As with other types of insurance, such as home and auto insurance, life insurance provides financial peace of mind for you and your family and is an important part of your financial planning process. Whole life insurance is one of the simplest types of life insurance policies. But with so many types of life insurance, how do you know if whole life is the right option for you? And if you have decided to pursue a whole life insurance policy, how do you know what the best whole life insurance policy options are?
Bankrate can help you to better understand whole life insurance, which could make you feel more comfortable with your life insurance decision. Our editorial team has compiled information about the best whole life insurance companies, including J.D. Power customer satisfaction scores and AM Best financial strength ratings, to help you choose a company that is right for you.
What is whole life insurance?
Whole life insurance is a type of life insurance policy that provides coverage for the entirety of your life, as long as you pay the premiums. Upon your death, your beneficiary or beneficiaries will receive the death benefit on the policy. Death benefits on whole life insurance policies can vary greatly, from as little as $25,000 to over $1 million.
Whole life also offers living benefits. That means when you pay your premium, your insurance company puts a portion of your payment into a savings account. This money grows with interest and allows you to use this cash value in a number of ways. You could take out a loan against the cash value, which you would have to repay in agreed-upon installments. You can also simply withdraw the cash value without paying it back, although this will lower your total death benefit amount. If you have enough cash value in your policy, you could also use it to pay your premiums.
Since whole life insurance covers you for a longer period of time than term life insurance, it is generally more expensive. However, you may enjoy the benefits of whole life insurance if you are looking for a simple policy that will not need to be renewed and also includes living benefits.
Best whole life insurance companies
The best whole life insurance company for one person may not be the best insurer for another person, because different companies cater best to different types of people and different needs. Some life insurers are focused on serving the military community while others may specialize on serving insureds with specific types of health conditions such as cancer or heart disease. Depending on your specific situation, you may need to research additional companies to meet your life insurance objectives. However, based on our research, the following five companies are among the best in the industry.
|Company Name||J.D. Power||AM Best|
|Globe Life||788 out of 1,000||A|
|Nationwide||813 out of 1,000||A+|
|New York Life||777 out of 1,000||A++|
|Northwestern Mutual||807 out of 1,000||A++|
|State Farm||822 out of 1,000||A++|
Globe Life offers several life insurance products, including whole life. If you are concerned about the medical exam that is often required when applying for life insurance, Globe Life may be a good option for you. The company’s whole life insurance product does not require a medical exam as part of its underwriting process.
Globe Life can trace its roots back to 1900 and currently has $2.7 billion in annualized life insurance premium in force. While Globe Life is the smallest life insurer on Bankrate’s “best whole life” list, the company earned sixth-place ranking in the 2021 J.D. Power U.S. Life Insurance Study, with a score of 788 out of 1,000. This indicates that its 4.4 million policyholders are generally satisfied with Globe Life’s customer service support. The company carries an A (Excellent) financial strength rating from AM Best.
If you prefer to have all of your insurance products with one company, Nationwide may be a good choice. Along with various life insurance products, Nationwide is a full-lines insurer which also offers home, auto, umbrella and pet insurance, among other products.
Nationwide offers clients two payment options when it comes to whole life insurance. The Whole Life 100 policy offers level premiums, like all whole life insurance policies, but payments stop when you turn age 100. The 20-pay Whole Life option locks in your premium rate for 20 consecutive years, at which point the policy is considered paid in full and premiums are no longer assessed. Nationwide has a strong customer service rating from J.D. Power and carries an A+ (Superior) financial strength rating from AM Best.
New York Life
Unlike many of its competitors, New York Life is a mutual insurer completely owned by its policyholders. It offers a complete range of life insurance products, including whole life, term and convertible term policies. New York Life accounts for 5.1% of the overall market share in the life insurance industry, with $40.2 billion in direct premiums written, which makes it the fourth largest life insurer in the country.
New York Life offers policyholders the ability to customize their payment schedule with its Custom Whole Life Insurance option. This option may allow you to pay up your policy in a shorter period of time so that you have no premiums due later in life. The company ranks lower in J.D. Power customer satisfaction scores compared to other whole life insurers on Bankrate’s list but carries an A++ (Superior) financial strength rating from AM Best.
Like New York Life, Northwestern Mutual is owned exclusively by its policyholders and offers a wide range of whole life, term and universal life policies. Northwestern Mutual is the largest direct writer of life insurance in the U.S. with more than $2 trillion of life insurance protection in place. The company received an above-industry-average customer service score from J.D. Power and carries an A++ (Superior) financial strength rating from AM Best.
Northwestern Mutual offers a tool on its website that will match you with a financial advisor. You can input your financial goals, which can include protecting your family, saving for retirement or growing your investments, and the tool will pair you with a financial advisor to discuss product options to help supplement your goals.
State Farm stands out in our list of best whole life insurance companies. Not only did State Farm receive the highest ranking from J.D. Power amongst the life insurers Bankrate analyzed, it also boasts an A++ (Superior) financial strength rating from AM Best. Just like with Nationwide, if you prefer to have all your insurance products in one place, State Farm could be a good option as it is the largest all-lines insurer in the U.S., offering home, auto, health and business coverage, among its numerous product lines.
State Farm offers three policy payment options for its whole life insurance product. You can pay in one lump sum, pay level premiums that will stop at age 100 or choose a limited number of years to pay. State Farm’s 19,000 licensed agents across the U.S. may be appealing if you prefer to do your business locally. You can find an agent in your area using its “Find an Agent” tool accessible via its website.
How to find the best whole life insurance company for you
There are several important factors that you may want to consider as you shop for a whole life insurance policy. One of them is financial strength. What do the financial ratings agencies such as AM Best, Fitch, Moody’s and Standard & Poor’s say about a company’s ability to pay claims? You can also go to the Department of Insurance website in the state where you live and find out how many complaints the company has received during the past year or two.
You may also want to consider a company’s quoted premiums. The difference in price between one carrier and another may surprise you in many cases, as different carriers are geared to provide competitive coverage for their whole life products. The Insurance Information Institute (Triple-I) recommends it is beneficial to obtain quotes from several companies to compare coverage options and premium rates.
Frequently asked questions
What is the difference between term and whole life?
Term insurance only provides death benefit coverage, and only for a specific timeframe (typically between 10 and 30 years), while whole life insurance provides coverage for your entire life and also comes with a savings account component that accumulates cash value over time. Because whole life insurance lasts longer and comes with additional benefits, premium is generally more expensive than term life policies.
What factors impact my life insurance premium?
There are several underwriting factors that carriers commonly use to determine how much you may pay for your life insurance coverage, according to the Triple-I. Your age, health and the amount of coverage that you need are the primary rating factors, but other factors such as where you live, your hobbies and your occupation may also be considered. The younger and healthier you are, the cheaper your life insurance premium is likely to be.
How much life insurance do I need?
Your life insurance death benefit amount is a very personal calculation. If you are still working and have loved ones who depend on your income, you may want to consider how many years of income your life insurance policy can provide them if you pass away. You may want to consider your debts, funeral costs and if you plan to leave a financial gift to anyone when you pass away. Our life insurance calculator might help you determine how much coverage you need. You can also talk to a licensed life insurance agent or a financial advisor to determine how much life insurance to purchase.