Life insurance can help you bolster your financial plans and offer financial protection to your loved ones. It protects the family’s financial future in the event breadwinner passes away. The insurance covers several expenses like education fees, basic needs, loss of income, and even funeral expenses when the policyholder dies.
What is a Life Insurance?
Life insurance is a contract or an agreement between an insurance company or the insurer and a policy owner, in which the insurance company promises to pay the policy owner’s beneficiaries a specified amount of money upon the death of the policyholder in exchange for regular premiums paid by the policyholder when still alive.
When buying a life insurance policy, the insured or policyholder must disclose any past and current information regarding their health condition. Furthermore, the insured is also required to disclose any high-risk activities involved in when signing the contract.
Types of Life Insurance
Insurance companies offer various forms of life insurance designed to address the specific needs of their clients. All these types of life insurance are broadly grouped into two major categories;
- Term Life Insurance
- Permanent Life Insurance
Term Life Insurance
Term life insurance lasts for a specific number of years and matures upon the expiry of this period. Most term life insurance policies come in 10, 20, or 30 years and usually seek to strike a balance between affordability and long-term financial strength. The term life insurance also comes in different forms;
- Decreasing term life insurance. This is a renewable term life insurance whose coverage decreases over the Life of the policy—the coverage decrease at a predetermined rate.
- Convertible term life insurance. This cover allows the policyholder to change from term life insurance policy to permanent life insurance.
- Renewable term life insurance. This type of term life insurance provides cover for the year the policy is bought. Its premiums are revised upwards annually, and the policy is usually the least expensive term insurance.
Permanent Life Insurance
As the name suggests, permanent life insurance remains active throughout the policyholder’s Life unless the insured stops paying premiums. This policy is more expensive compared to term life insurance.
Permanent life insurance also comes in different forms;
- Whole life insurance. That is a type of permanent life insurance whose cash value accumulates with time. The policyholder can use the cash value for several other purposes, including paying policy premiums, cash for daily use, and even taking a loan.
- Universal Life (UL). Universal Life is permanent life insurance with an interest-earning cash component. This type of permanent life insurance usually has very flexible premiums, and the premiums can be adjusted over time. Universal Life can have an increasing life benefit of a level death benefit.
- Indexed Universal Life. This is a special type of universal life insurance that comes with equity or a fixed-indexed rate of return on the cash value component.
- Variable universal. This is permanent life insurance where the policyholder can invest the cash value in a separate account. It also comes with flexible premiums and can have either an increasing death benefit or a level death benefit.
Top 10 Life Insurance Companies in the U.S
A life insurance policy can offer much-needed financial support and peace of mind to the family in the event of the demise of the primary breadwinner. However, given the diverse nature of the U.S insurance market, which comprises of several insurance providers, selecting the right insurance provider can be a daunting task.
Generally, the best insurance companies are those that offer robust customer service, are financially sound, offer a wide range of features, and make the application process easy. Below are the top 10 life insurance companies in the U.S.
1. Haven Life
Haven Life is a digital insurance company that offers accelerated underwriting. Accelerated underwriting uses data and algorithms to fast-track, assessing the insurability of the client and the premiums to be paid. The company has automated all its processes, with the whole application process conducted online and completed within minutes.
Haven Life offers two term insurance policies;
- Haven Term
- Haven Simple.
Haven Term is a term insurance policy that lasts between 10 and 30 years and offers coverage of up to $3 million.
Haven Simple is also a term insurance policy but comes with a shorter period of between five and 20 years. The policy also comes with lower coverage.
Haven Life itself does not offer insurance but instead sells insurance offered by MassMutual.
- Automated with a complete online application
- Some applicants do not need to submit medical reports
- Does not sell permanent life insurance
MassMutual comes second in our review of the top 10 Life Insurance Companies in the U.S. The company boasts of an A++ financial rating from AM Best, the highest rating for an insurance company. The rating indicates the company’s superior ability to settle claims. In addition to its unmatched ability to settle claims, MassMutual is also known for its dividend-paying policy that dates back centuries. Since 1869, the company has been paying life insurance dividends to eligible policyholders.
MassMutual allows term policyholders to convert to any of the company’s permanent life insurance policies without having to re-qualify for permanent insurance,
Over the past three years, the company has received extremely low complaints, according to the National Association Of Insurance Commissioners.
- Strong financial stability, which has earned the company the coveted A++ rating.
- A long-standing history of dividend payments to shareholders.
- Allows term policyholders to convert the permanent policy.
- Very few complaints
- Does not accept credit card payments
- Offer few free accelerated benefit riders
3. Guardian Life
Guardian Life offers term, whole, and universal life insurance policies. Like MassMutual, Guardian Life, which was established in 1860, has a long history of paying dividends to policyholders that date way back to 1868. The insurance company is expected to make its largest dividend payment of $1.13 billion this year.
Among other things, Guardian Life is known for being the best for applicants with an HIV history. In addition to ordinary policies, the company also offers special packages of both term and permanent life insurance tailored for people living with HIV.
Guardian Life has also reported very few complaints in the last few years that would have been expected for a company of its size. The company also sells other forms of insurance, including vision, dental, and cancer.
- Rated A++ thanks to its strong financial stability
- Received very few complaints in 2021
- Pays dividends on permanent life insurance policies
- Does not allow credit card payments
- Does not offer online application and claim filling
Established in 1925, Nationwide is one of the largest financial institutions globally and offers a wide of insurance services, including homeowners, auto, renters, and pet insurance. The insurance company offers insurance policies with a lifespan of between 10 to 30 years and offers coverage to age 95.
