Our editorial team follows a strict methodology for reviewing life insurance companies.
With policies with names like “whole life” and “permanent life,” buying life insurance can feel like a big decision. If you’ve looked into buying your own policy, you may have realized that life insurance is a complicated topic with many factors to consider.
Using the research from our 2024 life insurance study, we at the MarketWatch Guides team created this guide to the best life insurance companies in the industry. You’ll find this year’s list of top providers — with Mutual of Omaha taking the No. 1 spot — along with valuable information about how to choose the right policy and provider for your needs.
The listings that appear are from companies from which this website may receive compensation, which may impact how, where and in what order products appear. Not all companies, products or offers were reviewed in connection with this listing.
Best Life Insurance Companies of 2026
- Mutual of Omaha: Best for no-exam coverage
- MassMutual: Best for permanent life insurance
- Nationwide: Best for whole life insurance
- Guardian Life: Best for an in-person experience
- John Hancock: Best for people with diabetes
- Banner Life: Best for term life insurance
- State Farm: Best for customer satisfaction
How We Ranked Life Insurance Companies
Our team developed a comprehensive rating methodology to rank and review the best life insurance companies. We considered the factors most important to consumers like you, such as available coverage options, policy riders, cost and brand trustworthiness. To accurately rate each provider, we conducted in-depth research on policy options, gathered life insurance quotes, evaluated customer satisfaction using data from the National Association of Insurance Commissioners (NAIC) and J.D. Power, reviewed financial strength ratings from the credit rating agency AM Best and surveyed 1,000 life insurance policyholders nationwide. We also spoke with industry experts, including licensed financial planners and life insurance agents, to learn more.
Our expertise is backed by:
- A survey of 1,000 life insurance policyholders nationwide
- Rating almost 40 life insurance providers using our in-depth methodology
- Over 40 years of combined life insurance experience between our writers and editors
- Gathering more than 60,000 term life insurance quotes using 150 different applicant profiles from 60 providers nationwide
Details on the Best Life Insurance Providers
In the following section, we provide key details about our top picks to help you find life insurance providers that match your needs and preferences. You can read even more about these companies by following the links to our full-length provider reviews.
Mutual of Omaha earned the highest overall score of any provider in our 2024 life insurance study due to a combination of coverages, industry reputation and customer satisfaction. But the company is also our choice for no-exam coverage due to the wealth of policy options it offers that don’t require a medical examination. For example, the company’s guaranteed issue whole life policy accepts all applicants between 45 and 85 years old, regardless of health.
Makes it easy to manage policies and make payments online
Offers a large selection of riders for policy customization
Rated fourth of 22 providers profiled in J.D. Power’s 2023 U.S. Individual Life Insurance Study, which looks at customer service
Offers limited whole life options with benefits capped at $25,000
Doesn’t offer online applications for term life policies
Coverage
Mutual of Omaha offers the following types of life insurance:
- Term life insurance
- Whole life insurance
- Universal life insurance
Mutual of Omaha offers the following life insurance riders:
- Accidental death benefit
- Chronic illness benefit
- Critical illness benefit
- Dependent children’s rider
- Disability income
- Terminal illness benefit
- Waiver of premium
Cost
According to our cost analysis of term life insurance plans, Mutual of Omaha is $19 per month on average for a 35-year-old applicant who does not smoke seeking a 20-year policy with $250,000 in coverage. That average increases to $36 per month for a 45-year-old with the same policy.
Note that the sample rates above are for term life insurance only. Since rates for permanent policies can vary widely based on the applicant, our team was unable to obtain quotes.
When we were researching the best life insurance companies for our 2024 study, MassMutual stood out as a provider that offers satisfactory customer service. The company has a low volume of complaints with the National Association of Insurance Commissioners (NAIC) based on its size. It has also consistently paid dividends to policyholders every year since 1869, according to its website. We named MassMutual a strong choice for permanent life policies because it offers a range of policy and payment options for whole, universal and variable life insurance.
