Life Insurance Rating: Is Third-Best Good Enough?

When it comes to life insurance, the third-best rating is still a good rating. The best life insurance companies are determined by factors such as price, policies, coverage, riders, the application process, the company's financial strength, and customer satisfaction. While the specific rating criteria may vary slightly between different publications, the key metrics remain consistent.

Reputable sources such as Forbes, U.S. News, Bankrate, and NerdWallet have all published their lists of the best life insurance companies for 2024. These lists typically include companies that offer a range of policy options, competitive pricing, strong financial stability, and positive customer feedback. It is worth noting that the specific rankings may differ slightly between sources due to varying weightings and evaluation criteria.

- Pacific Life: Top-rated by Forbes and U.S. News, and featured in the top 10 by Bankrate and NerdWallet.

- Northwestern Mutual: Ranked second by U.S. News and featured in the top 10 by Bankrate and NerdWallet.

- Guardian Life: Ranked third by U.S. News and featured in the top 10 by Bankrate and NerdWallet.

- MassMutual: Ranked first by Bankrate and NerdWallet, and featured in the top 10 by U.S. News.

- State Farm: Ranked seventh by U.S. News and featured in the top 10 by Bankrate.

- Lincoln Financial: Ranked fifth by U.S. News and featured in the top 10 by Bankrate and NerdWallet.

These companies have consistently demonstrated strong performance in the life insurance sector, offering a diverse range of policy options, competitive pricing, solid financial stability, and relatively positive customer feedback. Therefore, even a third-best rating on life insurance is still indicative of a strong performance and a good choice for consumers.

How to choose the best life insurance company for you

When choosing a life insurance company, it's important to consider your unique needs and preferences. Here are some key factors to help you select the best life insurance company for you:

• Product offerings: Different companies offer different types of policies, such as term life, whole life, and universal life insurance. Choose a company that provides the specific type of policy you're looking for, along with any desired riders or add-ons.
• Financial strength: Look for companies with high financial strength ratings from independent agencies like AM Best, Moody's, or Standard & Poor's. This indicates their ability to meet long-term financial obligations and pay out claims.
• Customer satisfaction: Consider companies with high customer satisfaction scores and low complaint ratios. J.D. Power is a reliable source for customer satisfaction data in the insurance industry.
• Market ethics: Some life insurance companies follow the principles and codes of conduct of the Insurance Marketplace Standards Association (IMSA), which promotes ethical conduct in life insurance marketing.
• Advice and service: Life insurance can be complex, so it's beneficial to have a representative who is knowledgeable and attentive to your needs.
• Claims: Research the company's claims process and check national claims databases or state insurance departments for any complaint information.
• Premium and cost: Compare premiums and costs between companies, ensuring you're getting similar insurance plans. Consider the Net Payment Cost Index and Surrender Cost Index to evaluate the true cost of a policy.
• Customer reviews: Read reviews on websites like the National Association of Insurance Commissioners (NAIC) to understand other customers' experiences with the company.
• Financial rating: Assess the company's financial rating from agencies like AM Best to gauge their likelihood of defaulting on debts. A high credit rating indicates strong financial health.
• Application process: Consider whether you prefer to apply for and purchase a policy online or through an agent. Some companies offer both options.
• Riders: Evaluate the riders or add-ons offered by different companies to customize your policy to your specific needs.
• Price comparison: Compare prices and policies between different insurers, as you may find similar policies offered at different price points.

The best life insurance company overall

Pacific Life

Pacific Life is rated as the best life insurance company overall by US News and Forbes Advisor. It offers a wide range of policies, including term, universal, indexed universal, variable universal, survivorship indexed universal, and survivorship variable universal. It also has a good reputation among its customers and has received a low number of complaints.

However, Pacific Life's policies must be purchased through an agent, and the company's website offers minimal information about its policies. Additionally, most policies require a medical exam.

Other Top-Rated Companies

Other highly-rated life insurance companies include:

• Northwestern Mutual: The biggest life insurer in the country, with high financial strength and customer satisfaction ratings. Offers term, whole, universal, and variable universal policies.
• MassMutual: Offers a diverse range of policies, including term, whole, universal, and variable universal. Known for its superior financial strength and solid dividend payouts.
• Guardian: Sells term, whole, universal, and variable universal policies. Stands out for its lenient underwriting standards and coverage options for people living with certain health conditions, like HIV.
• Thrivent: A fraternal benefit organization serving Christian consumers, offering term and permanent life insurance. Known for its social responsibility and commitment to supporting members' volunteer activities and charitable donations.
• State Farm: Offers term, whole, universal, variable universal, and joint universal policies. Rated highly for customer satisfaction and accessibility, with a 24/7 customer helpline, an easy-to-use mobile app, and over 19,000 exclusive local agents across the US.
• New York Life: Provides term, whole, universal, and variable universal coverage. Known for its strong financial stability, with an A++ (Superior) rating from AM Best.
• Nationwide: Offers term, whole, universal, variable universal, indexed universal, and survivorship indexed universal policies. Rated highly for customer satisfaction, with a user-friendly mobile app, streamlined online portal, and a network of independent agents.
• Lincoln Financial: Offers term, universal, variable universal, and indexed universal policies. Known for its reliable policy illustrations and low internal policy costs.
• Protective: Offers term, whole, universal, indexed universal, and variable universal coverage. Praised for its competitive rates, solid term life insurance options, and superior historical performance of company investments.

