Best Life Insurance Companies for 2024

Anyone with people depending on them should buy the right life insurance coverage to protect loved ones. This guide will help insurance buyers find the best life insurance companies.

Life insurance is a type of insurance policy that provides financial protection for dependents. The policy pays out a death benefit if the covered person passes away. Designated beneficiaries receive the death benefit, which can be used to replace the deceased's income or pay for services the deceased provided.

Some life insurance policies are also a type of investment vehicle. They acquire a cash value. Policyholders can borrow against them, withdraw some money, or cash in their policies.

Insurance buyers can also add more protections, called riders, from most insurers. For example, it may be possible to add long-term care insurance or a guaranteed income rider.

Hoping to protect family members? Check out The Ascent's guide to the best life insurance for families.

There are two primary types of life insurance: "term life" and "whole life." While both provide a death benefit, they have some important differences. 

Term life insurance

Term life insurance is in effect for a set time. It pays a death benefit if the covered person dies while the policy is active. It is solely a life insurance product, with no investment component. Insurance buyers decide how large the death benefit will be, with some policies offering millions in coverage -- although policies with higher death benefits cost more.

Term life insurance is much more affordable than whole life insurance, especially for those who shop around to find coverage. Whole life premiums often cost up to four times more than a term life policy. However, term life insurance only provides coverage for the selected term, which is usually between 10 and 30 years.

If the covered person doesn't die while the policy is in effect, the policy will expire and the death benefit won't be paid. However, it's possible to buy a guaranteed renewable term policy to have the option to extend the term of coverage. Unfortunately, premiums could go up when life insurance coverage renews.

Whole life insurance

Whole life insurance remains in effect for life as long as premiums are paid. As long as it is in effect, the death benefit will be paid out.

Whole life policies also have an investment component and acquire a cash value that it's possible to borrow against or cash out. Policyholders can withdraw some of the money, borrow against the insurance policy, or surrender the policy.

Tax benefits are associated with investing in a whole life insurance policy. However, many financial experts believe it's possible to earn a better return on investment elsewhere. Buying a cheaper term life policy and investing the money saved on premiums could be the better choice in the long run.

The first decision to make when buying life insurance is whether to buy term life or whole life. Here's a rundown of which policy type is best for specific needs, along with pros and cons of each.

Term life insurance:

Best for: Term life insurance is best for people looking for the most affordable insurance protection for a limited time.

Pros

• Lower premiums than whole life insurance
• Death benefit never changes
• Option to add coverage features

Cons

• No lifetime coverage
• Premiums may increase during policy renewal
• Policy doesn't pay out if the policyholder passes away outside of the coverage term

Whole life insurance:

Best for: Whole life insurance is best for people looking for lifetime protection and a policy that also serves as an investment.

Pros

• Lifetime insurance coverage
• Premiums never increase
• Policy serves as an investment that acquires cash value

Cons

• More expensive premiums than term life insurance

When applying for a standard term or whole life policy, insurance buyers must go through a medical underwriting process.

They must provide health information so an underwriter can assess their risk of dying during the coverage period. In many cases, insurance buyers will also need to undergo a medical exam as part of the medical underwriting process.

No exam life insurance is life insurance that is sold to consumers without requiring a medical examination. There are different kinds of no exam life insurance to be aware of.

• Guaranteed issue policies don't require a medical exam or any medical underwriting. They tend to be expensive, offer limited coverage, and have long waiting periods before the full death benefit will be paid. They are usually a good option only for individuals who don't qualify for traditional life insurance.
• Policies from insurers that use alternative qualifying criteria are available through some newer companies. These use algorithms and the insurance buyer's answers to health questions to qualify them for coverage. Companies that offer these types of no exam policies often offer term life insurance at comparable rates and with comparable death benefits to policies that require medical exams. For those who qualify, it can be much simpler to buy coverage from one of these insurers.

Before purchasing a no medical exam policy, research the terms carefully to understand both coverage and cost. It's also important to remember that life insurance medical exams often aren't a big deal. The insurer covers costs and the exam involves a simple general assessment of health status.

Choosing the right life insurance requires taking several steps. Here are some of the things insurance buyers should do to get the perfect policy in place.

Research types of life insurance

There are different kinds of life insurance policies, including the following:

• Term life: Term life policies are in effect for a period when coverage is needed, such as 20 or 30 years. They are typically the most affordable type of life insurance and don't include an investment component. No death benefit is paid if the insured person does not die during the coverage term, and the policy does not accrue a cash value.
• Whole life: Whole life policies are in effect indefinitely. Policies typically cost six to 10 times what a term life policy would cost. However, whole life policies have an investment component. The policies accrue a cash value and they can be cashed in or borrowed against. The death benefit is also paid out any time, as long as the policy has not been canceled and payments have continued.
• Guaranteed issue: Unlike most life insurance policies, these do not require a medical exam or traditional underwriting. Guaranteed issue policies generally have lower coverage limits and there is usually a waiting period before the full death benefit is paid out.

Term life is usually the best choice for most people. However, those who cannot qualify for a term life policy due to pre-existing medical conditions may want to consider guaranteed issue coverage. And people who will need lifetime coverage (such as parents of disabled children who will need financial support after a caregiver's death) may want to look into whole life plans.

Decide how much coverage to buy

When buying life insurance coverage, it's essential to decide on the size of the death benefit.

Some experts recommend purchasing policies with a death benefit equal to 10 to 12 times annual income. This is a simple approach to estimating coverage needs. However, the DIME formula provides a more precise method. This formula suggests basing the amount of the death benefit on four factors:

• Debt: The policy should repay all outstanding debts.
• Income: It should replace income for the desired number of years.
• Mortgage: The death benefit should be large enough to fully pay off a home mortgage.
• Education: The policy should cover full educational costs for any children.