Features generous policy options and coverage limits for no-medical-exam life insurance
Has a 150-year history of paying out dividends to policyholders each year
Holds one of the industry’s lowest scores on the NAIC complaint index
May charge higher policy premiums compared to other competitors in the industry
Most policies require applicants to work directly with an agent, a potential drawback if you prefer digital communications
Coverage
MassMutual offers the following types of life insurance:
- Term life insurance
- Whole life insurance
- Universal life insurance
- Variable universal life insurance
MassMutual offers the following riders, with availability and cost varying by type of policy:
- Additional insurance
- Catastrophic disability
- Early or enhanced cash value
- Estate protection
- Guaranteed insurability
- Lapse protection
- Long-term care
- Option to split, change or convert
- Overloan protection
- Terminal illness accelerated death benefit
- Waiver of premium
Cost
According to our data, Mass Mutual Life Insurance costs $18 per month on average for a 35-year-old nonsmoker applying for a 20-year term life policy with $250,000 in coverage. The cost increases to $33 per month for a 45-year-old with the same life insurance policy term and limit.
Nationwide is a major player in the auto and home insurance industries, and emerged as a top-tier life insurance provider in our 2024 study — especially for its whole life policies. The company is one of the most flexible when it comes to how you pay for whole life coverage, providing choices on how you want to manage your premiums. Nationwide also offers the option to use your credit card to make payments, which may come in handy if changes in your life make it difficult to make payments.
Has an exceptionally low NAIC complaint ratio, indicating customer satisfaction
Offers no-exam coverage up to $5 million
Whole life policyholders can choose between paying premiums for 20 years or paying until age 100
Requires applicants to work directly with agents for most types of life insurance
Only offers some whole life policies to current policyholders
Coverage
Nationwide offers the following types of life insurance:
- Term life insurance
- Whole life insurance
- Universal life insurance
- Variable universal life insurance
While cost and availability vary by policy type, you’ll find the following life insurance riders at Nationwide:
- Accidental death benefit
- Children’s term insurance
- Chronic illness benefit
- Critical illness benefit
- Guaranteed insurability benefit
- Long-term care rider
- Overloan protection rider
- Terminal illness accelerated death benefit rider
- Terminal illness benefit
- Waiver of premium rider
- Waiver of premium
Cost
The cost of Nationwide Life Insurance averages $19 per month for a 20-year term policy with $250,000 in coverage for a 35-year-old applicant who doesn’t smoke tobacco. The same policy averages $33 monthly for a 45-year-old non-smoker.
Guardian Life is another stalwart of the life insurance industry that made our list of the top five providers for 2024. The company’s longevity can offer customers peace of mind concerning stability, with a history dating back over 150 years. When it comes to coverage, our team found that Guardian Life allows customers to create highly personalized policies with a robust selection of riders, making it a good option for people with specialized needs or preferences.
The company earned our pick for an in-person experience for its nationwide network of 3,000 agents who can help tailor coverage to meet each customer’s needs.
Has one of the industry’s highest age caps at 90 years
Offers no-medical-exam coverage up to $3 million
Holds an “excellent” financial strength rating from the credit rating agency AM Best
Applicants typically must work with an agent to purchase a policy
Provides little information about policies online
Coverage
Guardian Life offers the following types of life insurance:
- Term life insurance
- Whole life insurance
- Universal life insurance
- Variable universal life insurance
Guardian Life policyholders can customize their life insurance with a selection of riders that include:
- Accidental death benefit
- Chronic illness
- Guaranteed insurability option
- Long-term care
- Paid-up additions
- Terminal illness
- Waiver of premium
Cost
Guardian Life Insurance averages $20 per month for a 20-year term policy with $250,000 in coverage for a 35-year-old applicant who doesn’t smoke. The same policy averages $40 per month for a 45-year-old.
John Hancock rounds out our top five life insurance providers for 2024. The company offers a healthy selection of coverage options and a diverse array of riders to customize those policies. Policyholders up to age 60 can also get up to $3 million in coverage without a medical exam, benefiting those in good health who want a policy quickly. John Hancock earned our pick for life insurance for people with diabetes because of its Aspire program, which offers rewards, premium discounts, and virtual health visits to policyholders living with type 1 and type 2 diabetes.
