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U.S. News Life Insurance Guides
Life insurance is a financial tool that provides security for your loved ones after your death. You should consider it if your family members depend on you financially, particularly if your current financial obligations – such as expenses and debt – outweigh your assets.
Life insurance is available in a wide variety of policy types, ranging from affordable basic coverage to complex policies designed to supplement a comprehensive investment strategy. Prices range broadly, so most shoppers will be able to find a life insurance policy that fits their budget. The cost of your premium will depend greatly on the type of policy you want, the amount of coverage you need, and other factors specific to your situation. We explain all of this in detail below.
Life insurance is a financial tool that pays a benefit when the person who owns the policy dies. You can use it as a way to provide for your family after you die, or as a way to leave a legacy to a favorite charity or cause, and some types of life insurance can be used as a way to save and invest.
The basic types of life insurance include term life, whole life, universal life and no-exam life. These differ in terms of cost, how long they last, whether they accumulate cash value and other factors.
Although most people can benefit from a life insurance plan, it isn’t necessary for everyone. If you have no dependents, or if you have accumulated enough wealth that your death would not cause financial hardship to your dependents and you don’t plan to leave a legacy to a charity, you may not need to purchase life insurance.
The people at an insurance company who decide whether someone is insurable are called underwriters. Underwriters generally assign an applicant to a risk class based on factors such as age, gender, health and lifestyle. That risk class affects how much the applicant pays for the requested coverage, based on the insurance company’s standard rate table.
In addition to the type of policy that’s best for you, there are several other important considerations when buying life insurance. These include things like how often premiums are paid, whether the amount changes over time, whether the policy requires you to undergo a medical exam as part of the application process, how long you need the policy to be in effect, whether the policy pays dividends, and the different types of riders you might want.
Compare life insurance quotes from online brokers and by talking with agents who represent multiple life insurance companies. Insurance companies calculate your premium balancing how likely it is you’ll die, requiring them to pay a benefit, against the number of payments you’ve made on the policy. As a result, no two insurance companies’ policies are exactly the same, even for a given type of life insurance.
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To decide how much life insurance coverage you need and for how long, consider the following factors:
- Your loved ones’ financial resources after you die, broken down into Social Security and other retirement-related survivor benefits, group life insurance, and other assets and resources.
- Your loved ones’ financial needs after you die, broken down into end-of-life expenses, debts and income needs.
Subtract the sum of the resources from the total amount of financial needs to determine the correct amount of coverage. The Insurance Information Institute says most people underestimate this step and end up with too little life insurance coverage.
To determine how long you need coverage, consider your priorities. If you want to build a financial asset and provide lifetime coverage for your dependents, you need a permanent policy rather than a term policy.
To evaluate life insurance companies, we researched what matters most to consumers, experts and professional reviewers. Then we provide an unbiased evaluation of the life insurance companies our research determined consumers, experts and professional reviewers searched for most frequently.
Below are the top 16 life insurance companies. Follow the links in the companies’ names to read our full reviews.
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Our cheapest life insurance companies are based on sample monthly rates for a 20-year term life policy with $1 million in coverage for a 35-year-old female nonsmoker who falls in the Standard Plus risk class, which represents average health. We’ve listed the cheapest life insurance companies below. Follow the links in the companies’ names to read our full reviews.
There are three main types of life insurance: Term, whole and universal. Your premium payments, investment opportunities, the amount your beneficiaries can expect to receive upon your death, and other factors depend heavily on the type of life insurance you purchase. It’s important to choose the right type of policy to keep your overall premiums affordable, accomplish your financial goals and make sure your beneficiaries are taken care of if something happens to you.
What is term life insurance?
Term life insurance policies provide affordable coverage for a specific death benefit over a predetermined period, such as 10, 15, 20 or 30 years. It can be a smart choice for certain individuals, like parents who want to ensure their children are provided for until they reach adulthood.
