Top 10 Best Whole Life Insurance Companies (2018 Update)

While term life insurance is valid for a set length of time and generally purchased as a form of income replacement in the event of a breadwinner's untimely death, permanent life insurance will remain in effect throughout the life of the insured.

One such permanent type, whole life insurance, offers a guaranteed face value death benefit, a stable cash growth rate, and level premiums. Since the monthly premiums are guaranteed not to increase, payments will always remain predictable.

In the end, the death benefit will assist in payments towards final expenses, which may include medical and funeral costs and taxes, as well as additional funds needed to support loved ones left behind.

What Are the Additional Benefits of Whole Life Insurance? 

In addition to lifetime coverage, stable premiums, and a guaranteed death benefit, whole life insurance also offers significant and unique financial planning features that make sense for people in specific situations.  

Cash Value

An integral part of whole life policies is the ability to grow cash value over time.

This is done by allocating a portion of your fixed premium to a type of savings account. The account gains interest and earning are exempt from taxes.

This money is yours and can be used in several different ways:

• Loans – You are generally able to borrow your policy's accumulated cash value at a lower rate than a normal bank loan. Although you are not required to pay this back, any amount you borrow—plus interest—will be deducted from the death benefit if you don't.
• Retirement Planning – Unlike other retirement accounts like IRAs and 401 (k)s, the cash value of a whole life insurance policy is guaranteed, regardless of market volatility. In down markets, it can often make more sense to borrow from your whole life policy for supplemental retirement income, while giving your market-tied retirement investments a chance to bounce back.
• Increase Death Benefit – If you don't need the accumulated cash value yourself, you can use it to increase the original death benefit for your heirs. Keep in mind, the life insurance company will keep the cash value left in the account when you die. So if you don't need it, consider reinvesting the death benefit into a larger one for your beneficiaries.
• Pay Premiums – Once the policy is paid up you can use its own cash value to pay premiums instead of continuing to pay them out of pocket.

Dividends

Dividends on whole life insurance policies are usually paid annually and can be used in a variety of ways.

Like the accumulated cash value, dividends can be used to pay premiums or add to the death benefit.

They can also be taken as straight up cash, either paid to the policyholder or back into the cash value component.

Tax Advantages

There are several tax advantages whole life policyholders can enjoy.

Firstly, the death benefit is generally free of income tax, which means more money for the beneficiary.

Second, the cash value and paid-up additions to the whole life policy build on a tax-deferred basis. Also, when you earn dividends or take a partial surrender from the policy you won't have to pay taxes until you reach the total out-of-pocket premium, i.e. the money you have already paid.

Lastly, taking a loan from your whole life insurance policy won't incur taxes as long as you pay off the loan while the policy is still in force.

How Do I Choose the Right Insurer?

The most important thing to consider when choosing a whole life insurer is the company’s financial reputation.

Whole life insurance policies are one of the longest-term financial products in which someone can invest. Policyholders need to be sure the death benefit will be paid to their beneficiaries at a point in the future, possibly far in the future.

Customers also have to have confidence that the cash value component is stable if they wish to count on it for retirement, loans, surrenders, or other reasons.

The main agencies that issue financial strength ratings are Standard and Poor’s, Moody’s, A.M. Best, and Fitch. These organizations analyze an insurance company’s finances and creditworthiness and issue financial strength ratings informing consumers of a company’s ability to meet its financial obligations.

As all of the rating agencies use their own scale, life insurance customers should familiarize themselves with the individual methodologies:

• Standard and Poor’s
• Moody’s
• A.M. Best
• Fitch

The Best Whole Life Insurance Companies - Our Top 3

Here are some industry-leading companies we highly recommend for whole life insurance products.

#1 Globe Life Insurance

Globe Life is a life insurance provider that was originally founded on the platform of inexpensive policies for rural-based customers. Since then, the company has achieved A+ (Superior) grade with A.M. Best and has maintained the same management team for the last 20 years.

Today, Globe continues its mission to provide low-cost whole life plans to its customers. In fact, the company has more than 4.2 million active policyholders as of this review. One of the most recognizable aspects of Globe’s advertising is its long-standing promotional offer in which customers are only charged $1 for the first month of coverage.

Globe offers coverage payouts in increments from $5,000 to $50,000. Unlike other companies, Globe Life doesn't mandate a medical examination prior to coverage or require a waiting period, enabling consumers to buy their policies directly.

Policies issued through the company build cash value, feature rates that stay the same throughout the life of the policyholder, and come with a 30-day money back guarantee. In addition, coverage can never be reduced for any reason.

Since whole life insurance lasts a lifetime, Globe allows people of any age to enroll. As the company was founded on the concept of issuing inexpensive policies to the everyday working or middle-class family, the company also treats its customers in a straightforward, no-nonsense fashion.

This approach, combined with no medical exams, no waiting periods, and flexible payout amounts make Globe’s policies a financially prudent investment for families seeking a whole life insurance policy without having to break the bank.

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#2 Liberty Mutual Life Insurance

As the fourth largest property and casualty insurer in the United States, Liberty Mutual is 75th on the list of Fortune 500 companies, operates in 30 countries, and employs close to 50,000 people around the world. The company holds strong ratings from A.M. Best (A), Moody’s (A2), and Standard and Poor’s (A) in terms of creditworthiness and claims-paying ability.

Liberty Mutual provides policies for auto, home, renters, condo, life, and motorcycle insurance, among others. For all its insurance products, the company provides a quick online quote process that could save customers up to 12%.

Liberty Mutual’s whole life policies offer a guaranteed death benefit and premiums that stay level for a set period of time that varies between plans. Those under the age of 65 will see minimum death benefits of $250,000, however, this could drop considerably over that age.

Whereas the more popular term policies are generally purchased as income replacement in the event a family loses its breadwinner, whole life policies are ideal for those who are looking for guaranteed coverage for the duration of their life. This could be an excellent option for those who have a business or an estate, or even a relative with a disability.

Liberty Mutual offers five main whole life insurance products:

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#3 Massachusetts Mutual Life Insurance

MassMutual is a Massachusetts-based provider that offers an extensive range of life insurance policies that includes term, whole, universal, and variable. Founded in 1851, MassMutual is one of the oldest and most trusted financial organizations in the world.

As a mutual company, there are no shareholders and policyholders share in ownership, meaning they can vote for the Board of Directors and in many cases earn dividends on their policies.

MassMutal also has one of the strongest financial reputations in the business, which is critical especially in the case of a product that will need to go the distance like whole life insurance. The company earned an A++ (Superior) from A.M. Best, an Aa2 (Excellent) from Moody’s, and an AA+ (Very Strong) from Standard and Poor’s.

Whole life policies issued through MassMutual provide a guaranteed death benefit, a guaranteed level annual premium and premium payment period, and guaranteed increases in cash value.

The cash value component, unique to permanent life policies, can be an excellent way to accumulate funds for other purposes like increasing the death benefit, covering premium payments, or building a retirement fund.

Additionally, MassMutual’s mutual status means the company pays dividends on its whole life policies on an annual basis. Dividends can be used to pay off premiums, increase the death benefit, or increase the policy's cash value.

MassMutual currently has five main whole life policies to choose from:

Company history and strength, dividends, cash growth, and great customer service make  MassMutual a great option for those seeking whole life insurance.

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