Choosing a Life Insurance Company: Buyer’s Guide (Comparisons + Quotes)

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Important Things to Know...
  • When choosing a life insurance company, an insurer’s financial ratings and credit history are a good way to determine whether the company can meet its obligations
  • Bundling your different types of insurance is a great way to save on coverage
  • Getting your policy with a mutual company will earn you monthly dividends that can be used on your premiums

So you’re ready to insure your family’s future but you’re probably wondering how to choose a life insurance company.

Deciding what coverage and life insurance company to go with can feel like an impossible decision when you’re faced with the hundreds of choices claiming that they offer the best life insurance rates. Sometimes, comparing life insurance. it can feel like picking one company is just as good as picking any other, but this couldn’t be further from the truth.

Finding the best life insurance companies for you depends on your lifestyle and what you’re looking for from a life insurance policy. Whether it be mutual or publicly traded, group or individual, you’re sure to find the right company for you.

Ready to choose a life insurance company? Use our FREE quote tool above to get a better idea of what your rates will be.

How do I choose the right life insurance company?

First and foremost, rates will play a huge role in your choice of life insurance. We know it and so do you. So, let’s take a look at some average monthly rates from the top life insurance companies to give you an idea of what you’ll pay.

Average Monthly Life Insurance Rates by Age, Gender, and Policy Amounts for Non-Smokers
Age$100,000 – Male$100,000 – Female$250,000 – Male$250,000 – Female$500,000 – Male$500,000 – Female
25$11.03$10.02$22.10$12.91$23.19$19.04
30$11.12$10.07$15.31$13.02$23.85$19.26
35$11.12$10.07$15.42$13.02$24.07$19.26
40$12.65$11.12$17.94$15.21$29.10$23.63
45$14.57$13.31$21.55$19.69$36.32$32.60
50$18.60$17.20$30.19$27.02$53.60$47.26
55$24.51$20.61$42.88$34.35$78.98$61.91
60$35.88$27.48$71.10$50.86$135.41$94.94
65$51.06$37.76$109.82$75.14$212.85$143.51
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As you can see, sample monthly rates for non-smokers can start as low as $10.02 for a term policy. Now, that we have your attention with cheap life insurance rates, let’s talk about some other factors you should consider.

Which life insurance company is best?

Without oversight, a company has no reason to stay true to its policyholders. Without the checks and balances, they could run amok.

Third-party rating sites such as Moody’s and the Better Business Bureau use public information as well as what they’ve received from the insurer. With this information, they can give the customer an idea of the future financial and credit risk they could expect to face with a specific insurer.

A.M. Best Financial Rating

A.M. Best rates a company based on the credit risk an insurer poses for the future of their company. Their reviews serve as an objective look into the performance of an insurer and what they can expect to pay in the future. Also, the best life insurance companies to work for are the ones with the assets and good credit to keep you employed for your life.

A.M. Best has a few rating services that they use to give a comprehensive idea of an insurer’s financial performance:

  • Best’s Financial Strength Ratings (FSR)
  • Best’s Issuer Credit Ratings (ICR)
  • Best’s Issue Credit Ratings (IR)
  • Best’s National Scale Ratings (NSR)

Each of these programs covers a different aspect of an insurer’s financial stability and the ability to meet their obligations in the coming future.

Best’s Financial Strength Ratings (FSR) is a rating scale with seven different ratings ranging from A to D, with subcategories in between the ratings to convey varying degrees of those ratings. They also have four rating designations for companies that are either unable to be rated or facing some sort of legal action.

  • E – Companies that have been placed into rehabilitation by court order
  • F – Companies that have been placed into liquidation by a court order
  • S – When a company’s rating has been suspended due to a major event that has impacted the insurer
  • NSR – No financial strength rating available

The FSR is an independent and objective view of an insurer’s ability to meet their financial obligations. It’s not reflective of individual policies or programs and mostly stands as an overview of a company’s reliability.

Best’s Issuer Credit Rating (ICR) is an objective opinion of an insurer’s ability to meet their financial obligations on both a short and long-term basis. The long-term ICR rating is separated into nine different letter categories ranging from aaa to c, best to worst. It is reflective of policies that mature in a year or longer.