Best for health conditions

Guardian is a great option for applicants with a history of health conditions. The company is known for its lenient underwriting standards and caters to people living with certain health conditions, like HIV, by offering tailored coverage. Guardian has also drawn significantly fewer complaints than expected relative to its size, making it a trustworthy choice for shoppers.

Guardian offers term, whole, universal, and variable universal policies. However, minimal policy details are available on the site, and policies cannot be purchased online.

Best for customer experience

When it comes to customer experience, Northwestern Mutual is a top-rated life insurance company. It is the biggest life insurer in the country and offers term and permanent life insurance. Northwestern Mutual has the lowest complaint ratios of the life insurers we review, making it a trustworthy choice for shoppers. The company has a history of being able to pay claims, as shown by its A++ (Superior) financial strength rating from AM Best.

As a mutual company, Northwestern Mutual is owned by its policyholders and consistently pays a dividend to eligible customers. It offers a range of term, whole and universal life insurance policies. Universal life policyholders benefit from flexible payment and coverage options, while term life customers can convert their policy to permanent coverage without a medical exam.

The company's website does not give specifics about coverage amounts or riders, and there are limited riders available. However, it provides a mobile app, online portal, local agents and a 24/7 customer service phone line that accepts premium payments, making it a great choice for customer satisfaction and experience.

Best range of permanent life insurance

Permanent life insurance is designed to be a lifelong policy and comes with a cash value component. There are two main types of permanent coverage: whole life insurance and universal life insurance.

Whole Life Insurance

Whole life insurance generally features fixed premiums and a cash value component. The cash value component could be advantageous, providing a financial cushion over time. Additionally, certain whole life policies offer the potential to earn dividends. These dividends, which are not guaranteed, may be used to enhance the cash value, pay premiums, or be withdrawn as cash. However, keep in mind that the cash value typically accumulates slowly, so it's important to assess whether this feature aligns with your long-term financial goals.

• State Farm: State Farm stands out for its financial strength, highly reliable policy illustrations, and early access to cash value.
• Northwestern Mutual: Northwestern Mutual provides a superior combination of high ratings for financial strength and good pricing on whole life insurance for many ages and health risks.
• Penn Mutual: Penn Mutual offers whole life policies with very good financial strength and low internal costs, meaning more money can go towards your cash value.
• Guardian: Guardian has a diverse lineup of whole life products, including life insurance for people living with HIV.
• MassMutual: MassMutual has a string of whole life policies to choose from, some of which earn cash value at a set interest rate of 3.75%.
• Thrivent: Thrivent offers whole life policies with a range of payment options and the potential to pay dividends to select policyholders.
• New York Life: New York Life sells three whole life policies and offers a variety of life insurance riders, as well as customizable payment options.
• AARP: AARP offers whole life insurance policies with no medical exams required, although you have to be a member to buy one.

Universal Life Insurance

Universal life insurance is another form of permanent life insurance. It is known for its flexibility, as the premium and death benefit can be adjusted as needs or lifestyles change. It also has a cash value component with earned interest based on a fixed rate or how indexed accounts perform, depending on the policy.

• Pacific Life: Pacific Life offers term, permanent, and no-exam life insurance, with an accelerated death benefit included at no charge.
• Nationwide: Nationwide has two hybrid long-term care insurance policies that pay out for up to seven years and have a cash indemnity benefit, so you don't have to wait for reimbursement.
• Northwestern Mutual: Northwestern Mutual sells one whole life policy with flexible coverage and the option to blend term life for cheaper coverage.
• MassMutual: MassMutual offers universal life insurance policies, in addition to whole life.
• Lincoln Financial: Lincoln Financial offers both term and permanent life insurance policies, with very reliable policy illustrations for its cash value policies.
• Midland National: Midland National deserves attention for its generous living benefits for term life insurance and cost-competitive cash value policies for senior buyers.
• Ethos: Ethos offers term and permanent policies from top providers, with reasonable rates for smokers in good health.

Frequently asked questions