Permanent life coverage available for people ages three months to 90 years
Term and universal life coverage goes as high as $65 million
Offers three types of variable universal life and two types of indexed universal life coverage
Customers must work with an agent to get quotes and apply for coverage, a drawback for those seeking digital communication
Doesn’t offer whole life, a potential con for those who prefer predictable permanent coverage
Coverage
John Hancock offers the following types of life insurance:
- Term life insurance
- Universal life insurance
- Indexed universal life insurance
- Variable universal life insurance
John Hancock offers the following riders to allow policyholders to personalize their coverage:
- Accelerated death benefit
- Cash value enhancement
- Critical illness
- Disability payment of specified premium
- Estate preservation
- Healthy engagement (Vitality Plus)
- Long-term care
- Overloan protection
- Policy split option
- Return of premium
- Total disability waiver
- Unemployment protection
Cost
John Hancock Life Insurance costs $23 per month on average for a 35-year-old, nonsmoker seeking a 20-year term life insurance policy with $250,000 in coverage. A policy with the same term and coverage is around $41 per month for a 45-year-old.
Banner Life ranks sixth on our list of the best life insurance companies, notably for its term life offerings. The company has seven term length options, including a 40-year policy. By comparison, most other companies we reviewed offer three to five term lengths, and only Protective Life offers an option longer than 30 years. The company’s term life products also stand out for the cost, with 30% to 40% lower rates than some competitors. Banner Life also has the financial stability to pay claims promptly to beneficiaries, based on its “superior” rating with AM Best.
Received 10 times fewer customer complaints than expected for a company of its size, based on NAIC data
Offers seven term length choices, all with option to convert to permanent coverage
Features lower term life rates for 35- and 45-year-olds than the other companies we reviewed
Offers fewer policies than some competitors, with no whole life insurance option
Website is branded under parent company Legal & General, which may confuse customers
Coverage
Banner Life offers the following types of life insurance:
- Term life insurance
- Universal life insurance
Banner Life offers the following riders to allow policyholders to personalize their coverage:
- Term rider
- Child rider
- Accelerated death benefit
- Waiver of premium
Cost
Banner Life costs $15 per month on average for a 35-year-old nonsmoker seeking a 20-year term life insurance policy with $250,000 in coverage. A policy with the same term and coverage is around $27 per month for a 45-year-old.
As the final provider on our list, we named State Farm the best for customer satisfaction. In addition to having a vast network of local agents that customers can contact for assistance, State Farm has earned the No. 1 ranking in J.D. Power’s U.S. Individual Life Insurance Study every year from 2019 to 2023. Plus, State Farm was the most popular life insurance provider among respondents in our study, with 27.5% selecting the company as their insurer.
The company’s overall trustworthiness also extends to its financial stability, earning the highest possible score from the financial rating agency AM Best. This can offer peace of mind for policyholders that their loved ones will receive their payout when they pass.
Individual customer responses have made the company No. 1 in J.D. Power study for four straight years
Offers term policy option that returns all premiums if policyholder outlives the term
Received 64% fewer complaints than expected, according to the NAIC
Customers cannot complete the application process online
Accelerated death benefits not included in base policies
Coverage
State Farm offers the following types of life insurance:
- Term life insurance
- Whole life insurance
- Universal life insurance
State Farm offers the following riders to allow policyholders to personalize their coverage:
- Children’s term rider
- Select term rider
- Waiver of premium for disability
- Flexible care benefit rider
- Guaranteed insurability option
- Level term rider (additional insured)
Cost
We were unable to obtain cost information for State Farm. You can contact the company for more details on pricing.
Buying Guide: How To Find the Best Life Insurance For You
Buying a life insurance policy is a big decision. In addition to the money you’ll spend over the course of your policy, the benefits can also impact the lives of your loved ones and other beneficiaries.
Our team of experts created the following guide to provide you with the information you need to choose the best policy and insurer for your needs.
1. Consider If You Need Life Insurance
The first step of the process is to determine whether or not life insurance is a worthwhile investment for you. Not everyone needs or could even really benefit from a life insurance policy.
Who Needs Life Insurance?
Generally speaking, life insurance offers a useful investment tool for anyone who wants to support family, other loved ones or an organization after they die. That means that life insurance can benefit people in the following scenarios:
- Parents: Many parents have the goal of leaving a legacy for their children — or at least not leaving them with debts, burial costs and other expenses. Life insurance policies for parents can help offset those types of costs.
- Homeowners with a mortgage: A life insurance death benefit can help your surviving loved ones pay off a mortgage after you pass away. Mortgage life insurance is a specialized policy that pays the lender directly if the insured person dies while the mortgage is active.
