Best Life Insurance
Based on In-Depth Reviews

What is life insurance?

Life insurance is a type of insurance policy that pays a lump sum of money to a designated beneficiary when the policyholder dies. Designated beneficiaries receive these funds –also called the death benefit– tax-free, to use for whatever they see fit, including funeral costs, college, buying a home, or just daily expenses. If the person who dies is the primary breadwinner, a large enough death benefit can often help mitigate the loss of income the death represents for the family.

There are many different types of life insurance, but the most common ones are term and permanent.

What is term life insurance?

So what is term life insurance, and how does it work? Term life insurance refers to policies that are active for a certain period of time, usually 10, 15, 20, or 30 years. If you should die within that period of time, your beneficiaries receive a tax-free payout in the amount you chose when you purchased the policy.

Should you survive the term, the policy will expire or, if it’s an option in the original contract, can be converted to a permanent policy.

This type of policy is by far the simplest and cheapest option in the market. It also allows for a great deal of customization by allowing you to choose the best term for your life situation and your death benefit. For example, you can choose terms that cover the years when your children would need your income the most or, if you’re single and dependent-free, you might choose just enough coverage to pay off any co-signed debts, a mortgage, medical care, final expenses, or a mortgage. 

What is whole life insurance?

Whole life, or permanent coverage, is exactly what the name implies: a policy that, as long as you pay the premiums, will pay your beneficiaries no matter when you die. While whole life policies can be between 5 to 20 times more expensive than term life, they do provide the unique advantage of accumulating tax-deferred cash value. Additionally, with these policies, some insurers also pay dividends, making them potentially worthwhile investment vehicles.

Whole life is considered to be one of several permanent life insurance policies. Other types of permanent insurance include universal life and variable life, both of which also accrue cash value, but at interest rates that vary depending on market conditions.

Additionally, there are simplified issue and guaranteed issue policies for consumers who do not want to take a medical exam. While these do not require a medical exam, they are much more expensive than those policies that do.

FOR YOUNG PARENTS & CARETAKERS

How to get life insurance

Purchasing life insurance starts with determining how much coverage you need to protect your beneficiaries. You'll also need to decide on the type of life insurance that suits your needs, whether it's a term or whole life insurance policy. 

You should research various companies that provide life insurance and examine their benefits to find which one best aligns with your objectives.

Review sites can offer an objective perspective of life insurance companies. For instance, this Everyday Life insurance review indicates the company is financially stable and has a strong reputation. Similarly, this Bestow Life insurance review notes that Bestow excels in its policy varieties. 

Once you know which company you want to work with, you can usually start the application process online. However, you may need to work with a life insurance agent in your area to finalize your policy. Some policies require you to undergo a life insurance medical exam before providing coverage.

How to prepare for a life insurance medical exam

A life insurance medical exam is a pretty simple process. A qualified practitioner will measure your height, weight, and blood pressure. They'll take blood and urine samples, which they'll use to evaluate you for certain medical conditions or to determine whether you smoke. 

Most medical exams occur in the comfort of your own home, so you won't need to worry about scheduling an appointment at your doctor's office.

Life insurance for young parents & caretakers

If you’re a parent, chances are that the thought of life insurance has crossed your mind more than once.

Of course, you would like to provide for your children after you’re gone, but maybe you don’t know which policy to choose, are hesitant to take the medical exam, or simply put it on the shelf as something to consider later. Or maybe, like many parents on a budget, a life insurance premium might seem like a luxury expense, not a necessity.

However, obtaining life insurance might be much simpler and more affordable than you think, and its benefits are very much worth the investment required.

To start with, there's peace of mind.

Financial hardship

More than one-third of American families say that they would find themselves in serious financial trouble within one month of a breadwinner’s passing due to the loss of income. In addition, medical bills and funeral expenses can easily add up to tens -sometimes hundreds- of thousands of dollars. Without a safety net, even families on solid financial footing can end up in a truly precarious financial position.