The short-term ICR rating is only five categories and is more reflective of policies that mature in under a year.

Both the long- and short-term ICR reflects the credit risk or the possibility that the insurer won’t meet their obligations when the time comes.

A low rating in either category would reflect that you would likely face a larger chance of encountering issues during the life of your policy. They also have very similar ratings in place for companies that have lost their rating.

Best’s Issue Credit Rating (IR) indicates an insurer’s quality of credit and their ability to meet their prior obligations. Like the ICR, the IR can be applied to both a long- and short-term basis, with the short term only being applied to policies that mature in under a year. The rating also follows the same scale as the ICR.

Best’s National Scales Rating (NSR) is a rating based on an insurer’s credit risk in a local jurisdiction from a global insurer, specifically countries and regions. An NSR can only be compared to an NSR from the same country since they are dependent on that specific region. They also shouldn’t be applied to the national rating, although the scales are similar.

NSR’s rating is similar to the ICR and IR in its rating scale aaa to c followed by whatever the country code may be, XX being the placeholder they use.

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Standard & Poor’s (S&P) Financial Rating

Standard & Poor’s Global Ratings are classified by two subgroups: general-purpose and special-purpose. They use a series of letters and numbers as well as suffixes and qualifiers to determine the life insurance company ranking.

Their general-purpose ratings are separated into the Issue Credit Ratings and Issuer Credit Ratings and serve as the traditional rating category for most insurers. These ratings cover a broad range of potential credit risk factors.

S&P’s Issue Credit Ratings are separated into both short- and long-term ability for an insurer or creditor to meet their obligations.

They also consider the type of policy and whether an insurer faces legal action such as bankruptcy and default, among others.

Their long-term scale has 11 categories that range from AAA to D with a + or – indicating where the life insurance review sits within those groups. The short-term credit ratings are a six-point scale ranging from A-1 to D with A having 3 subcategories.

The Issuer Credit Ratings are an opinion of an insurer’s creditworthiness based on their past and current financial information.

It does not reflect individual obligations but serves as an overview of all obligations as they mature. They can also be short- or long-term like the Issue Credit Rating.

This long-term rating scale is very similar to the Issue Credit Rating’s scale. It follows a 10-category scale with + or – indicating where they stand within the individual rankings. The short-term scale is exactly the same as the short-term Issue Credit Ratings. For example

The Special-Purpose Rating is for capital market transactions and grouped entities such as financial companies that have insurance branches. There are several varying and niche interests. The rating scales mostly follow the same critique as the general-purpose ratings.

Moody’s Financial Rating

Moody’s Investor Service is a rating service that provides objective information on a number of investments such as insurance companies. Like most other rating services, the ratings are divided into both short- and long-term ratings.

The criteria are further divided into Long-Term Debt Ratings, Short-Term Ratings, Issuer Ratings, Corporate Family Ratings, Bank Ratings, Insurance Financial Strength Ratings, National Scale Ratings, and Money Market and Bond Fund Ratings.

The Long-Term Debt Ratings are the opinion of the risk that the client will face on fixed balances with a policy maturity of a year or longer. This addresses the chance that the insurer will or won’t honor their contract. The Long-Term scale is as follows:

  • Aaa – High quality, minimal risk
  • Aa – High quality, low credit risk
  • A – Upper medium quality, low credit risk
  • Baa – Medium quality, moderate credit risk
  • Ba – Speculative, substantial credit risk
  • B – Speculative, high credit risk
  • Caa – Poor quality, high credit risk
  • Ca – highly speculative, close to default, with some chance to recover
  • C – lowest quality, in default or close with almost no chance of recovery

For example, State Farm life insurance has a long-term rating of Aa1 which is the highest subcategory of their high quality, low credit risk section.

The Short-Term Ratings are also the opinion of the risk that an insurer will meet its obligation. However, the short term means that this rating only applies to policies of less than a year. The short-term scale is as follows:

  • P-1 – Superior ability to repay their short-term obligations
  • P-2 – Strong ability to repay short-term obligations
  • P-3 – Acceptable ability to repay short-term obligations
  • NP – These companies aren’t consistent enough to fall into the prime categories

The Issuer Ratings are Moody’s opinion of the insurer’s ability to honor older unsecured obligations.