- Primary earners: When one member of a family earns the bulk of the income, their death can put the family in a difficult position. A life insurance policy can help replace that lost income when the primary breadwinner passes away.
- Couples: A death benefit payout from life insurance for couples can help remove or reduce financial stress when one partner is grieving.
- Business owners: If the owner of a business passes away, life insurance payouts can help cover salaries and expenses while the business transitions to new owners or searches for a suitable replacement.
- People with debt: Some debts, such as medical debt, get collected from a deceased person’s estate. A life insurance payout can help cover those debts and ensure any inheritance funds to surviving loved ones remain intact.
2. Determine What Kind of Life Insurance You Need
If you decide that you need or want to buy life insurance, the next step is deciding what type of policy you need. Generally speaking, the main types of life insurance are term life insurance, whole life insurance and universal life insurance. Each kind of life insurance has its own advantages and disadvantages, and certain coverage offers a better fit for some people than others.
We go into more detail about the types of life insurance policies you can buy in the next section. Skip ahead if you want to learn more right now.
3. Create a Budget for Life Insurance
Another deciding factor to think about early in the buying process is how much you can afford to spend on life insurance premiums. While the payouts that come with higher premiums may seem enticing, you could have your policy canceled if you fail to make payments on time and in full.
Some types of whole life and universal life insurance allow you access to some of the funds you’ve invested before you die, also known as cash value life insurance. In most cases, you cannot withdraw funds early from other types of policies, including term life insurance.
Since coverage lasts the entirety of the policyholder’s life, you can expect whole life and universal life insurance to cost significantly more than term life policies. However, some permanent policies also have more flexibility around premiums, especially as they build cash value.
We recommend being realistic about what you can afford when it comes to life insurance. You can always buy more coverage later on if your financial situation changes.
4. Decide How Much Coverage You Want
Once you know what your budget is for a policy, it’s time to consider how much coverage you want to buy. Remember that you don’t have to max out your entire budget — that’s just your upper limit.
For the most part, term life and in some cases whole life policies come with set payout amounts, which represent the coverage you get with a policy. As you may expect, the higher the payout, the more expensive the premiums.
Many whole life and nearly all universal life payouts are more variable. In some cases, the amount paid out when the policyholder dies is based on market performance rather than set rates.
“Be careful not to buy more insurance than you truly need, and don’t let an insurance salesperson sell you complicated products without having a clear understanding of what you’re getting,” advises Eric Ridley, an estate planning attorney at Ridley Wealth.
“A solid general guideline is to consider coverage that equals 10 to 15 times your annual income. This rule makes sure that your family can maintain their standard of living, cover debts, and plan for future needs if you’re no longer around.”
5. Understand What Affects Life Insurance Rates
Like most forms of insurance, there are a variety of factors that go into the cost of your life insurance premiums. Insurers based premiums on the relative risk of having to pay out benefits and when those payouts could occur. The higher the risk, the more expensive the premiums.
Factors That Affect Life Insurance Premiums
There are numerous factors that can go into how much you pay for life insurance. Here are a few of the most impactful based on our research.
- Age: Insurers consider younger people less risky to insure than older people, who could experience more health issues. For this reason, young people typically pay cheaper premiums.
- Gender of record: Statistically, females live longer than males on average. As a result, men typically pay higher rates for life insurance.
- Health: Unless you choose a no-exam policy, most life insurance plans require a medical examination to assess your general health. Risk factors such as family history of disease, obesity or chronic health conditions can increase the cost of your premiums.
- Smoking: The average life expectancy for smokers is at least 10 years shorter than for nonsmokers, according to the Centers for Disease Control and Prevention (CDC), which typically translates into higher premiums for people who smoke.
- Lifestyle: People who regularly engage in high-risk activities such as rock climbing, car racing, scuba diving and more have an increased risk of early mortality. This additional risk means these people tend to pay higher rates for life insurance.
6. Compare Quotes With Our Comparison Platform
Life insurance is a substantial purchase that can provide financial support to your beneficiaries. Each insurer has a different underwriting process, meaning one company may weigh the above-mentioned risk factors differently from another. Because of this, you’ll often find significant differences in premiums for the same policy from one provider to the next.
Shopping around for the best deal can make a difference of hundreds of dollars per year or more, even if the coverage is the same. Over decades of payments, that can really add up.
