October 2, 2023
Get To Know The Best Life Insurance Companies As Of January 2023

Get To Know The Best Life Insurance Companies As Of January 2023

Firstly who is the best insurance company in 2022? USAA. USAA is the best insurance company in our ratings. According to our 2022 survey, USAA customers report the highest level of customer satisfaction and are most likely to renew their policies and recommend USAA to other drivers.

Not all car insurance companies are created equal. We surveyed more than 10,000 drivers to learn more about their car insurance experience, focusing on key areas like customer service, claims handling, and customer loyalty. Using that data, we rated the best car insurance companies of 2023 to help you find the best one.

Let’s Get Down To the best Life Insurance Companies As Of January 2023. According to Forbes

The pandemic has brought financial security into sharp focus over the past two years. 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.

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

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 financial 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 Standard & Poor’s and AM Best and are usually found on insurers’ websites.

Select life insurance as part of a larger financial plan.

A financial advisor can explain the best life insurance options in the context of your larger personal financial goals.

Don’t assume insurers offer competitive pricing for everyone.

Life insurance companies 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.

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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 disclosure for universal life insurance is included in any proposals.

A life insurance quote reflects what you’ll be billed for, but it doesn’t tell you anything about a policy’s internal costs, such as expenses and fees, and the actual cost of insurance that’s charged within the policy.

Be sure to insist that any universal life insurance illustration include 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.

Figure out if you want life insurance riders

Life insurance companies generally let you add extra coverage to your policy through life insurance riders. These riders can include benefits you can use while you’re alive, such as accelerated death benefits, long-term care, term life conversion, and waiver of premium if you become disabled.

Adding a rider may increase the cost of life insurance. If you’re interested in expanding coverage through a life insurance rider, ask your life insurance agent to explain the options.

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 and don’t renew the policy (at a higher cost), 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 pass away. 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

Whole life insurance is predictable because the premiums, rate of cash value growth, and amount of the death benefit are 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 performance of the invested assets that are underlying the policy. Types of universal life insurance are fixed-rate universal, 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.

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Variable life insurance

Variable life insurance offers flexibility not found in whole life insurance, but with a safety net so your death benefit can’t drop below a certain amount.

That flexibility includes deciding on where to invest your cash value. The investments you choose play a vital role in the success of your policy, which makes this an option if you want to play an active role in your life insurance. Unlike a variable universal policy, a variable life insurance policy offers a safety net so that your death benefit won’t fall under a specific dollar figure.

A variable life insurance policy doesn’t let you change your premiums, which also makes it, unlike variable universal life.

Similar to other types of permanent life insurance, a variable life policy offers cash value, which you can tap into while you’re alive. You need to make sure your policy maintains at least a minimal level of cash value or your policy could lapse.

No-Exam Life Insurance

Life insurance companies sometimes offer policies without a life insurance medical exam. These no-exam life insurance policies don’t require an exam but you may be asked to answer health-related questions.

Types of life insurance policies include:

  • Accelerated underwriting: Life insurance companies primarily use information from third-party sources and algorithms to set your rate. The insurance company will review your prescription drug history, criminal record, and driving record to gauge your risk. With that information, the insurance company will set your life insurance rates.
  • Guaranteed issue life insurance: There’s no medical exam, no health questions asked and you can’t be turned down.
  • Simplified issue life insurance: There’s no medical exam, but you likely have to answer a handful of health questions.

Guaranteed issue and simplified issue policies can cost much more than policies that are fully underwritten, but they’re a way to get life insurance quickly and may be the only option for older people and those with health issues.

Other Types of Life Insurance

Other types of life insurance include:

  • Burial insurance: Also called funeral insurance or final expense insurance, a burial insurance policy typically has a small death benefit meant to pay off final expenses, such as $10,000. They are typically whole-life insurance policies and will have a high cost for the amount of coverage.
  • Survivorship life insurance: A survivorship life insurance policy, also called second-to-die life insurance, offers coverage for a husband and wife. The death benefit isn’t paid out until both people die.
  • Mortgage life insurance: A mortgage life insurance policy pays off your mortgage if the policyholder dies. The payment goes directly to the mortgage lender.

Supplemental life insurance: Supplemental life insurance is a free or low-cost group policy that may be offered by an employer or group. If a supplemental policy is connected to an employer, you will likely lose that coverage if you quit or are terminated.

What Types of Life Insurance Do Others Buy?

Term life insurance is more popular than permanent policies, based on current ownership. According to the American Council of Life Insurers:

  • 48% of U.S. households report having a term life policy, making it the most popular choice compared to cash value policies.
  • About 20% of households report having a cash-value life insurance policy with cash value.
  • The median face value of term life policies by household is $110,000.
  • The median face value of cash value policies by household is $50,000.

The best type of life insurance for you is one that fits your budget, financial goals, and the needs of your beneficiaries.

If your goal is to cover your loved ones for a specific period of time—like while you pay down a mortgage or raise children—a term life insurance policy is usually the best option. This is particularly true if you’re on a budget, as term life insurance policies are more affordable than permanent policies.

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If you want to ensure financial protection for your spouse or loved ones for the long haul, then permanent life insurance may be better. The same is true if you want a life insurance policy with savings to feature because permanent life insurance includes a cash value component, such as whole life insurance.

How Much Does a Life Insurance Policy Cost?

The average cost for a 10-year, $250,000 term life insurance policy for a 40-year-old man is $192 a year. That’s compared to $276 a year for a $500,000 policy and $420 for a $1 million policy.

The average cost for a 10-year, $250,000 term life policy for a 40-year-old woman is $168 a year. That’s compared to $264 a year for a $500,000 policy and $336 for a $1 million policy.

Permanent life insurance policies cost more for the same amount of coverage as term life insurance.

The cost of life insurance varies by the company and your age, health, gender, type of coverage, length of coverage, amount of coverage, and other factors.

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 lapses, 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 an 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, 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 You 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.

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