This instability can have lasting and profound repercussions. “There are often secondary losses with the financial hardship,” said Roberta Ward, a licensed clinical social worker who specializes in bereavement and hospice care. “It might require big things like moving, like selling a house, moving to something less expensive, or to an apartment versus the neighborhood home you had been in, it might require changing schools, it might mean a change in lifestyle. All of those kinds of changes and secondary losses can significantly impact the child’s ability to resolve their grief.”

Dealing with grief

In fact, financial hardship after a death is considered a risk factor for complicated grief, an intense state of mourning that can prevent the person from recovering after a loss. While most people - including children - are resilient and will find ways to work through grief if given the right support, she says that added stressors make things much more difficult for both children and parents. 

"I’m not sure that there is a harder job than being a grieving person trying to parent grieving children." 

"The children are not grieving in a vacuum, the parent has their own grief, so anything that you add to their grief experience has the potential to diminish their parenting skills.” Ward adds that “if you’re financially set, you are still going to have to deal with the pain of your loss and tending to the pain and sense of loss your children feel. But if you add to that financial stress and the possibility of moving or having to go back to work or to work more hours and being away from your children, all of that makes tending to your grief and your children’s grief more difficult.”

In other words, while it cannot cure the pain of loss, financial stability can help a family stay in their home, keep children in the same school with the teachers and friends they know, and maintain some of the normal, day-to-day routines that provide the stability a family needs to navigate grief.

Our recommendation for parents

Most parents can benefit from term life insurance, an inexpensive option that can cover the period of time until their children become financially independent. We recommend that parents of very young children choose a term of at least 20 years, as this should provide sufficient coverage if you were to die while they’re still financially dependent

Conversely, if you parent a child with disabilities or other conditions that might require financial support for their whole life, a permanent policy might be right for you.

Life insurance for high-risk people or caregivers 

We consider life insurance a must if you have children, but it’s also a great idea if you have elderly parents that need your help, minor or disabled siblings, or even business partners—basically if anyone in your life would suffer serious financial consequences if you were to die. Adrenaline-seekers such as rock climbers or deep sea divers should also consider a life insurance policy, even though it may be more expensive than policies for more risk-averse consumers. People with dangerous jobs, like aircraft pilots and commercial fishermen, should definitely take out life insurance if they have families.

Finally, it’s important to remember that debt does not die with the debtor, and if you have any outstanding debt that has been co-signed by someone else -such as credit cards, student loans, or mortgages- life insurance can be a way to help, even after death.

Best choices for caregivers

We recommend term life policies for caregivers, especially for people with elderly parents. If the senior you care for suffers from any type of cognitive impairment, it’s important to talk to an attorney to set up a trust to manage the funds after you’re gone.

If you have a high-risk job or lifestyle, consider contacting an experienced independent insurance agent, who can negotiate with insurance companies on your behalf. Additionally, adventure lovers who are committed to clean eating and regular exercise should consider Health I.Q., an online agency tailored to the health conscious.

LIFE INSURANCE FOR RETIREMENT OR INVESTMENT

“I used to tell my wife: this isn’t paying a bill, this is setting money aside,” says Dave Jelinek, a former insurance agent in northern Wisconsin. He decided to get whole-life policies for his two boys. “Mostly it was a savings plan. I got a $10,000 policy when they were born, and then a $50,000 policy when they were older. But it wasn’t about the life insurance, it was mostly about the savings plan.” His children then took over the payments for their life insurance policies and have kept them active for decades. These accounts, he said, gave them the motivation to keep saving.

The whole life policy is the subject of much debate in the life insurance field, with many arguing against it as expensive and unnecessary. However, many others -like Jelinek- have found it to be a great savings and investment vehicle.

As mentioned above, though whole life policies cost much more than term life, they do accrue cash value. As you pay your premium, a portion of it is set aside, letting the policy accumulate funds in addition to a certain amount of interest or dividends paid by the insurer.