The quote comparison platform from our partner, Policygenius, allows you to get free quotes from multiple providers at once. The process takes just a few minutes. You can expect to start getting emails, texts or phone calls soon after you finish — all of which you can opt out of whenever you choose.
7. What To Expect From Life Insurance
Life insurance can play a major role in your family’s lives once you pass away, but interactions with your policy and insurer on a day-to-day basis while you are still living is typically very limited. Term life policies especially are more or less a “set it and forget it” type of investment unless something in your life requires you to make changes.
Permanent life policies are a little more interactive than term life because you can borrow against or withdraw from your accrued cash value. That means your relationship with your provider can become a little more involved than with term life.
Universal life insurance, on the other hand, offers the policyholder a great deal of flexibility, typically allowing adjustments to premium payments and death benefits.
Types of Life Insurance Policies
You’ve got options when it comes to the kind of policy you want to buy. Life insurance policies generally fall into three main categories: term life, whole life and universal life. Each of these categories comes with its own unique advantages, disadvantages and purposes.
What Is Term Life Insurance?
Term life insurance is a type of life insurance that comes with a set term, typically ranging from 10 to 30 years. These policies have consistent premiums and pay out death benefits if the policyholder dies during the term. If the policyholder outlives the term, they can choose to end the coverage or convert it to a whole life policy.
Term life is typically the cheapest type of life insurance, but it also comes with the risk of not paying out the benefit if the policyholder outlives the term. To help you get an idea of how much term life insurance costs, the table below outlines monthly rates with three of our top picks for term life insurance specifically.
| Company | Our Take | Monthly Cost |
|---|---|---|
| Banner Life | Best for term life insurance | $17–$39 |
| MassMutual | Best for permanent life insurance | $18–$40 |
| Guardian Life | Best for an in-person experience | $21–$45 |
What Is Whole Life Insurance?
Also called permanent life insurance, whole life policies cover a policyholder until they die, regardless of when that happens. Like term life policies, whole life premiums stay consistent unless you decide to make changes.
Unlike term life, however, whole life policies can accrue actual cash value. After this cash value reaches a certain threshold, policyholders can make withdrawals or borrow against it.
To help you shop for whole life coverage, our team named the following companies as the top options based on available policies, rider options, cash value benefits and overall financial stability.
| Company | Our Take | AM Best Rating |
|---|---|---|
| Nationwide | Best for whole life insurance | A+ |
| New York Life | Best for cash value policies | A++ |
| State Farm | Best for customer satisfaction | A++ |
What Is Universal Life Insurance?
Universal life insurance is one of the most flexible types of life insurance. Like whole life plans, universal life insurance accrues cash value over time that policyholders can use as collateral or a source of funds to withdraw.
Universal life policyholders often have some say about how their cash value is invested. For instance, variable universal life policies invest in some financial markets such as mutual funds. This raises the ceiling of how much a policy can grow in value, but also comes with risks of losing cash value during market downturns.
Universal life policies also allow policyholders to adjust their premiums as needed, as long as the amount invested in the policy meets an insurer’s requirements. This can include the option of skipping payments altogether.
What Is No-Exam Life Insurance?
Most life insurance policies require a medical exam to assess a policyholder’s health risks during the application process. This means that people who have significant risk factors can end up paying much more for coverage than those without them — or get denied coverage altogether.
Some life insurance providers offer no-exam life insurance policies. As the name suggests, these policies do not require a medical assessment. Guaranteed issue is a type of no-exam life insurance that offers a good option for people concerned about what a medical exam may reveal and how the results would affect their premiums. The tradeoff, however, is that guaranteed issue life insurance policies cost considerably more by default.
Additionally, many insurers now waive medical exams for the healthiest applicants through a process called accelerated underwriting. Instead of requiring lab work and a physical, insurance companies use technology to research applicants’ medical information and assess their overall risk. Healthy applicants benefit by getting approved more quickly and receiving the same rates offered by plans with traditional underwriting.