Corporate Family Ratings are used for broader financial groups that may have multiple insurers or other separate investment arms. These ratings are the opinion of a corporate family’s ability to honor its financial obligations across all businesses.

The Corporate Family Ratings use the long-term scale and only apply to customers that have a single class of debt or if they have a consolidated structure. As such, these ratings apply to all of the affiliated businesses under the overarching brand.

The Bank Ratings are the opinions of a bank and are separated into the Bank Deposit Ratings and the Bank Financial Strength Ratings.

Both of these serve as an opinion of the credit risk that a client will face when deciding whether to invest with a particular bank.

The Insurance Financial Strength Ratings are the opinion of the insurer to pay their obligations on time and in the promised amount.

Moody’s National Scale Ratings is the opinion of an insurer’s creditworthiness as they operate in a specified country. They should not be compared country to country, as stated by Moody’s.

The Money Market and Bond Fund Ratings are the opinion of the investment quality of the shares in mutual funds, emerging markets, and other comparable investment vehicles. They can either be short-term and long-term obligations.

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Life Insurance Customer Reviews

As well as the financial oversight provided by an insurer, customers need to know the experience that their peers have had with the insurer. Because of this, there are rating companies that specifically focus on the customer’s experience with that business.

Some examples of these are the Better Business Bureau (BBB), J.D. Power, and the NAIC Complaint Index.

Better Business Bureau (BBB) Reviews

One of the most popular customer rating services is the Better Business Bureau (BBB). The BBB is often referenced in popular culture and is the de facto opinion to many people on a business’s worthiness when working with a customer.

The BBB’s rating scale ranges from A+ to F, best to worst. Each letter is a different degree of a company’s ability to meet its clients’ needs. This rating also stands as the trustworthiness and ability of the insurer, in this case, to act in a good-faith manner on behalf of the client.

In the video below, here how the BBB themselves define their goals and ambitions.

The BBB does its own independent and objective research-based on complaints in the public record and other information that they can gather. Each of the 17 factors holds different degrees of weight. Once they have assessed the value of the company, they will use points to assign it a letter grade based on how it works with its customers.

Most of the time, a complaint history will have the most impact on an insurer’s rating with the Better Business Bureau.

With 85 percent of the review based on complaint history, a company or insurer can keep their rating higher by just addressing complaints registered with the BBB. Thus, the BBB does not guarantee reliability with any company.

Other than the letter grade that’s assigned to a company, you can find a section where customers can post a review and rate the company out of 5 stars. However, customers are much more likely to leave a negative review that could make or break your company than a positive one, so this section is best taken with a grain of salt and reflects the worst of the worst in experiences.

There is also a section where you can see lodged complaints against a company, both closed and open. The complaints are summarized on both sides and you can get a general idea of what the company and client both do as they attempt to solve the complaint. In the end, the customer may either accept or reject the company’s response.

J.D. Power Life Insurance Ratings

J.D. Power is also a well-known consumer review agency that compiles analytics research and customer experiences to give an objective opinion on the ability of the company to serve its clients. They have over 50 years of providing objective opinions on a variety of industries from automotive to financial industries.

J.D. Power uses the experience of a sample group of consumers to rate an insurer on a five-point scale referred to as “Power Circles.” They will rate an insurer one to five Power Circles in each of seven categories:

  • Overall satisfaction
  • Product offerings
  • Price
  • Statements
  • Interaction
  • Communications
  • Application and orientation

In each of these industries, they also perform studies, such as online banking studies in finances, or individual types of car studies in the automotive field.

J.D. Power’s 2019 Life Insurance Study found that Northwestern Mutual’s customers rated the insurer the highest among the individual life market.

In second and third were State Farm and Mutual of Omaha, respectively.

With life insurance annuities, RiverSource came in first with New York Life in second and TIAA in third.