So why not invest in a 401k instead of a whole life policy? Letting money accrue tax-free and being able to withdraw or borrow against it without penalties are big pluses, says Jelinek, who also partially funded his retirement with one of these policies.

“It’s mind-boggling what you can do with good life insurance.”

"The key," Jelenik says, "is to talk with a knowledgeable agent and choose the right company." In his case, he chose a mutual company that could pay dividends.

On the other hand, many financial experts and insurance agents believe that there are much more worthwhile investment choices. As with any big money decision, make sure to talk to a financial planner before pursuing this or any other option.

Best choices for savings and retirement

If you’ve already maxed out your contributions to more traditional retirement accounts—such as a 401k and/or Individual Retirement Account (IRA)— a whole life policy can be a good complementary product. With these policies, thinking big picture and long-term is important, as it can take decades to build up cash value. It is, however, a fairly safe investment that can yield consistent returns in some cases.

Debunking life insurance myths

The medical exam is scary, too time-consuming, and/or invasive

Many people put off getting life insurance because they’re hesitant to go through what they think will be an invasive health screening.

However, the medical exam is easier and quicker than most people think.

Insurers often provide applicants with a variety of options for taking the test, including sending a paramedic to their home or workplace to take the samples.

During the exam, you will answer some questions about you and your family’s medical history, much like the questionnaires you take when you visit a doctor for the first time. After the questions, the technician will ask for a urine sample, and draw blood to check cholesterol levels, blood sugar, and detect any evidence of tobacco or drug use. They will also weigh you, note your height, and take your blood pressure.

In some special cases--for very large policies, older applicants, or those with a history of heart disease--it might also involve an electrocardiogram. For most people, though, the whole process takes less than 30 minutes, in other words, a fraction of the time of a doctor’s visit.

I’m young and healthy, odds are I’m not going to need it.

Without falling into fear mongering, the chances of a catastrophic accident may be higher than you think, and have very little to do with anything under your control. In fact, in the latest year for which the Center for Disease Control has national data (2016), the leading cause of death for Americans aged 1-44 was unintentional injury, not disease or cancer.

Instead of thinking about not needing life insurance at this exact moment, think of it this way: will anybody be affected by the loss of your income? If the answer is yes, and someone is going to be stuck paying off your debts or would be worse off financially, then getting life insurance is important. And being young and healthy right now means that you can get a policy with higher coverage limits, for a lot less than you’ll be able to further down the road.

Life insurance is a purchase for your future, for the “just in case.” Even if you only have vague plans for kids within the next ten or fifteen years, getting married, or starting a business, there are definite upsides to purchasing life insurance early. The older you are, the more expensive the policy--with average yearly increases between 8%-10%. It simply makes good financial sense to look into your options early, before age, dependents, or significant debt make a policy more expensive.

I’ll get it eventually

The absolute best time to get life insurance is now.

If you’re young, healthy, and have no dependents, there’s a better chance of being able to get rates you might not qualify for later on. To give you a better idea of what we mean, here are some numbers for you.

There are a few different things we can glean from the image above. The first is that life insurance rates remain fairly stable from ages 18-30, and then from 30-35, after which they increase dramatically. And if your term policy should expire after age 35, renewal will therefore be expensive.

It's too expensive

“When it comes to life insurance, find out what you need and see how you can approximate it, given your budget,” says Chris Huntley, founder of Huntley Wealth & Insurance Services and Insurance Blog by Chris. “If all you can afford is a policy for $10,000 even though calculations say you need $50,000, getting the policy for $10k is better than not at all"

A second common misconception of life insurance is that the cost is too high. According to a 2017 joint study by insurance research organization LIMRA and non-profit educational organization Life Happens, 66% of surveyed consumers don’t purchase life insurance because they believe it’s too expensive. In fact, it turns out they wildly overestimated the cost, posing a monthly payment of $500 for a healthy, 30-year-old with a term life policy of $250,000. This is two and a half times the actual amount of $200. Of course, how much your policy will cost depends on a number of factors, which we will discuss in more detail further down.