Our team has chosen the following three companies as the best options for no-exam life insurance.
| Company | Our Take | AM Best Rating |
|---|---|---|
| Mutual of Omaha | Best for no-exam coverage | A+ |
| Fidelity Life | Best for seniors | A- |
| Transamerica | Best for affordable coverage | A |
Whole Life Is the Most Popular Type of Life Insurance
Based on our survey results, whole life insurance is the most popular type of life insurance, with nearly half of respondents (48.8%) saying they had a whole life policy. Term life (34.6%) was the second-most popular answer, followed by universal life (17%) and burial life (16.2%). Note that survey respondents were allowed to choose more than one answer, and 30% said they had more than one life insurance policy.
How Much Does Life Insurance Cost?
The cost of life insurance is highly variable — even in the context of the greater insurance industry in which most costs vary. Generally speaking, term life policies are the cheapest type of life insurance, followed by whole life and then universal. With universal life policies, however, premiums are somewhat at the discretion of the policyholder.
Term life policy costs are easier to estimate than other types of life insurance because many companies offer online quotes. To help you in your life insurance research, we list the average cost of term life policies at different coverage levels for male and female policyholders across different ages.
Average Cost of Term Life Insurance for Females
Our team requested quotes for top-rated life insurance providers to determine estimates for term life insurance policies for women. The table below outlines our findings across different coverage amounts.
| Age | Monthly Cost for $100,000 | Monthly Cost for $250,000 | Monthly Cost for $500,000 |
|---|---|---|---|
| 20 | $16 | $18 | $15 |
| 25 | $10 | $11 | $14 |
| 35 | $15 | $20 | $33 |
| 45 | $25 | $38 | $64 |
| 55 | $49 | $100 | $139 |
| 65 | $94 | $186 | $305 |
Average Cost of Term Life Insurance for Males
Our team also received quotes for term life insurance policies for men across varying coverage amounts. Learn more about our findings in the chart below.
| Age | Monthly Cost for $100,000 | Monthly Cost for $250,000 | Monthly Cost for $500,000 |
|---|---|---|---|
| 20 | $19 | $22 | $35 |
| 25 | $11 | $13 | $17 |
| 35 | $17 | $24 | $39 |
| 45 | $29 | $47 | $82 |
| 55 | $151 | $140 | $186 |
| 65 | $128 | $266 | $449 |
Ask an Expert: Why Is Whole Life Insurance So Expensive?
“In a nutshell, whole life insurance is so expensive because it offers coverage that is meant to be with you for the rest of your life. Whole life insurance also serves as an investment due to the cash value component of the policy.”
— Chris Johnson, Senior Producer at All About Insurance
Why Purchase Life Insurance?
You might have been told or know vaguely that you “should” purchase life insurance but perhaps you’re unsure why, exactly.
In this section, we explore some of the reasons why people see buying life insurance as a sound financial move. This can help you get a better idea of how life insurance can benefit you as well as what type of policy makes sense.
Life Insurance Offers a Safeguard for Families
One of the primary reasons — if not the primary reason people — people buy life insurance is to take care of their family’s financial needs should they die. In our 2024 MarketWatch Guides Life Insurance Survey, half of the 2,000 policyholders surveyed cited either “peace of mind” (27.4%) or “concerns about my family’s finances if they die” (23.5%) as their main reason for purchasing a life insurance policy.
Estate-planning attorney Eric Ridley tells the MarketWatch Guides team that life insurance policies can be vital in protecting the financial health of loved ones.
“Life insurance is a financial safety net,” he said. “It steps in when other assets are not liquid or accessible quickly. The death benefit can cover immediate expenses like mortgages, debts, college tuition and everyday living costs, preventing a sudden financial burden or radical lifestyle change for your family if you pass away.”
People Who Haven’t Saved Enough for Retirement
Death benefits can help to reduce financial hardship for the named beneficiaries of a life insurance policy. In doing so, having life insurance can help reduce the financial burden placed on the policyholder’s retirement savings. Based on statistics from the 2020 Survey of Household Economics and Decisionmaking (SHED), that is critical for a large majority of Americans.
Just over a third of Americans (36%) said they felt they were “on track” with their retirement savings, according to the SHED study. Younger Americans are especially pessimistic about their savings, with only 28% of respondents between the ages of 18 and 29 saying they felt like they were saving enough money for retirement. While those aged 60 and up had the highest rate of confidence in their retirement savings, fewer than half (48%) said they felt like they were on track.