Once the term is complete, a term policy has no value. Instead of starting over from scratch, many life insurance companies offer the option to convert a term policy to a permanent one, such as a whole life or universal life policy. The costs and choices vary among convertible term policies. Before purchasing a new term life policy, it’s worth taking the time to discuss your options with a financial advisor.
What is whole life insurance?
In contrast to term life insurance, whole life is a type of permanent life insurance that remains in effect for as long as you keep paying the premiums. You can pay premiums in one lump sum, monthly or annually, depending on the policy.
Whole life policies also differ from term policies in that they accrue tax-deferred cash value over time. The insurance company uses the cash value to keep your premiums level throughout the life of the policy, and policyholders can sometimes borrow this money for a short-term loan. Whole life insurance costs considerably more than term, and thus it isn’t the best choice for most people.
What is universal life insurance?
Universal life insurance is another type of permanent life insurance that accumulates tax-deferred cash value. Universal life – also called adjustable life – is more flexible than whole life. For example, you maybe be able to increase the death benefit or change your premium payment amounts or the payment schedule. However, universal life is more expensive than term and more complicated than term or whole life.
What is no-exam life insurance?
No-exam life insurance is a type of life insurance policy that lets you avoid a medical exam, which is typically a requirement for a standard policy. This makes the process faster and easier, and it avoids a stumbling block for people who don’t feel comfortable undergoing a physical. You may still need to answer questions about your health, however, as well as supply your medical records. This type of policy has downsides, including much more expensive premiums and limited options for riders.
How long do you have to claim life insurance?
Generally, life insurance companies are bound by adherence to state laws regarding how long you have to claim insurance benefits. Contact the company or an insurance agent directly for more information.
Does life insurance pay for suicidal death?
In general, life insurance companies are bound by state laws regarding payment for suicidal death. Policies that are older than two years are generally eligible for a claim. However, a given company’s set of rules may vary by policy type and state, so you should contact the company or an insurance agent directly for more information. No matter how large the benefit from any life insurance policy you may have is, it is not worth more to your loved ones than having you around
If you are contemplating suicide, help is available. Call any time of day for free, confidential support from the National Suicide Prevention Line at 800-273-8255. The organization also operates more than 150 crisis centers that offer encouragement and local resources. Please reach out to them if you are in crisis.
Does life insurance cover a drug overdose?
In general, life insurance companies are bound by state laws regarding payment for a drug overdose. Policies that are older than two years are generally eligible for a claim. However, a given company’s policy may vary by policy type and state, so you should contact the company or an insurance agent directly for more information.
Can you get life insurance if you have cancer?
If you are currently receiving treatment for cancer or have had it within the past few years, you probably won’t be able to get a standard life insurance policy. However, some companies do offer guaranteed-issue life insurance to some people who are living with cancer. Contact the company or an insurance agent directly for more information.
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The following describes our 360 approach to researching and analyzing life insurance companies to provide guidance to prospective consumers.
1. We researched the companies and products people care most about.
U.S. News analyzed and compared a variety of publicly available data, including internet search data, to determine which life insurance brands Americans are most interested in. We found 22 companies that stand out in terms of volume of searches and research among consumers, as well as across the different rating sources. Once we identified these companies, we reviewed insurance companies’ data to determine every available life insurance product offered by each company at the time of publication. We focused on companies with policies that are widely available, so we excluded a certain number of policies that are only available through employers and not available for individuals.
We compared available coverages and packages from top life insurance companies across several criteria, including cost, coverage limits, policy features and availability. Research shows that these criteria are among the most important considerations to people shopping for life insurance. We compared cost across companies using two types of estimated cost information per company: a summary cost relative to the company in our main review page, as well as more detail about costs by specific policy in our company profiles. At the company level, we offer what we call a “base cost”: a cost representing a 25-year-old Virginia woman in excellent health getting a typical 10-year term, $250,000 life insurance policy from a given company. By keeping certain criteria consistent, such as state of residence, we make it easier for readers to compare costs by company. In our company profiles, we show cost estimates regarding every specific policy for which online quote information was available at the time of publication. Where available, quote information has been provided from each company. We provided the same information to each company, and got the quote either using publicly available online quoting tools, direct conversations with the companies, or both. In addition, we show the costs for a range of typical individuals, including 25-, 35- and 45-year-old males and females residing in Virginia and in excellent health. All prices shown are for $250,000 policies, with a 10-year-term for term life insurance and no term for permanent life and whole life insurance policies. This range of choices allows readers to understand insurance costs, although the best way to get an accurate estimate is to use a company’s online tools as well as speak to company agents.
