Compare Life Insurance
What every informed consumer needs to know...
Choosing a life insurance policy can be a painful process. There’s a lot of complex terminology involved, with so many different policy options available that it can be very overwhelming. Do you want lifetime coverage? Are you able to afford high premiums? Is it important that your policy have an investment component?
Before settling on a specific life insurance policy, you need to determine your family’s needs, both before and after death. Read on to learn more about the different life insurance options offered today and how to figure out which one is best for you and your family.
How we Compare Life Insurance
The financial strength of an insurance company refers to the overall stability of the company’s finances. Life insurance is essentially a long-term contract that isn’t paid out until much later in life. Because of this, it’s very important that the insurance company you go with has a positive long-term outlook. Otherwise, they may not be able to pay out any outstanding obligations to you and/or your beneficiaries should the company collapse or run into financial troubles.
To determine a company’s financial strength, finance companies such as A.M. Best and S&P compile data and use various sets of criteria to determine overall financial stability. They look closely at things such as credit rating and their ability to meet any outstanding obligations to policy holders. It’s a good rule of thumb to buy only from insurance companies that have high marks from the major ratings agencies.
However, understanding the ratings can be tricky. Each company uses a different scoring system, but the ratings they assign are intentionally vexing. For example, many consumers are quick to assume that an insurer with an A+ rating from Fitch is the best score possible. I mean, why wouldn’t you think that? But the reality is that there are four scores higher than A+: AA-, AA, AA+, and AAA. Take some time to review the scoring criteria before placing too much value on what seems to be an excellent score, because oftentimes a score that looks impressive on paper really just translates to “good.”
|Northwestern Mutual||Mass Mutual||Prudential||Liberty Mutual||AXA||Gerber Life|
|Standard & Poor's||AA+||AA+||AA-||A||A+||BBB|
To this day, despite the ubiquity of online quoting platforms that connect clients to multiple companies, 80-90% of the business of life insurance is still done through face-to-face (or phone) interaction with traditional agents. Different companies have different requirements for their agents in terms of certifications and continuing education while employed.
According to JD Power 1 in 5 policyholders never heard back from their agent after purchasing life insurance in 2015. A lack of communication is often cited as the main reason a customer does not fully understand their policy and therefore becomes unsatisfied or lets their policy lapse.
To rate customer experience we used 2015 National Association of Insurance Commissioners (NAIC) data on complaint ratios. This compares a given company’s complaints to the industry as a whole; it’s essentially a “complaint share.” We also took into account JD Power satisfaction scores from 2015 where applicable.
To simplify things as much as possible, we can say that there are basically three major categories for life insurance, which are further divided into specific policies that give specific premiums, coverage, and payment terms/periods. There’s term life insurance, whole life insurance, and universal life insurance. Let’s take a closer look at each.
Term Life Insurance: Generally, this refers to life insurance plans that are short-term, or run for a pre-determined number of years (5, 10, 20, etc.). It’s purely a protection plan that pays out a predetermined sum if the insured individual(s) dies during a specific period of time. This type is the most common, and usually the one offered by employers as part of their benefits package. Most of the time, term life is an inexpensive insurance option, as the premium rate is locked in for the duration of the plan. Consider this option if you plan to be debt free when you reach retirement age and you just want coverage until your youngest child finishes college.
Whole Life Insurance: This is the first form of permanent life insurance, and it can be kept for the duration of your life. Monthly premiums are at a set rate, and they must be paid on time. With this type of coverage, most policies offer a tax-protected savings or investment component. As your cash value increases, you have the option to borrow against it, surrender the policy for a payout, or collect dividends on it. The premiums can be quite high, but the cash value benefits can be very useful for policy holders.
Universal Life Insurance: Universal insurance is a bit more complicated. The easiest way to describe it is to say it’s flexible, which is why it’s often called adjustable life insurance. The investment and death benefit portions are separated under this plan, which allows you to change your premiums and benefits to match your current budget. In the event that you run into unexpected financial trouble, you can reduce or stop your premiums and use your accumulated cash value to pay the premiums. Universal life insurance offers the most well-rounded protection to you and your loved ones.