We understand that $200 may be too much of a draw on your monthly budget, yet think about the alternative. How much would it cost if you weren’t around anymore? How would your family manage with the loss of income? How would your debts get paid off?

Death has a way of adding up in ways you may never have expected. To start, there are the burial expenses, which average between $7k-$10k, ($3k for a cremation). Even if you don’t have a significant other, children, or a dependent (elderly or otherwise), then there’s still the settlement of any outstanding debt or back taxes, and mortgages to pay off. And should you have people depending on you, it’s likely that the loss of your wages will be a significant blow to the family finances, not to mention the expense of grief counseling, if needed. If the death was the result of a long illness, such as cancer, there may also be significant medical debt.

There are some ways to reduce the cost of your policy, besides the big ones such as quitting smoking (or never having done so in the first place), and avoiding high-risk activities (e.g. sky-diving, rock climbing, auto racing, private piloting, etc).

Stay-at-home parents don’t need life insurance

Life insurance is often thought about in terms of replacing lost income. But there are some family members whose work is just as valuable, even if he or she doesn’t bring in a yearly salary: the stay-at-home mom or dad. According to the Pew Research Center, there are more than eleven million stay-at-home parents in the U.S., yet many don’t consider taking out a life insurance policy for themselves.

Though their work may not be as visible--they’re tutors, caretakers, housekeepers, cooks, chauffeurs, and more--outsourcing it would cost the equivalent of an annual salary of $113,000 (as per calculations by Salary.com).

So, what should a stay-at-home parent’s policy benefit limits be? Chris Huntley recommends that non-working spouses, even if not a parent or primary caretaker, take out coverage in at least half the amount of the working partner.

“You’re not just losing their income; you’re losing all of the ways they help your family… that might mean they’re helping to keep the house, helping take the kids to school, watching the kids. All of the care they provide is expensive if you want someone else to do that. You can’t just look at their income; you have to look at what they’re providing to the family and the potential replacement cost,” says Huntley.

Tips for reducing your life insurance costs

Know how much you need

The fact is that most people’s estimates of how much insurance they should get are wildly off-base, with 40% considering three times their salary sufficient--despite industry professionals recommending policies 7 to 10 times their annual income--. The best way to accurately calculate your life insurance needs is by adding up all additional sources your beneficiaries can expect to access (e.g. Social Security, retirement accounts, or pensions). Then subtract that from the amount you’d like to realistically leave your spouse or dependents. The resulting number may seem low, maybe around $30,000. Ten times that amount is $300,000: the size of your ideal policy. Of course, this should be tailored to your specific circumstances, and we always recommend erring on the side of caution. At the end of the day, a little is better than none.

Choose the right amount of coverage for you

Remember, the longer the term, the more expensive your policy. Many people hear the phrase “whole life” and think it’s ideal to be covered forever, for all intents and purposes. However, this comes at a steep cost, and the benefits may not outweigh the investment. In most cases we recommend that consumers take out term policies rather than whole life. Though these will expire eventually, when timed right, coverage should only end once your children have left home or your mortgage has been paid. And at that point, receiving the lump sum of all the premiums paid comes as a windfall.

Consider multiple policies

 Just as a long term makes life insurance more expensive, a high benefit limit will also up your premiums. By obtaining several life insurance policies, (possibly with different insurers and term lengths), you may be able to minimize your costs. There isn’t a limit to the number of policies you can have at once, but the total death benefit must correspond to your income and assets. In other words, red flags will be raised should you attempt to get millions and millions of dollars in coverage, with an annual salary of $65,000.

Incorporate healthy habits

Life insurance is all about risk assessment. The healthier you are, the less likely it is that your insurer will ever have to pay out, which is an outcome you’d both like to avoid. Small, simple steps can have outsized results: cutting down on alcohol consumption or working out a few times a week can make a major difference in your policy. Even if you started with less-than-ideal lifestyle habits, if you can get a chronic medical condition under control, quit smoking, or lose a significant amount of weight, you may be able to negotiate a lower premium. Anything that can be proven to increase your life expectancy can be leveraged for a less expensive rate.

