use
Summary: Best Life Insurance Companies
What Is Life Insurance?
Life insurance is a contract between you and an insurance company. Essentially, in exchange for your premium payments, the insurance company will pay a lump sum known as a death benefit to your beneficiaries after your death.
Your beneficiaries can use the money for whatever purpose they choose. Often this includes paying everyday bills, paying a mortgage or putting a child through college. Having the safety net of life insurance can ensure that your family can stay in their home and pay for the things that you planned for.
There are two primary types of life insurance: term and permanent life. Permanent life insurance such as whole life insurance or universal life insurance can provide lifetime coverage, while term life insurance provides protection for a certain period.
How to Find the Best Life Insurance Policy For You
With the wide variety of life insurance policies available, pinpointing the right one can be a challenge for any buyer. Don’t go it alone when trying to find the best life insurance policy. Financial advisors and experienced life insurance agents have the background to help you make the right decision based on your goals and budget.
Look at financial strength ratings. A strong financial strength rating is more than just peace of mind that the company won’t go out of business decades from now. Insurers with greater financial strength can be less likely to need to increase internal policy costs and premiums in response to challenging financial times.
Ratings are available from agencies such as S&P and A.M. Best, and are usually found on insurers’ websites.
Select life insurance as part of a larger financial plan. Here’s where a financial advisor can explain life insurance options in the context of your larger personal financial goals.
Don’t assume insurers offer competitive pricing for everyone. Insurers want your business, but they all operate from their own playbooks. Premiums can vary wildly and, for cash value policies, cash value growth can be very different among companies and policies.
Be aware that a life insurance quote for a cash value policy may not reflect what you’ll actually end up paying over the years to keep the policy in force.
“Current regulations in some states and for some products permit insurers to ‘quote’ a low premium while charging high costs—without disclosing that you may need to pay additional premiums later in order to avoid a lapse,” warns Barry Flagg, founder of Veralytic.
Insist that cost disclosures for universal life insurance be included in any proposals. A life insurance quote reflects what you’ll be billed for, but doesn’t tell you anything about a policy’s internal costs, such as expenses and fees, and the cost of insurance within the policy.
Be sure to insist that any universal life insurance illustration include the detailed expense pages or policy accounting pages. Products with a low premium quote could have higher internal costs, which can slow your cash value growth.
Types of Life Insurance
There are two primary types of life insurance: term life and permanent life.
Term life insurance
Term life insurance is a policy where you choose the length of coverage, such as 10, 15, 20 or 30 years. If you die within that term, your beneficiary will receive the death benefit. If you outlive the term, there is no death benefit.
Term life insurance is good for folks who want to cover a specific financial concern, such as income replacement during your working years.
Permanent life insurance
Permanent life insurance is good for folks who want a death benefit paid out no matter when they die. Permanent life insurance policies also have a cash value component that can accumulate money on a tax-deferred basis. Permanent life insurance is usually significantly more expensive than term life.
People who choose permanent life insurance usually have specific goals in mind, such as supporting financial dependents, funding a trust for heirs, or building cash value to supplement retirement savings.
Permanent life insurance can be broken down into main subtypes:
- Whole life insurance. This type of life insurance is predictable because the premiums, rate of return on cash value and the amount of the death benefit are all fixed and guaranteed.
- Universal life insurance. This type offers more flexibility and you may be able to adjust premium payments and death benefits within certain parameters. The cash value growth will depend on the insurer and the type of universal life insurance you buy: guaranteed universal, indexed universal or variable universal.
Permanent life insurance policies can be difficult to understand from quotes or hypothetical illustrations. Simply comparing life insurance quotes or some projection of cash values won’t reveal whether the policy is a good value. “Look under the hood,” advises Flagg of Veralytic. For example, a life insurance agent or financial advisor can request a Veralytic report to see how the policy you’re considering compares to industry benchmarks.
“Ultimately, the premium you’ll have to pay and/or the cash value growth you’ll see depends on what the insurer actually charges and how well the investments do. You want to confirm that internal policy costs are competitive and that the investments within the policy fit your risk tolerance,” cautions Flagg.
What Does Life Insurance Cover?