Having a life insurance policy reduces the need to plan to pay for after-death costs and take care of family members using one’s retirement savings. For people who are at or nearing retirement age, having retirement savings and life insurance coverage can offer more flexibility — which is especially important as the last decade has shown that costs of living can increase suddenly and significantly. Since 2020, the U.S. has seen a 20.8% increase in the overall consumer price index (CPI), representing a substantial increase to the cost of living in a relatively short period of time.
Life Insurance Can Offer an Investment Strategy
For many, life insurance isn’t just about playing financial defense: it’s also a good offensive strategy. Life insurance can also offer a good investment in some cases, according to Ridley.
“Investing in life insurance offers unique benefits that traditional investments like stocks and mutual funds can’t match, which make life insurance — in proper amounts — a key part of a proper financial plan,” he said.
Whole life and universal life policies accrue actual cash value that policyholders can withdraw or borrow against, which can resemble some types of investment accounts. Owners of indexed universal life insurance policies tie their cash value to the performance of indexed funds to raise their gains ceiling.
“Life insurance policies with cash value components, such as whole or universal life, also offer tax-advantaged growth, allowing your money to grow without the same exposure to market volatility and immediate tax consequences,” Ridley added.
The “tax-advantaged growth” that Ridley is talking about references how life insurance returns are not taxed at the same level as investment funds in the U.S. This means beneficiaries can receive payouts from life insurance accounts that have gained value through market growth without having to pay capital gains taxes like they would with more traditional investments.
These advantages are likely part of why the life insurance industry has seen considerable growth in recent decades. According to data from the Board of Governors of the Federal Reserve System (The Fed), the total assets of U.S. life insurance companies has grown from $5.4 trillion in January 2010 to $9.9 trillion in January 2024 — an increase of nearly 83%.
Ridley adds that another benefit of investment-oriented life insurance policies is flexibility around how policyholders can use accrued cash value.
“In an emergency you can access the cash value [and] literally borrowing against it, which can offer some liquidity that’s not dependent on selling off your other investments,” he said.
Some cash value policies — such as whole life — guarantee returns at a fixed rate to minimize investment risk. Whole life policies typically guarantee between 1% and 4% returns to prevent losses. Indexed universal life policies tie investment returns to indexes such as the S&P 500, which can cause the cash value to decrease during market downturns.
Variable life plans require a more hands-on approach from policyholders, typically offering a wide variety of investment options such as mutual funds, bonds and index funds. Variable life policies such as variable universal provide the chance for greater returns, but also present greater risk. If the market underperforms, policyholders can lose some of their cash value.
Life Insurance Survey 2024: What We Learned
In August 2024, our team conducted a comprehensive survey of 2,000 life insurance policyholders nationwide. Our questions spanned a range of topics from how many life insurance policies people have to their thoughts on government-provided death benefits. In this section, we’ll go over some of the key things we learned from the 2024 MarketWatch Guides Life Insurance Survey.
Most People Buy Life Insurance for Their Families
We also wanted to know what motivates people to buy life insurance in the first place. The most popular reasons, by a wide margin, had to do with relieving anxiety about their family’s financial health. More than half of those surveyed said that either “peace of mind” or “concerns about my family’s finances if I die” prompted them to buy life insurance.
The third-most popular answer, however, was more of a feeling, with 14.9% saying that buying a life insurance policy “just seemed like something I should do.” Very few people (7.7%) said that it was financial advice from a professional that inspired them to get coverage.
Many People Don’t Understand Differences in Coverage
As part of our survey, we asked respondents to match the definitions of term life, whole life and universal life insurance to their respective terms. Based on the results, there is a sizable knowledge gap when it comes to life insurance. So if you feel confused trying to buy coverage, know you are not alone.
Whole life was the most correctly-identified type of insurance, with 62.1% getting the answer right. A majority of respondents (56.1%) were also able to match term life with its definition. Fewer than half (43.9%), however, matched universal life with its explanation. Even in the case of whole life, our survey suggested a portion of the population may not understand the differences between types of life coverage — even among people who have life insurance.
What People Wish They Knew About Life Insurance Before Buying
Our team wanted to find out what current policyholders felt their own knowledge gaps were at the time they bought a life insurance policy. We asked respondents to select things they wish they had known — in hindsight — at the time of purchase. Only 16% said they knew everything they needed to know about life insurance when buying a policy.