Shop around

Life insurance is a highly competitive industry, and insurers are looking for your business. Comparison shopping is essential for all large purchases but particularly so for life insurance, where two similar companies can offer virtually the same policy for hundreds of dollars less due to different underwriting algorithms. After all, while one insurer might view all diabetes patients as risky, another one might give them credit for a healthy lifestyle that keeps blood sugar under control. To better compare differing plans, a good tip is to ask about each one’s net cost index, which should be provided by the company, agent, or broker. The math to do this is a little bit complicated and we won’t get into it here. All you need to know is that it collapses two variables (the premiums vs the cash value) into one single number. The lower the cost index for your gender and age, the less it will cost you (for the same terms).

Pay annually instead of monthly.

Like many others, life insurance companies will reward customers who pay up front and, according to Huntley, doing so could save you up to 8%.

Use an independent agent or agency.

There are many benefits to choosing an independent insurance agent, especially if you have less-than-stellar health and you’d like someone to negotiate for you. If you are considered a somewhat higher risk, and are getting unaffordable rates, then a reputable, experienced independent agent could be the best choice for you.

What Type of Life Insurance Should I Get?

Life Insurance Group Classifications

Insurers classify applicants into five categories, based on their health condition. While the names vary slightly, they usually are something along the lines of Preferred Plus, Preferred, Standard Plus, Standard, and Substandard.

People that fall in the Preferred Plus category are almost guaranteed approval and will get the lowest rates, while people in the Substandard category will pay the most, sometimes as much as 250% more than those in the slightly higher Standard category.

In addition to these, insurers add two other categories, just for smokers: Preferred Smoker and Standard Smoker. It’s important to note that most insurers consider you a smoker even if you just occasionally smoke a cigarette or a celebratory cigar now and then.

When an applicant has ongoing or past medical conditions, a history of drug or alcohol use, criminal records, or a high-risk occupation, insurers turn to “table ratings”. These ratings usually have 16 categories of increasing risk, which add a percentage amount to the premium you’re offered.

Pre-Existing Conditions 

On to the good news: you don’t need perfect health to get coverage at an affordable rate.

Yes, your health condition will be one of the biggest factors in determining whether you’re approved and your monthly rate. However, even if you’ve had major health problems in the past or are currently facing them, it doesn’t mean you’re uninsurable.

Even if you received a “table rating,” it doesn’t mean every insurer will place you in the same category, since every each company’s actuarial math is a bit different. Many insurers recognize that past health problems don’t necessarily mean future problems, especially if the underlying conditions are being managed effectively by medication and conscientious health habits.

This has led some insurers to offer “health credits” options. With these programs, insurers reward you –and may even bump you up a category or two– for ongoing healthy lifestyle habits, such as regular exercise, keeping cholesterol and blood pressure at the recommended levels, and quitting smoking.  Even chronic conditions like diabetes don’t necessarily translate into unaffordable premiums, especially if you can show that you manage it successfully through diet and taking medication as prescribed.

Needless to say, if you’re a smoker, the single most valuable thing you can do –both for your health and your pocket- is quitting.

Why does every insurance company ask about smoking habits?

The simple answer to this is that smoking tobacco, whether via cigarettes, cigars, or vaping, is a huge health risk and therefore carries a higher cost (averaging 15-20% more in monthly premiums than non-smokers). Any amount of smoking or nicotine consumption within the time period framed in the insurer’s question (even if it’s only a cigarette or two on the weekends, or through a nicotine patch), automatically qualifies you as a smoker in the company’s eyes.

In fact, many companies will continue to consider you a smoker for as long as five years after you can pass a urine, blood, hair, or saliva test for levels of nicotine and cotinine in your system.