Nationwide offers renewable term life policies that can also be converted to permanent life insurance. It has an A+ rating for financial stability from AM Best. Over the last three years has received very few complaints and recently came second out of 21 life insurance companies for customer satisfaction in J.D. Power’s U.S. Individual Life Insurance Study.
Nationwide offers several life insurance plans, including term, permanent, variable UL (VUL), and Universal Life (UL) policies. The company is more flexible and exempts applicants from medical tests. In addition, the company offers an automated application system that fast-tracks the application and approvals.
Most of the company’s policies come with accelerated death benefits at no extra cost, which allows the insured to access some of the death benefits while still alive. This happens when the policyholder is diagnosed with a critical, chronic, and terminal illness.
- Allows credit payments
- Very few complaints lodged against the company
- Most policies come with living benefits.
- Ranked second in customer satisfaction
- No available riders
- Limited eligibility
5. Mutual of Omaha Life Insurance
Based in Omaha, Nebraska, Mutual of Omaha was established in 1909 and operates as a mutual company. The company offers other forms of insurance in addition to life insurance, including insurance for long-term care, disability income insurance, and Medicare supplement insurance. Apart from insurance, Mutual of Omaha offers other financial services like annuities and mortgages.
The insurance company offers term life policies starting from $10,000 and last between 10 to 30 years. Mutual of Omaha allows policyholders to convert their term policies to permanent life, and some of its term insurance policies cover up to age 80.
Mutual of Omaha’s universal Life policies come with accelerated death benefits at no extra cost. Additionally, its indexed universal Life policies offer accelerated death benefits, downside protection, and guaranteed refund option riders.
- Offers term life products up to the age of 80
- Offers term, whole, and universal policies
- Offers accelerated death benefits on universal Life polices
- Has limited coverage for permanent life policies
The United States Automobile Association (USAA) will be celebrating 100 years since its inception in 2022 and is one of the top 10 Life Insurance Companies in the United States. The company is known for having strong customer satisfaction according to NAIC’s complaint index and is A++ rated, which attests to its financial stability and superiority in settling claims.
USAA is preferred by the military thanks to its military-tailored riders. It offers level Term V policies that cover severe injuries and pays up to $25,000 for specific injuries that the policyholder may sustain while in military service.
Policyholders enjoy guaranteed insurability riders at no extra cost. These riders allow the policyholder to step up their coverage upon leaving the military.
- A++ AM Best rating
- Severe injury benefits
- Included term conversion rider
- Offers term coverage without further re-qualification
- Has limited no-exam coverage options
- Does not accept credit card payments
7. New York Life
New York Life is one of the top life insurance companies in the U.S and among the highest-rated companies offering both term and permanent life policies. The insurance company offers packages that include both permanent and universal policies.
New York Life allows term policyholders to convert them to permanent policies. Additionally, it offers flexible options allowing policyholders to add riders like Living Benefits, Accidental Death Benefit, and Disability Waiver of Premium.
- Offers term, whole, and universal life policies
- Policyholders can convert their term policies to permanent policies
- Policies may be more expensive than other life insurance providers
8. Northwestern Mutual
Northwestern Mutual has been in service since 1857 and is the largest individual life insurer in the U.S. The company offers flexible payment and coverage options to universal policyholders.
Like many other companies in this review, Northwestern Mutual offers flexible term policies that can be converted to permanent policies without further medical assessments. The company also has a long-standing culture of paying dividends to qualifying policyholders, including this year, when the company is expected to pay $6.2 billion in dividends to qualifying policyholders.
- Offers term, whole, and universal policies
- Term policies can be converted to permanent life policies
- Flexible policy options available
- No online applications
- You must contact agent for a quote
9. Lincoln Financial
Founded in Fort Wayne, Indiana, in 1905, Lincoln National Life Insurance Company was named Abraham Lincoln. Abraham’s son, Robert Todd Lincoln, allowed the company to adopt the name as well as Abraham Lincoln’s likeness. The company has maintained these elements in its logo.
The company’s term insurance policies range between 10 to 30 years. Universal policyholders can build cash value around their accumulated premiums. Lincoln allows term policyholders to convert them to universal policies. This provision is only available to those aged below 70 years.
In addition to insurance, the company also offers financial planning solutions to employees and individuals.
- Term policies can be converted to permanent policies
- Term and universal policies available
- You may not need to undergo medical examinations
- The online application is limited to a few policies
- No whole life policies
Protective Life closes our review of the top 10 Life Insurance Companies in the United States. The insurance company is known for offering one of the cheapest term life insurance. Some of its options include term policies that last up to 40 years, compared to the 30 years offered by most insurance companies.
Protective was founded in 1907 and boasts of an A+ rating from AM Best for financial stability. The insurance company received few complaints from regulators in the last three years.
- Allows credit card payments
- Offers longer-term coverage of up to 40 years
- Known for offering the least expensive term policies
- Low no-exam coverage amounts
Selecting an appropriate insurance policy can be a daunting task, especially if you don’t have sufficient information. This becomes even more complicated when dealing with a diverse insurance landscape like that of the United States. Factors to consider when selecting life insurance include the nature of the policy, the coverage, riders, and the financial stability of the insurance company.