Life insurance covers death from illness, accidents and simply old age. This includes deaths from diseases, falls, car accidents and Covid. Deaths from accidental drug overdoses are covered.
A narrow type of life insurance called accidental death and dismemberment covers only deaths that are accidental, such as an accidental fall or car crash. It does not cover deaths by illness, disease or old age.
What Does Life Insurance Exclude?
Life insurance policies generally exclude only suicide within the first two years of owning the policy. This “suicide clause,” as it’s called, is a standard part of life insurance contracts. Apart from that, you can count on a life insurance policy to provide a payout no matter the cause of death.
There are cases where a payout could be jeopardized for reasons unrelated to the cause of death. For example, if the policyholder quit paying for the life insurance and the policy lapsed, there is no payout. However, if the policyholder only recently quit paying because of an illness—such as a hospitalization that prevented payments—beneficiaries might be able to reinstate the policy by paying the premiums due.
Life insurers could also deny a payout if they find that the applicant misrepresented something on the application, such as a health issue.
Do I Need Life Insurance?
If someone depends on you financially—either now or after your death—you may need life insurance. For example:
- Many people buy life insurance so it can act as income replacement for their families if they die unexpectedly.
- Some people provide financial support after their death by funding a trust with life insurance. For example, if you have a child with special needs, a trust can be used to provide for them.
Other common reasons people buy life insurance are:
- To provide funds for their own funeral.
- To provide money for their families to pay off a mortgage or other debts.
- To ensure that children have money for college tuition in case a parent passes away.
- To create supplemental income during retirement years with a cash value policy.
- To provide money to pay estate taxes to beneficiaries who are inheriting very large taxable estates.
How Much Life Insurance Do I Need?
You can calculate how much life insurance you need with a basic equation:
[Financial obligations you want to cover] －[existing assets that can be used toward bills] = Your life insurance need
Examples of “financial obligations you want to cover” might include income replacement, mortgage payments, college tuition and other large debts.
Examples of “existing assets that can be used toward bills” might include your retirement savings and other types of savings (such as a 529 college savings account), and existing life insurance.
Is Life Insurance Worth It?
Life insurance is worth it when you need to protect the financial future of your family or business in case you pass away unexpectedly. For high net worth individuals, life insurance can provide your family with a tax-free death benefit that they can use to pay estate taxes.
Cash value life insurance also offers certain tax benefits for individuals who are in high tax brackets and who want to put some retirement savings into investments that can have high returns:
- Cash value growth within a policy is tax-deferred and the policyholder can withdraw money tax-free (up to the amount they’ve paid in premiums).
- Another advantage is that you can take a policy loan from your cash value that’s also tax-free (as long as the policy remains in-force).
Life insurance may not be worth it for you if:
- No one would suffer financially upon your death.
- Your heirs won’t need money to pay estate taxes.
- You don’t want to use life insurance as an additional retirement savings vehicle because you’re in a low tax bracket or you want only conservative retirement investments.
Many people overestimate the cost of life insurance. Before you assume you can’t afford it, collect life insurance quotes.
If you’re buying cash value life insurance, know that a life insurance quote may not tell the full story of how much the policy will actually cost you. Current regulations in most states for many types of policies allow agents and brokers to quote low premiums based on optimistic policy projections—even though the policy may have high internal charges and the investment projections might not pan out. If this happens, you could be on the hook for additional premiums or face a lapse of your policy.
Life Insurance Sales Are Surging
Sales of new life insurance surged last year, with new premiums growing 18% in the third quarter in 2021. This marked the third consecutive quarter of double-digit growth, according to LIMRA, an industry-funded research group.
Those first quarters of 2021 also showed the biggest nine-month growth in 25 years. LIMRA says that all types of policies saw sales growth during this time, including term life, whole life and universal life insurance.
Covid Prompts Plans to Buy Life Insurance
Covid has been a major force behind life insurance sales increases, as more Americans look for ways to gain better financial security for their families.
More than one-third of Americans plan to purchase life insurance soon, spurred largely by the pandemic, but many potential buyers mistakenly believe the cost of a policy is out of reach, according to a survey conducted in January 2021 by LIMRA and Life Happens, an industry-funded nonprofit that educates consumers about insurance.