2. We created objective 360 Overall Ratings based on an analysis of third-party reviews.
U.S. News’ 360 Reviews team applied an unbiased methodology that includes opinions from independent life insurance experts and third-party reviews.
Our scoring methodology is based on a composite analysis of the ratings and reviews published by credible third-party professional and consumer review sources. The ratings are not based on personal opinions or experiences of U.S. News. To calculate the ratings:
(a) We compiled two types of third-party ratings and reviews:
- Professional Ratings and Reviews. Many independent life insurance evaluating sources have published their assessments of life insurance companies and products online. We consider several of these third-party reviews to be reputable and well-researched. However, professional reviewers often make recommendations that contradict one another. Rather than relying on a single source, U.S. News believes consumers benefit most when these opinions and recommendations are considered and analyzed collectively with an objective, consensus-based methodology.
- Consumer Ratings and Reviews. U.S. News also reviewed published consumer ratings and reviews of life insurance providers. Sources with a sufficient number of quality consumer ratings and reviews were included in our scoring model.
Please note that not all professional and consumer rating sources met our criteria for objectivity. Therefore, some sources were excluded from our model.
(b) We standardized the inputs to create a common scale.
The third-party review source data were collected in a variety of forms, including ratings, recommendations and accolades. Before including each third-party data point into our scoring equation, we had to standardize it so that it could be compared accurately with data points from other review sources. We used the scoring methodology described below to convert these systems to a comparable scale.
The 360 scoring process first converted each third-party rating into a common 0 to 5 scale. To balance the distribution of scores within each source’s scale, we used a standard deviation (or Z-Score) calculation to determine how each company that a source rated was scored in comparison to the source’s mean score. We then used the Z-Score to create a standardized U.S. News score using the method outlined below:
- Calculating the Z-Score: The Z-Score represents a data point’s relation to the mean measurement of the data set. The Z-Score is negative when the data point is below the mean and positive when it’s above the mean; a Z-Score of 0 means it’s equal to the mean. To determine the Z-Score for each third-party rating of a company, we calculated the mean of the ratings across all companies evaluated by that third-party source. We then subtracted the company’s rating from the mean and divided it by the standard deviation to produce the Z-Score.
- Calculating the T-Score: We used a T-Score calculation to convert the Z-Score to a 0-100 scale by multiplying the Z-Score by 10. To ensure that the mean was equal across all data points, we added our desired scoring mean (between 0 and 10) to the T-Score to create an adjusted T-Score.
- Calculating the common-scale rating: We divided the adjusted T-Score, which is on a 100-point scale, by 20 to convert the third-party rating to a common 0-5 point system.
(c) We calculated the 360 Overall Score based on a weighted-average model.
We assigned “source weights” to each source used in the consensus scoring model based on our assessment of how much the source is trusted and recognized by consumers and how much its published review process indicates that it is both comprehensive and editorially independent. The source weights are assigned on a 1-5 scale. Any source with an assigned weight less than two was excluded from the consensus scoring model.
Finally, we combined the converted third-party data points using a weighted average formula based on source weight. This formula calculated the consensus score for each product, which we call the 360 Overall Rating.
All life insurance data displayed on this page was collected between June 1, 2019 and October 1, 2019.
U.S. News 360 Reviews takes an unbiased approach to our recommendations. When you use our links to buy products, we may earn a commission but that in no way affects our editorial independence.