On the plus side, if you can prove you’re either in the process of quitting or have plans to do so in the immediate future, some companies may allow you to retake the medical exam after 18 months. Your age also plays a factor, as with any insurance policy. A 30-year old smoker will pay less than a 50-year old one, on the theory that they have a better chance at quitting, and less lasting damage to their health.

While the prospect of expensive monthly premiums may tempt some consumers to simply lie about their tobacco habit, failure to disclose what is considered a significant health condition constitutes insurance fraud and may have serious consequences if you’re found out.

Most insurance companies run further checks on the medical history of approximately one-fifth of their applicants, which may uncover a lie about smoking. And if, say, a policyholder should develop one of any number of smoking-related illnesses (e.g. cancer, heart diseases, metabolic or pulmonary diseases), and their tobacco use is uncovered, the insurer may cancel the policy altogether or refuse to pay out. Alternatively, the company may calculate how much less you’ve paid on your policy (say, 70% of what you should have), and themselves only pay out 70% for medical costs.

Pregnancy and life insurance

For many, bringing a child into the world is a catalyst for getting life insurance. While pregnancy should not affect your rates, some common pregnancy-related conditions, such as gestational diabetes or high blood pressure, could make your premiums sky-rocket. These complications typically arise later in the pregnancy, which makes it extremely important to start the life insurance application process as early as possible. This can help you get the best rates and ensure you have coverage all throughout the pregnancy.

What to Watch Out for When Buying Life Insurance

The unlicensed company or agent

The importance of making sure the company is licensed by the state where you live cannot be overstated. The life insurance industry is subject to strict regulations, and states have placed safeguards protecting consumers in case an insurer goes out of business. Insurers are required to contribute to guaranty associations, which – if one of them were to go bankrupt – would cover the outstanding claims. This ensures that claims will get paid even if your insurance company closes its doors.

Checking for a license is important for another reason: there have been cases of fake insurance agents defrauding consumers by offering policies from non-existent companies. In these scams, pseudo-agents will offer legitimate-seeming documents from either reputable or fictional companies and even collect premiums from unsuspecting consumers.

If an agent you don’t know offers a policy you did not request, with prices that seem to be way below what others are offering, consider it a red flag. As the National Association of Insurance Commissioners (NAIC) emphasizes, the best course of action is to “stop, call, and confirm.” Call your state’s insurance department and ask for licensing information for both the company issuing the policy and the agent you’re dealing with before you sign on any dotted lines.

The unnecessary whole life policy

While many well-intentioned insurance agents suggest whole life policies to their clients because they believe it’s the best choice, there are plenty of instances in which unscrupulous agents push the most expensive policy in order to increase their commission. Regardless of their motivation, it’s important to be clear on what you hope to achieve with your policy and what you can afford long-term.

In most cases and for most people –especially parents– term life is really the best choice. Not only is it more affordable, but it covers the period of time when their children would most need their income.  Even childless consumers who would leave behind a spouse and a mortgage may find that term life is also the best choice, especially if the death benefit is large enough to cover what is still owed on the mortgage note.

Having said that, there are a few consumers for whom permanent life insurance is a good idea: high-net worth individuals who are using it for estate planning, people who have maxed out their other retirement plans, and caretakers of disabled children or adults who will need care throughout their lifetime.   

Assuming you don’t qualify for affordable rates

Consumers who suffer from chronic conditions or have faced life-threatening illnesses often assume that they will only qualify for guaranteed issue policies, which are much more expensive than the traditional term policy.  

However, insurance underwriting is a highly complex process, with different companies assessing risk in very different ways. This is especially true in life insurance, which takes into account every minute detail of your lifestyle, health, and even your family’s health, in order to decide whether to approve you or the amount of premium they’ll charge.

However, because each insurer has its own risk-assessment calculations, it’s important to get quotes from several different companies to get the best deal. If a pre-existing condition disqualifies you from one insurer or causes them to give you an unaffordable premium, don’t assume that this is the rate you will get from every company. Make sure to contact a reputable agent with experience in the industry who can negotiate with insurers on your behalf.