The online survey found that 36% of Americans planned to buy life insurance last year. That’s the highest percentage of potential buyers in the history of the survey, which was first fielded in 2011.
By age group, millennials expressed the most interest in purchasing life insurance (45%). Thirty-one percent of the adults in Generation X and 15% of baby boomers said they plan to buy life insurance in the next 12 months, according to the survey.
While millennials appear to be eager to buy life insurance, they vastly overestimate the cost, the survey indicates. Forty-four percent of millennials estimated the cost of a 20-year term life insurance policy for a healthy 30-year-old would exceed $1,000 a year, yet it’s actually about $165 a year. Overall, more than half of Americans overestimated the cost of life insurance, the research shows.
Lacking Sufficient Life Insurance
“Having adequate life insurance coverage is the foundation for a secure financial future,” David Levenson, president and CEO of LIMRA, said in a news release about the survey.
LIMRA and Life Happens say 102 million Americans reported lacking sufficient life insurance coverage or having no coverage at all, representing 40% of adults in the U.S. In the survey, 59% of Americans said they need life insurance (73 million) and 22% of insured Americans (29 million) said they need more life insurance. A little over half of Americans are covered by life insurance.
What’s preventing Americans from adding new coverage or beefing up existing coverage? Here are three of the reasons:
- Fewer than one-third of consumers are “very” or “extremely” knowledgeable about life insurance.
- 53% are unsure what type of life insurance to buy or how much to buy.
- 36% believe they wouldn’t qualify for coverage.
LIMRA and Life Happens say some families rely too much on employer-sponsored life insurance through the workplace. Federal data cited by the organizations shows the median amount of coverage offered in the workplace is either a flat sum of $20,000 or one year’s salary. Yet 35% of men and 22% of women questioned in their survey said their workplace coverage was adequate.
“Covid-19 has raised awareness about the important role life insurance plays in families’ financial security. Our research shows 42% of Americans would face financial hardship within six months if the primary wage earner were to die unexpectedly,” said Levenson at LIMRA.
Consumer Satisfaction With Life Insurance Is Up
Along with sales, consumer satisfaction with life insurance is up, which is a notable turnaround from past years. “Life insurance ownership has been declining for the past 30 years and overall customer satisfaction with life insurance has historically deteriorated consistently from the moment it is purchased,” said Robert Lajdziak at J.D. Power in a statement. “That’s all starting to change.”
J.D. Power’s 2021 U.S. Individual Life Insurance Study found satisfaction with life insurance providers at 776 on a 1,000-point scale, up 13 points from 2020.
Having a helpful life insurance agent is one component to customer satisfaction. But as consumer shopping shifts to online, the quality of insurer websites is increasingly important. J.D. Power says that 40% of life insurance customers use their insurer’s website for everything from researching policy options to looking at their account and making payments. Overall customer satisfaction with life insurer websites climbed 24 points last year to 844 out of 1,000 points.
People Make More Wills Because of Covid
Life insurance and wills often go hand-in-hand in financial planning. Yet they serve distinctly separate purposes. For example, a will cannot dictate who gets a life insurance payout. A life insurance company is contractually obligated to pay the death benefit to the beneficiaries listed on the policy, no matter what a will says. However, if all beneficiaries listed on a life insurance policy are already deceased, the life insurance payout will go into the insured person’s estate.
It’s important to keep life insurance beneficiaries and wills up to date, so that your wishes can be properly carried out. Forbes Advisor surveyed Americans to find out whether they have made wills, and why.
Overall, less than half of adults say they have a will. But a large portion of those who do (64%) say that Covid prompted them to make wills.
Do you have a will?
Did you make your will as a result of Covid-19?
Reasons for making a will closely align with many of the reasons people buy life insurance, such as having children and getting married. Having assets is also a top reason for getting financial affairs in order with a will.
Which of the following life events would be the most likely to inspire you to make a will?