The study also found that the overall satisfaction with individual life providers was 761 out of 1,000. This score was lower than retail banking, full-service investors, and auto insurance, making it the least preferred type of investment of 2019.

NAIC Life Insurance Complaints

The National Alliance of Insurance Commissioners (NAIC) sets the standards and largely regulates the insurance industry across all 50 states. The NAIC encourages insurers to follow best practices, and they hold them accountable through peer review.

In 2019 the NAIC placed its focus on eight key issues:

  • Annual suitability and best interest standard
  • Climate/natural catastrophe risks and resiliency
  • Data, innovation, and cyber
  • Group capital calculation (GCC)
  • Health insurance
  • Long-term care insurance
  • Macroprudential initiative (MPI)
  • International

The NAIC is seen as the most official source to many when researching life insurance. This is because of their focus on the key issues that affect consumers and keeping track of those issues when an insurer messes up.

One of the ways they police insurers is the NAIC Complaint Index, in which they compare an insurer’s complaints against the national average.

The national average is represented as a 1.00 with any number lower being less than the average and any higher number being more than the average.

They also keep track of an insurer’s financial information for client or investor reference.

What options are there when choosing life insurance?

Deciding which insurer to use may depend heavily on the type of policy you’re looking for. Most companies offer more than one type of policy, but not all companies will offer the policy you’re looking for. Seeing if a company offers a life insurance calculator online can help determine if they have a policy for you.

If you don’t know what type of policy you’d like, then this can serve as a guide to help you decide.

First, you’ll have to understand what needs will have to be covered by your policy. This can be easily broken down into short-term and long-term needs.

An example of a short-term need would be any medical bills or debt that you leave behind. Since this will be passed onto your heirs, you’ll want to make sure that you provide enough to cover these bills.

Another example of a short-term need would be to give you the lavish funeral you’ve always dreamed of. Whether it be term life, whole life, or just final expense, your coverage will keep your family from having to go into their pockets to cover your final ceremony.

Your monthly salary, or rather the lack thereof, is something else to consider as a short-term need, as your family will likely feel the impact in the months following your death. This should be especially important if you’re the primary wage earner, as your loved ones will feel the impact much sooner

Your death benefit should be at least 10 to 15 times your annual salary. This will provide a good cushion as well as ensuring that any long-term needs will be met as well.

A long-term need is something that your loved ones would like to depend on in the future but isn’t an immediate concern. College tuition is a good example of this.

The fact is tuition will continue to rise in the years to come. Setting aside enough money can ensure that your little ones can pursue any field they want without owing tens of thousands in loans to their school, or worse, the government.

If a loved one depends upon you for care, you can set the death benefit to be payable to someone who can take care of your loved one’s needs once you’re no longer able to.

If you own a business, then your death benefit could be used to help during the transition of management or used to float the business expenses for the foreseeable future.

Once you understand what you need to be covered, you’ll have to decide what type of policy you want. There are two main types of life insurance: temporary and permanent coverage.

Temporary, or term life, only lasts for a pre-determined period. This type of policy is best for those who only want substantial coverage for a period of their life such as when their family is just forming or at the start of a new business.

With term life, once your coverage runs out you lose out completely on your investment. However, there are options to maintain your coverage, with a renewable or convertible policy option.

There are a couple of types of permanent life insurance policies, mainly whole, universal, and variable policies.

While it may cost more, these policies will last for your entire life and also allow for the accrual of the net cash values of life insurance, which will allow for additional wealth that you can use for expenses in your retirement. Some policies even allow you to invest your cash value at an increasing percentage.

Another type of permanent insurance is burial and final expense, which will be far less than either term or whole life insurance. Because it costs less, it provides much less in coverage, mostly just for the expenses that come from your medical bills and the funeral.

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Term Life Insurance

If you only want coverage that lasts for a portion of your life, then term life insurance will be the best for you. A term is usually several decades and the longer it covers, the more coverage you will have.

The video below from Allstate explains what term life is with an example of a scenario.

Since it only lasts for a portion of your life, you’ll lose out completely on the investment if you surrender or if your policy matures before you pass away. So, if you live in Texas, and you’re considering the best life insurance companies in Texas for a term policy, even they couldn’t get your death benefit if your policy matures before you die.