There are two other less common forms of permanent life insurance: variable life and variable universal life. Variable life lets you control your investments, in that you can allocate a certain portion of your cash value to an investment portfolio. Variable universal life is basically the same as universal life insurance, but it allows the policy holder to create sub accounts, similar to mutual fund accounts. Variable and variable universal life insurance plans are considered to be more risky due to the added investment options. There’s no single best plan available, which is why it’s important that you determine your needs prior to researching to figure out which option is right for you and your family.
|Northwestern Mutual||Mass Mutual||Prudential||Liberty Mutual||AXA||Gerber Life|
|Term||10, 20 or to a specific age such as 80||10 or 20 years||10,15,20,25 and 30||10, 15, 20, 30 years||1,10,15 or 20||10,15,20, 30 years|
|Term Benefit Amount||$100,000 minimum coverage||$100,000+||$50,000 minimum coverage||$25,000 to $150,000|
|Premium Payment Periods A|
|Covert to Permanent A|
|Return of Premium|
|Covert to Permanent B|
|Borrow against value?|
|Convert to Permanent C|
|Convert to Permanent D|
|Other Term Policies|
|Benefit Amount D||$10,000 minimum coverage||N/A||$100,000 minimum coverage||$50,000||$25,000 to $150,000|
|Premium Payment Periods B||N/A|
|Borrow against value? B|
|OTHER WHOLE LIFE POLICIES||65 Life, 90 Life, Limited Pay Life||N/A||Life paid-up at 65, 20 year payment life, Extra value life||Interest Sensitive Whole Life||Gerber Life Grow-up Plan, Guaranteed Life Insurance Plan|
|Benefit Amount E||$50,000 minimum coverage||$25,000||$100,000 minimum coverage||$50,000|
|Premium Payment Periods C|
|Dividends Possible? B|
|Borrow against value? C|
|OTHER UNIVERSAL POLICIES||Custom Universal Life Accumulator, Single Premium UL||Indexed Universal Life, Survivorship Universal Life||Spirit Series Performance Universal Life, Spirit Series Universal Life|
|OTHER VARIABLE POLICIES|
|OTHER VARIABLE UNIVERSAL||VUL Protector, PruLife Custome Premier II|
Plan riders are add-ons that can be purchased to provide increased coverage or specific types of additional benefits. Each type of insurance will have varying riders, but there are some that are common across multiple insurance types.
Accelerated Benefits: Should the policy holder be diagnosed with a terminal illness, this rider grants early access to death benefits to help with the cost of treating a terminal illness.
Accidental Death Benefit: This rider pay an additional death benefit in the event that the insured dies accidently. Almost all of our Top 10 life insurance providers offer this benefit at an additional cost.
Additional Insured Rider: Extends coverage to an additional person, usually a spouse.
Child Rider: Additional coverage in the event of your child’s death.
Disability Rider: If the policy holder were to suffer some sort of injury that prevents them from working or seeking employment, this rider provides income to pay for expenses.
Final Expenses: This policy covers funeral expenses for the insured.
Guaranteed Insurability Option: This gives the policy holder the ability to guarantee future insurability at standard rates without further proof of insurability or a medical assessment.
Long-Term Care Rider: Covers the cost of long-term care if it’s needed at any point during the policy term.
This is just a sampling of attachments that can be made to your policy. Since these optional features have an impact on the level of life insurance coverage, they should be very important factors for you when purchasing life insurance. Every company will have different riders, and not all will be available for every type of plan. Do your research to figure out if any of these riders may be important to you and/or your family, either now or in the future of your policy term.
Life Insurance with the Best Additional Features:
|Haven Life||AIG Direct||American National||Northwestern Mutual||Mass Mutual||Globe Life||Fidelity||Prudential||National Family Assurance||Rosie Future||Liberty Mutual||AXA||Gerber Life|
|Children's Term Benefit Amount||No|
|Convert to Permanent?|
|Guaranteed Insurability Option|
|Guaranteed Insurability Option Benefit Amount||$2,000 to $25,000||No|
|Long Term Care|
|Survivor Purchase Option|
|Accidental Death Benefits|
|Financial & Retirement Planning|
|No Medical Exam Options|
|Lump Sum Payouts|
|Claim Forms Readily Available|
|One-on-One Claim Advisor|
|Help with Governement Benefits|
Help and Support
When choosing a life insurance policy, you should also consider the customer service record of the insurance company. As we’ve outlined, life insurance can be complicated and difficult to understand. This is why it’s important that providers make it as easy as possible for their customers.
If you have just taken out a life insurance policy, you usually have 30 days in which you cancel at no extra charge. For most of the Top 10 companies, outside of that initial period all you have to do is write your provider and tell them why you wish to cancel. Usually you will be allowed to cancel with no additional cost. You will stop paying your monthly premiums, and the coverage will no longer apply. However, check the terms and conditions of your policy to make sure this is the case. Keep in mind that you probably will not be entitled to any refunds of premiums payments already made.
Life insurance for a smoker is more expensive. But many insurance companies now allow policy holders that are former smokers to apply for non-smoker rates, after a certain amount of time has passed. Usually this amount of time is a year, and a medical examination would be required to determine that you are in fact no longer a smoker. In addition, companies will also often provide some financial and retirement planning assistance to help you set up your policies at no additional cost.