More: Why Are Americans Drafting Wills? Nearly Two-Thirds Say Covid Is A Key Motivator
Methodology
Survey methodology
An online survey of 2,000 U.S. adults was commissioned by Forbes Advisor and conducted by market research company OnePoll, in accordance with the Market Research Society’s code of conduct. Data was collected between Feb. 4 and Feb. 7, 2022. The margin of error is +/- 2.2 points with 95% confidence. This survey was overseen by the OnePoll research team, which is a member of the MRS and has corporate membership with the American Association for Public Opinion Research (AAPOR). For a complete survey methodology, including geographic and demographic sample sizes, contact pr@forbesadvisor.com.
Ratings methodology
For our Forbes Advisor ratings we analyzed cash value policies using data provided by Veralytic, an independent publisher of life insurance research and analytics. Veralytic maintains a database of thousands of life insurance products and measures the competitiveness of each product.
Factors scored were: financial strength, the reliability of policy illustrations, the historical performance of the company’s investments, access to cash value and cost competitiveness.
1. Cost competitiveness (30% of score): This measures the level of premiums and internal policy charges, including the cost of insurance, fixed administration expenses and cash value-based wrap fees.
2. Reliability of policy illustrations (25% of score): When you could be holding on to a policy for decades and counting on cash value to accumulate, you want to avoid surprises. This factor measures the reliability over time of the company’s illustrations.
3. Access to cash value (10% of score): This measure evaluates the liquidity of cash value and a policyholder’s access to it. Some policies will build cash value better in the early years, and with other companies you may be waiting several years before you have meaningful cash value within a policy. Generally speaking, the higher the liquidity, particularly in early policy years, the better—but some insurers charge more for greater liquidity, so consider the possible tradeoff.
4. Historical performance (25% of score): This measures whether the historical performance of the company’s investments that fuel cash value growth are superior to other companies’ comparable products.
5. Financial strength (10% of score): This measure incorporates the insurer’s financial strength ratings from four major ratings agencies. Financial strength is particularly important when you’re relying on a company to be able to pay claims for many decades.
Data on life insurance riders and products sold was also supplied by Veralytic.
Website readability data was supplied by VisibleThread, a language analysis platform that improves the efficiency, clarity and compliance of mission-critical business writing. VisibleThread analyzes language such as passive voice, jargon, complex words and sentence length. You may only buy life insurance once in your life, so having understandable information at hand is critical.
Frequently Asked Questions
Which is better: term or whole life?
When it comes to term life vs. whole life insurance, the better choice depends on your specific goals. For example, if you’re looking for life insurance protection for only a certain number of years to cover a financial concern (such a mortgage), term life insurance is likely the best fit.
But one downside of term life is that you can outlive your coverage. If you want lifelong coverage, look at forms of permanent life insurance such as guaranteed universal life insurance.
What kinds of death are not covered by life insurance?
Life insurance generally covers all types of death, whether it’s from illness, injury or old age. Even death by homicide and drug overdoses is covered. Suicide is usually not covered within the first two years after the policy is purchased, but is covered after that time.
Accidental death and dismemberment insurance has a life insurance payout only for accidental deaths, such as a car crash or accidental fall.
Can I buy life insurance on someone else?
You can purchase life insurance on someone else, such as a spouse or a parent, as long as you have an “insurable interest” in that person. That means you would suffer financially if they pass away.
If you’re the policyowner for life insurance on someone else, you can make yourself the life insurance beneficiary and receive the payout.
But you can’t buy life insurance on someone else secretly—they’ll need to sign the application.
Next Up In Life Insurance
Information provided on Forbes Advisor is for educational purposes only. Your financial situation is unique and the products and services we review may not be right for your circumstances. We do not offer financial advice, advisory or brokerage services, nor do we recommend or advise individuals or to buy or sell particular stocks or securities. Performance information may have changed since the time of publication. Past performance is not indicative of future results.
Forbes Advisor adheres to strict editorial integrity standards. To the best of our knowledge, all content is accurate as of the date posted, though offers contained herein may no longer be available. The opinions expressed are the author’s alone and have not been provided, approved, or otherwise endorsed by our partners.
Forbes Advisor adheres to strict editorial integrity standards. To the best of our knowledge, all content is accurate as of the date posted, though offers contained herein may no longer be available. The opinions expressed are the author’s alone and have not been provided, approved, or otherwise endorsed by our partners.
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