Life Insurance: A U.S. News Guide

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.

Best Life Insurance Companies

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.

#1 Northwestern Mutual
#2 Haven Life
#3 State Farm
#4 Banner Life
#5 Principal
#5 Pacific Life
#7 Guardian Life
#7 Nationwide
#7 Pimerica
#7 MassMutual
#11 New York Life
#11 Allstate
#13 John Hancock
#13 Protective
#15 Mutual of Omaha
#15 Prudential

Read more about the U.S. News Best Life Insurance ratings.

Cheapest Life Insurance Companies

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.

Read more about the Cheapest Life Insurance Companies.

How Does Life Insurance Work?

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.

Read more about how life insurance works.

How to Buy Life Insurance

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.

Read more about life insurance quotes and how to buy life insurance.

How Much Life Insurance Do I Need?

To decide how much life insurance coverage you need and for how long, consider the following factors:

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.

Read more about how much life insurance you need.

Types of Life Insurance

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.

Read more about term life insurance.

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.

Read more about whole life insurance.

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 may 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 insurance.

Read more about universal life insurance.

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.

Read more about no-exam life insurance.

Frequently Asked Questions

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.

Learn More

For more information about life insurance, see the following guides:

For more information on other types of insurance, see the following guides:

Methodology

We explain what our research has determined matters most to consumers, experts and professional reviewers when it comes to life insurance. Then we provide an unbiased evaluation of the life insurance companies our research determined consumers, experts and professional reviewers searched for most frequently. Our goal is to empower consumers with information and tools to help them make informed decisions. More information about our 360 Reviews methodology for evaluating life insurance companies is here.

All life insurance information was accurate as of August 19 , 2020.