Obtain several life insurance quotes

It's a good idea to get at least three to five quotes from different life insurance companies because prices vary.

Many insurers provide quotes online. Or an independent insurance agent can help consumers shop around with different carriers to explore coverage needs.

Insurance buyers should look at premium costs, but also other key criteria as well, including:

• The insurer's reputation for handling claims: J.D. Power provides data on consumer satisfaction with different life insurance carriers, and the National Association of Insurance Commissioners maintains a complaint database consumers can search.
• The insurer's financial reputation: AM Best provides grades indicating an insurer's stability.
• Add-ons and riders: Consumers may want to find a life insurer that offers certain types of add-on coverage, such as a return-of-premium rider that allows premiums to be repaid if the death benefit on a term life policy is not paid out, or a terminal illness rider that allows earlier access to death benefit funds in the event of a terminal diagnosis.

After reviewing all of these details, insurance buyers can choose which insurer to submit an application to. Insurers often ask for extensive medical information during the application process and a medical exam may be required. Be sure to leave time to complete this step and get coverage in place when it is needed.

Life insurance costs vary depending on many factors, including:

• Policy type: Whole life policies generally cost around six to 10 times more than term life coverage. Guaranteed issues policies are also expensive relative to the extent of protection they provide.
• Age: Those who purchase life insurance at a younger age can expect to pay less for coverage.
• Health status: People with no medical issues will pay less for life insurance than those with health problems.
• Smoking status: Smokers will pay much more for life insurance coverage.
• Insurance carrier: Some companies are more expensive than others.
• Add-ons: Purchasing additional protections can result in higher monthly premiums.
• Term length: Policies with longer coverage terms will come at a higher price.
• Death benefit amount: The larger the death benefit, the more expensive the coverage is likely to be.

The difference in cost from one policy to the next can be substantial. For example, while the average cost of a term life policy purchased at a young age could be around $30 for someone with no health issues, older smokers could pay $1,000 per month or more for similar coverage.

Life insurance coverage insures against the loss of life. If the covered person passes away, beneficiaries receive a payment. It's also possible to add riders or optional additional coverage. The most important coverages are listed below, along with common riders.

Accidental death

Beneficiaries get an additional payout when someone dies as a result of an accident. This is commonly referred to as the death benefit. Beneficiaries often receive double the death benefit from the accidental death rider.

Long-term care

This adds long-term care insurance. Long-term care coverage can be purchased separately, however, bundling can simplify and streamline the process of getting covered. Long-term care insurance provides coverage for nursing home care or long-term care at home.

Family income benefit

Loved ones will receive regular monthly income for a policyholder's death

Return of premium

Premiums paid for term life insurance are returned if the coverage term ends without a death.

Waiver of premium

Premiums are waived for policyholders who become permanently disabled. Coverage will remain in effect, despite a pause in premium payments, after a disability.

Life insurance provides a death benefit in almost all situations when someone passes away. A death benefit is typically paid out:

• If someone dies of an illness, such as cancer or heart disease.
• If someone dies as a result of an accident
• If someone dies due to a homicide

Some life insurance policies will not provide a death benefit if the covered person dies by suicide within a certain period of time after the policy is purchased.

The life insurance death benefit can be used for anything that the beneficiaries desire, from debt repayment to funeral expenses to daily expenses.

Life insurance buyers can also add additional coverage in the form of riders. This means that in addition to paying a death benefit, the life insurance policy might offer these extra protections:

• Guaranteed renewability: This allows a policyholder with term life coverage to renew the policy at the end of the term regardless of any health conditions that have developed
• Guaranteed insurability: This allows the policyholder to buy additional coverage without undergoing more medical testing
• Accidental death coverage: This provides an additional payment if the death occurs due to an accident
• Accelerated death benefits: This allows for funds to be paid out to a policyholder who has become terminally ill even prior to their death
• Child term coverage: This allows for a covered parent to add on a term life insurance policy for a child
• Long-term care coverage: This would pay for custodial care in a nursing home or home care setting if this type of care becomes necessary

Insurance buyers should research these options to ensure they are getting the right coverage for their needs.

Life insurance would typically not provide coverage in the following situations:

• If a lapse in payment occurred
• If a policyholder misrepresented their health status when applying for coverage

Some insurers also deny coverage for high-risk activities like scuba diving or skydiving. And, if a policy has a waiting period, the insurer might pay out only a partial death benefit or no death benefit during that time.

Life insurance is affordable and offers invaluable protection to save loved ones from financial disaster after a death. It can pay for important things, like a child's college education or the mortgage on a family home. It can also pay for important services someone was providing to their family, such as caring for children or aging parents.

To make sure a policy is worth paying for, you need to understand the details. This means researching term insurance vs. whole life insurance, researching which riders to buy, and obtaining at least three different quotes to compare costs.

Life insurance offers peace of mind and ensures loved ones are cared for. Shop around for quotes today with no obligation to find out how much a policy will cost and which policy makes the most sense.

Want a large life insurance policy? Check out The Ascent's guide to million-dollar life insurance policies.

Life Insurance products are rated on a scale of one to five stars, primarily focusing on:

Customer Satisfaction

We look at overall customer sentiment from those who have direct experience with the specific life insurance company. This is compiled through researching publicly available data as well as survey data from visitors of this site.

Pricing

With so many options for life insurance across the board these days, it's easiest, and quite effective, to first look at the bottom line.

Policy Options

We look at the various options available and variety of insurance products offered that can better fit a range of consumers. The focus being on term and whole life insurance and the strength of those specific policy products.

Company Strength

We review the overall strength and health of the company as an indicator as that can highlight a stability that provides peace of mind. Company strength can include:

• Age of company
• Financial health
• Overall customer ratings