Some companies also offer life insurance policies that do not require a medical exam, however this usually means a higher premium, and you may need to pay the premiums for a certain amount of time before you are eligible for full payout. This is most common with group policies, but inquire with your insurance provider if and when it is offered.
Most companies now offer an online customer portal, which you can use to submit and track any claims you currently have open. You can also use the portal to communicate with a representative regarding any questions or concerns you may have. Figure out which method of communication you’re most comfortable with, and be sure during your research process to determine which companies make it easy to manage your life insurance policy using your preferred method of communication.
Nowadays a robust online presence is essential for nearly every kind of business. Some life insurance companies offer online tools that allow you to determine how much coverage you need and get an actual quote in minutes. Other things we consider are the option to manage your account online, and education materials aimed at helping the consumer understand what life insurance products fit their personal situation (articles, blogs, advice, research tools, etc.).
Full Life Insurance Comparison
|Company Reputation||Customer Experience||Policies||Additional Features||Help and Support||Online Presence|
|Haven Life Insurance||9.5||9.7||9.5||9.5||10.0||10.0|
|American National Life Insurance||9.0||10.0||9.5||9.5||9.0||9.5|
|Northwestern Mutual Life Insurance||10.0||9.5||8.5||9.5||9.0||9.5|
|Mass Mutual Life Insurance||9.5||9.0||9.5||9.3||8.5||9.0|
|Globe Life Insurance||8.0||8.0||9.5||8.0||9.0||8.0|
|Fidelity Life Insurance||8.0||8.0||8.0||10.0||8.0||9.5|
|Prudential Life Insurance||8.8||8.0||9.0||7.0||8.0||8.0|
|National Family Assurance Life Insurance||8.2||9.0||8.0||8.0||8.0||8.0|
|Rosie Future Life Insurance||8.8||8.0||9.0||7.0||8.0||8.0|
|Liberty Mutual Life Insurance||8.0||7.5||8.5||8.0||8.0||8.0|
|AXA Life Insurance||5.0||8.5||8.0||8.0||8.0||8.0|
|Gerber Life Insurance||6.0||7.5||4.0||6.0||5.0||5.0|
What is Life Insurance and what do people use it for?
Contrary to what movies and television may suggest, Life Insurance is not meant to help your family get rich quick upon your death, but instead is to help relieve the financial burden of your passing on your loved ones. Life insurance can help for expenses resulting from your death, cover any outstanding debt you left behind (so your loved ones are not left responsible for it), help replace lost income giving your family more time to plan for their future, or help secure their future all together.
What are the types of Life Insurance Policies available?
There are a number of different types of Life Insurance Policies, which typically fall into one of two categories: Term or Permanent Insurance.
Term Life Insurance policies often come with lower monthly premiums and have a set terms in which the life insurance policy is active (typically 5 to 30 years). If you die during the policy period, your beneficiary will receive the full death benefit covered by your policy. However, once your term life insurance policy ends, neither you nor your beneficiaries are entitled to any payouts.
Permanent Life Insurance policies will cover you until your death, as long as you pay your premiums every month. Permanent policies, sometimes known as Cash Value Insurance, typically come with much higher premiums and a portion of your payments will be placed in a cash value account. At first, the actual cost of your insurance will be low, so a larger amount will be put aside in your account. Over time, the cost of insurance will increase, and therefore, the amount put aside will decrease. Additionally, you can also take out a loan against your cash value account, but beware that it could impact the death benefit your beneficiaries will receive if the loan is not repaid before your death. Last, if you decide to cancel your policy prior to your death, you will receive your cash value back (less any outstanding loan amounts and applicable fees).
Can anyone take out a life insurance policy on me?
In order to take a life insurance policy out on someone else, you need to have an “insuring interest” in said person, meaning that only someone who could suffer a financial loss from your death can take out an insurance policy on you. This could mean a family member, your employer, business partner, or even people or institutions that are major creditors.
However, in most cases, it would be difficult for someone to take out a life insurance policy without you knowing it. In order to become insured, the insurance company will likely need to do a health evaluation or have access to your medical records (which would require you to release these to them by signing a consent form). Additionally, most companies require a signature of the person being insured making it difficult for a policy to be taken out in your name without your knowledge.
What does it mean when a permanent insurance policy is “Paid Up,” and what happens then?
This means that you have made enough payments to your insurance policy that you have paid off the cost of insurance for the rest of your life. The insurance company will then plan to use the funds in your cash value account to make the premium payments until you die. If you end up taking out a loan against your cash value account at this point, the insurance provider may require you to make premium payments once again, or reduce your death benefit until the loan is repaid.