There are options to prevent this loss of investment, however.

  • Renewable – With a renewable term policy, your coverage will restart at the end of every term until a certain age at an increasing rate.
  • Conversion – The conversion option allows you to switch to a whole life policy as long as you meet certain conditions beforehand.
  • Return of premium – With this rider, you can get a portion of your premiums invested at an increasing percentage, but it won’t be as much your death benefit.

There are also different types of term life coverage that provide different kinds of coverage.

For starters, a level policy offers guaranteed premiums and a guaranteed death benefit for the life of your contract. This is often referred to as the easiest and most straightforward policy out there.

There are policies that change your coverage and premiums for as long as you pay. These are called increasing and decreasing term.

With an increasing policy, your coverage will increase the longer that you pay your premiums.

That being said, your premiums will also increase over the life of your policy.

Decreasing policies, as you might expect, offer the opposite. As the policy ages, the coverage and premiums will decrease. This policy is designed so that as your family matures and requires less support from you, your coverage will decrease.

Whole Life Insurance

Like it sounds, a  whole life insurance policy lasts for your entire life as long as you continue to pay your premiums. Another feature of whole life policies is the ability to accrue cash value.

Cash value comes from a portion of your premiums and places them into a savings account.

This cash value can be used later in life during retirement, whether you borrow against it or surrender your policy for the full amount.

A traditional whole life policy guarantees equal premiums for the life of the policy, as well as a predetermined death benefit. With this policy, you’ll know how much cash value you’re contributing every month, as well as being able to budget your death benefit ahead of time.

A universal policy is another permanent policy that accrues cash value. Instead of a savings account, however, the cash value is deposited into an investment account that accrues additional wealth over the life of the policy. These investments can be separated into two types:

  • Indexed – This investment is placed into an account dependent on a publicly-traded index such as the stock market, so it can do very well or very bad depending on the index
  • Guaranteed – This guarantees an increasing percentage to your investment, albeit less than the potential of the indexed.

A variable life insurance policy also invests your premiums into an investment account. However, this investment is placed into a variety of sub-accounts much like a mutual fund. This makes the investment less risky as if one account does bad, another might make up the difference.

A variant on this, variable universal, allows for the investment in mutual fund accounts while still ensuring that you can alter your coverage and premiums during your policy.

Final Expense Insurance

Final expense and burial insurance are exactly what they sound like. It only covers your final expenses such as medical bills and burial costs, and the death benefit is never as much as a term or whole life policy. Because of the lower death benefit, it’s easier to get this type of insurance despite your medical history or age.

A level policy will guarantee you an equal death benefit and equal premiums for the length of your policy. This is the most hassle-free way to get the final expense coverage that you need.

A policy with a graded death benefit is best for those with a serious disease that would normally be denied term or whole life policies.

This policy has a waiting period of two years or more before you can collect the full death benefit. If you die before the waiting period is up, you’ll only receive a portion of the death benefit.

Another final expense policy that’s good for serious illness would be a modified death benefit, which also has a waiting period of two years or more. If a non-accidental death happens before the waiting period, you’ll receive a portion of your premiums at an invested percentage.

Guaranteed acceptance ensures that you’re accepted to the policy without any medical underwriting. Like the other modified final expense policies, you’ll be subject to a two-year waiting period before your beneficiaries can access your death benefit.

Policy Conversion Life Insurance

Something else to look at is if your desired company offers a conversion option for their term life policies. This allows you the ability to convert your temporary coverage to permanent coverage that will last for the rest of your life.

Another benefit is that most policies will let you convert your policy and get the same rates as when you first applied for the policy, saving you more in the long run.

For instance, let’s say that you initially decided to purchase a term life policy to only cover your family while it’s still young. But as the policy continues and nears maturity, you decide that you like the security it provides for your family.

Bundling Insurance Coverage

Some insurers that offer more than life insurance will offer you bonuses and savings if you decide to bundle your coverage.

In the video below, hear the benefits of bundling health insurance and life insurance amongst others.