The most popular answer, selected by 38.5% of those surveyed, was “the difference between different types of life insurance.” More than a third (34.7%) said they’d simply like to have known more about how life insurance works in general.
People Tend To Feel Good About Their Life Insurance Policies
We asked a handful of questions about the policyholders themselves and their attitudes towards their life insurance plans and providers. Based on the responses we got, most seem satisfied with their purchases.
In general, people seem to trust that their families will need their life insurance benefits, with nearly three-quarters (72.8%) saying they were the primary source of income in their household. More than half (56.6%) said their loved ones would face financial challenges if something happened to their life insurance policy.
But respondents also said that they trusted their life insurance policy to provide for their families if needed. Nearly 80% think their benefits will cover the needs of their families and 87.3% said they trusted their life insurance provider to pay those benefits as agreed.
That trust in their policy and provider also seems to help people feel better about their economic situation. Just over 80% said they view life insurance as an essential component of their financial planning. Perhaps more revealing is that more-than-two-thirds (67.9%) told us their sense of financial security has improved since they got a policy.
Final Thoughts on Life Insurance
The best life insurance providers can offer peace of mind and a financial safety net for families — two of the things people said in our survey that they want the most out of a policy. For some, life insurance can also serve as an investment opportunity with unique advantages.
We chose Mutual of Omaha as the best life insurance provider in 2024. But if you’ve taken away anything from this guide, know that buying life insurance is an incredibly personal decision. The right type of policy, coverage amount, and insurance provider will depend on your unique set of circumstances and goals. Finding the best options can take time and careful consideration — but given that life insurance is truly a “buy it for life” type of product, it is worth the time and research.
Frequently Asked Questions About Life Insurance
The most trustworthy life insurance company on our list based on financial strength and customer satisfaction ratings is State Farm. The company holds an A++ rating from AM Best and has maintained the top spot in J.D. Power rankings for four consecutive years. However there are many life insurance providers that have well-established reputations as trustworthy providers — some for more than a century.
A $1,000,000 life insurance policy can cost anywhere from $50 to $1,000 or more per month, depending on the type of policy you want to buy, your age and health and other factors.
Which life insurance is best to buy really depends on your financial situation and your goals. Term life, whole life and universal life insurance policies all have unique advantages that make them better-suited for some people than others. We recommend speaking with a financial advisor or life insurance agent to learn more about the best options for you.
Whether or not you pay taxes on life insurance depends on how your beneficiaries will receive the money. Typically, beneficiaries do not pay taxes on life insurance benefits as it is not included in one’s gross income. However, you may need to pay taxes on interest generated from a life insurance payout. Taxes around life insurance can become very complicated, so it’s best to refer to a professional to give you the right advice and help you avoid penalties or legal trouble.
Our Life Insurance Experts
Methodology: Our System for Rating Life Insurance Companies
Our team researches and ranks life insurance companies using an in-depth scoring system that considers the factors most important to consumers like you. Our analysis includes a comprehensive review of each provider we feature based on available coverage, customizability, availability, customer service and company reputation. Here are the factors we take into consideration when rating life insurance providers:
- Brand trust (40%): Life insurance payouts can exceed $100,000 or more, which makes choosing a reputable and trustworthy insurance provider important. To assess brand trust, we use J.D. Power and Associates customer satisfaction surveys, AM Best credit rating scores and the National Association of Insurance Commissioners (NAIC) complaint index. The higher a company scores in each area, the more points it receives.
- Coverage (33%): The more policy options a life insurance company offers, the more opportunities you have to obtain the right coverage for your specific needs. For this reason, we give companies the most points for offering multiple types of life insurance, including various term, permanent and no-exam options.
- Availability and ease of use (19%): Since life insurance coverage options can be complex, we consider the ways a customer can reach a company — and how easy communication is. For this category, we research how many communication channels a company offers for general customer support, claims processing and the application process. Companies earn the most points for offering various ways to interact with an agent, both in-person and online.
- Riders (8%): Companies offering various life insurance riders or endorsements allow policyholders to better customize their coverage. In this category, we determine how many riders a company offers and award the most points to providers with more than 10 options.
We use our rating system to compare and contrast each company against key factors to help us determine the best life insurance companies in the industry. To learn more, read our full life insurance methodology for reviewing and scoring providers.
