Life insurance is essential if you have someone in your life who depends on your income. Unfortunately, most people do not have the right kind of coverage or the right amount. About half of all the United States households have less life insurance than they should, following the Life Insurance Marketing and Research Association. Separate research by employee benefits provider Unum discovers that about a third of all households will be straining financially within the first month of losing a breadwinner.
The best part is life insurance is not expensive. Some people even approximate that life insurance costs up to five times as much as it does, indicates the Insurance Information Institute (III). In this article, we make the procedure for shopping for life insurance as easy as possible by compiling the top life insurance companies.
The best type of insurance for you right now
There are two main types of insurance
Term life insurance
If you purchase term life insurance, you will only pay premiums for a set term, often ten to thirty years. Your main objective is to make sure that a particular amount of money, the death benefit, will be provided to your loved ones should you die during that term.
Advantages of term life insurance
Term life insurance is the most affordable. Moreover, instead of paying premiums for your whole life, you only pay a set period. Thus you end up paying a smaller total over the years.
Even better, you can convert your term life insurance policy into a permanent life insurance policy. If you are currently on a tight budget, but you need life insurance, a great choice is to buy term insurance today and change it into permanent insurance later. Most insurance companies allow conversion within a certain period after buying your insurance; however, this time duration differs for each life insurance provider.
Disadvantages of term life insurance
A term life insurance policy lacks no cash value. You are only paying for the death benefit, or for the amount of monetary compensation your beneficiary will receive after you are gone. If you choose a permanent policy over a term policy, you will receive more benefits than just death benefits. That is why the term insurance is so affordable.
If you live beyond the set term, your family will not get any payout when you do pass away. Most people opt for term life insurance so that, should they pass away unexpectedly, their family will have money to keep on taking care of the expenses. After the term is over, you will possibly have fewer expenses- your kids might have finished college and may have paid your car and mortgage then. As you age, your necessity for life insurance decreases, so most people opt for term life insurance.
Permanent life insurance policy overview
The permanent policy lasts for your whole life. This indicates that you will pay premiums for the duration of your life. Mainly there are two categories of permanent life insurance.
Whole life insurance
A whole life policy offers death benefits to your loved ones after you pass away. Unlike a term policy, whole life has a cash value.
Advantages of whole life insurance
Whether you pass away at age thirty or ninety, your loved ones will receive a death benefit. Whole life has cash value- you will pay your monthly, annual, quarterly premiums, just as you would with a term- but a section of these premiums goes into an investment account that accrues interest.
You can trade-in your program and forfeit coverage to get the cash at any time. You can also take out a loan, withdraw a partial amount, and even use the money to pay premiums. And the money is tax-deferred.
Disadvantages of whole life insurance
Whole life is expensive since you will be paying for a more extended period plus the cash value. If you think you will have paid off most of the loans on your assets by the time you pass, you may want to go with term life insurance. If your situation is tight at the moment, whole life insurance is better for your family.
Besides, you have to pay fees if you trade in your coverage for the cash value. Note that in reality, if you have not spent your cash value by the time you die, the insurance company will take it back. Your family only gets the death benefit.
Universal life insurance
With universal, the amount of your premium payments can be modified over time, you can change how often you pay your premiums, and your death benefits can change.
Advantages of Universal life insurance
A universal life policy is an excellent option if you think your financial situation can change significantly before you pass. For instance, perhaps you realize twenty years into your plan that your loved ones will require a little more help than you originally thought after you are gone. You can increase the death benefits without having to get a new policy.
Disadvantages of universal life insurance
Universal insurance has most of the same shortcomings as whole life insurance. However, of all types of life insurance, universal has the most variable, making it confusing. Thus you might need a life insurance pro to break it for you.
The Best Life Insurance Companies of 2020
To develop our rating, we evaluated many insurance companies, scoring them on customer service, cost, and financial strength.
Voya Financial: Ideal Policy for family history of cancer
Unlike most life insurance companies in the market, Voya Financial is known for placing less emphasis on family history when determining rates.
If a factor as dire as cancer is part of your family history, you should still talk to insurance agents and get life insurance quotes from various companies. Nonetheless, there is a good chance Voya Financial will provide you some of the best- premiums. Besides, it has higher customer satisfaction and financial strength than most of its competitors.
Lincoln Financial Group: Recommended for millennials
You might think it is unnecessary to get life insurance if you are in your 20s and 30s, especially if you do not have a mortgage, kids, or a spouse.
But the younger and healthier you are, the lower your premiums will be. If you choose thirty-life insurance coverage at age twenty-five, you will be covered until you are fifty-five, and there is a good chance you will get married, have kids, and buy a home before you are 55 years. If you purchase life insurance before you think it is vital, your payments will be much lower than if you wait. Lincoln Financial Group has better financial strength, is more affordable than its competitors, and has great customer satisfaction.
State Farm: Best Term Life Insurance
State Farm Insurance rewards you for purchasing multiple insurance products, such as car insurance, business, or health.
But if you do not use State Farm for other kinds of insurance, it is still a great choice or term life insurance. State Farm was ranked with the highest customer satisfaction for five years in a low insurance company by J.D power. You can choose a ten, twenty, or thirty-year term for $250,000. You can convert the program to a whole life policy, and it is renewable up to age 95.
Northwestern Mutual: Best whole life insurance policy
Northwestern Mutual is highly customizable. The company has several optional add-ons (known as riders in the insurance market). For instance, a waiver of premium rider is accessible so that, should you become disabled while you have insurance, Northwestern Mutual will no longer require you to pay premiums. This is simply one of the many riders. You also have various payment options.
Mutual of Omaha: Top burial insurance company
When you purchase burial insurance, the death benefit is specifically intended to assist your loved ones in paying for burial and funeral costs.
There is an age limit when you are purchasing burial insurance. Mutual of Omaha’s minimum age requirement is forty-five, while most companies do not start till age fifty. Since it is mainly intended for funeral and burial costs, the benefits amounts that you might receive are much lower than death benefits for any kind of life insurance policy.
Protective Life Insurance: Best Universal Life Insurance
When it comes to cost, Protective Life Insurance is possibly your best universal life insurance option. Protective stands out since it provides something known as Custom Choice UL (Universal Life) Insurance. Universal life insurance is famous for being customizable. The Custom Choice UL policy appears like term life insurance. You select a set of times you want your premiums and death benefit to remain stagnant.
When the time frame ends, your premiums stay the same. Nonetheless, your death benefit amount slowly reduces. After your balance hits the minimum of $10,000, the death benefit stays at that amount, and the premiums will begin to increase.