If you own a home, then you most likely have some kind of coverage to protect your property from any accidents. Much like protecting your life, this type of policy will help you if you face tragedy. Pairing your home and life together will make sure that your effects are protected while you get to save on your monthly premiums.

Like your home, your car is most likely covered under some form of an auto protection policy. Likewise, pairing your auto and life will also help you save on your monthly premiums.

Bundling home, auto, and life will help you save more on all three.

The table below gives a better idea of what one can expect when bundling their policy.

Bundling Life Insurance With Home and Car Insurance
ProsCons
It can save you on monthly premiumsYou may need to go to outside company if your insurer doesn't offer the coverage you're looking for
It is more convenient to do business with one companyIf you change one policy, it may affect the rest of your coverage
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If you still want to bundle your coverage but don’t know where to start, we’ve found some companies that you can begin with:

  • Nationwide offers special discounts if you bundle your home, auto, and life with them.
  • Allstate will give you a discount if you bundle your auto and life insurance.
  • If you bundle your Progressive life insurance with any other insurance product, you’ll save as well.

While these are just a few options, most companies that offer more than one type of insurance will let you bundle their coverage together for a discount.

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Types of Life Insurance Companies

Insurers would be nothing without the funds that keep their company afloat. Whether they are publicly funded or profit off their members, this is how they pay out their death benefits.

Stock Life Insurance Companies

A stock company is owned by all of its shareholders, and thus owes it to those shareholders to make a profit.

Publicly Traded Life Insurance Companies are owned by investors

Before a company can be a traded company, they have to meet a minimum capital before they can get approved. There may be other requirements if they are a publicly-traded company.

Some examples include:

  • MetLife
  • Prudential
  • AXA Equitable

These companies are open to being traded and owe more to their shareholders than their policyholders.

Mutual Life Insurance Companies

Mutual companies are owned by their policyholders, and thus the insured gets monthly dividends based on the performance of the company. The policyholders also get to vote on the board of directors.

Mutual Life Insurance Companies are owned by policyholders

Some examples include:

  • Northwestern Mutual
  • New York Life
  • Penn Mutual

With these companies, you’ll earn dividends that may even help or cover the cost of your monthly premiums.

Fraternal Benefit Society Life Insurance

A benefit society is an organization that offers policies or relief only to its members, whether they be a society or subject to people who meet special criteria of a time and place.

In fact, many insurers started or can trace their history back to a fraternal or another type of benefit society. These not-for-profit programs are designed to provide members with coverage in case the worst happens.

Some examples include:

  • Modern Woodmen of America
  • Thrivent Financial
  • Independent Order of Foresters

These insurers provide benefits to special high-risk occupations and members who belong to fraternal organizations.

Top Life Insurance Companies by Market Share

The table below shows the top providers by market share and what type of company they are. A market share is how much of the market that a company currently owns.

Top Five Life Insurance Companies by Market Share
CompaniesType of CompanyMarket Share
Northwestern MutualMutual6.42%
Metropolitan GroupStock6.00%
New York LifeMutual5.68%
PrudentialStock5.57%
Lincoln NationalStock5.36%
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Whether you want a mutual company or stock, these providers are a great place to start.

How to Choose a Life Insurance Company: The Bottom Line

Protecting your family and their future after your gone is a heavy decision that could very well help set them up for success and longevity. Being such an important decision, it requires all the care and thoughtfulness that you can muster.

Deciding what company to use can feel like an impossible task. You want to make sure you have the coverage you need at the absolute best price. You’ll achieve this through careful research and making sure that you’re in great shape.

If an insurer notices that you’re healthy and have plenty of time to pay off the policy, you’ll have your choice among which company you would like to start a policy with.

Once you’ve got your company, you’ll be free to choose which policy you want and any additional benefits as well. From then on, you can rest assured that no matter what happens, your family will be taken care of.

If you’re still interested and want to learn more about life insurance and protecting your family’s financial future, consider a life insurance money magazine subscription to stay up to date on any new developments in the financial world.

Want to see your rates now that you know how to choose a life insurance company? Use our FREE quote tool to figure out what you’ll have to pay.

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