Term life insurance provides coverage for a length of time, for example, 10, 20, or 30 years. If the insured client dies during the term, specific monetary benefits are paid to their beneficiaries. When the term is up, policyholders typically have three options: renew for another term, convert to whole life coverage, or allow the policy to expire. The length of the term determines the cost —as longer terms have more expensive coverage, and you can expect rates to increase when you renew your coverage. While term life insurance is cheaper than whole life or “permanent” coverage, it has no savings or investment component—its only value is the agreed-on death benefit.
Thanks to flexibility in cost and coverage length, term life insurance plans remain popular, with thousands of companies nationwide offering policies for peace of mind. We’ve collected and compared key data including financial strength, customer service, key offerings, and standout features to select the five best term life insurance providers in 2020.
The 5 Best Term Life Insurance Companies in 2020
- State Farm: Best for Customer Service
- New York Life: Best for Flexible Policies
- Transamerica: Best for Cost-Effective Plans
- Pacific Life: Best for Straightforward Coverage
- Northwestern Mutual: Best for Easy Policy Adjustments
|New York Life||Transamerica||Pacific Life||Northwestern Mutual|
|Our review||Our review||Our review||Our Review||Our Review|
|The best||Customer service||For flexible terms||For Cost-Effective Plans||For Straightforward Coverage||For Easy Policy Adjustments|
|S&P Global financial strength rating||AA||AA||AA-||AA-||AA+|
|AM Best financial strength rating||A++||A++||A||A+||A++|
|Moody’s financial strength rating||Aa1||Aa1||A1||A1||Aaa|
|J.D. Power 2019 U.S. Life Insurance Study score||5/5||4/5||2/5||3/5||5/5|
*Data as of 05/20/2020.
State Farm makes it onto the list of top term life insurance companies thanks to its superior customer service scores. With an A+ rating from the Better Business Bureau (BBB) along with 5 out of 5 Power Circles on the J.D. Power 2019 Life Insurance Study, State Farm is all about making sure clients are satisfied with their policies. And with 19,000 agents across the country, it’s easy to connect with an insurance professional to find the best fitting term life solution.
Check out our full State Farm review to learn more about its term life offerings, pricing, and coverage options.
|✓ Best For||✗ Not For|
|Great customer service||Term customization|
New York Life
New York Life makes it easy to customize your policy to match your coverage needs. The company’s “Level Premium Convertible” option lets you select a term length between 10 and 20 years with premiums that are guaranteed to remain the same for the length of your policy. You can also choose a “Yearly Convertible” policy that renews annually (and for a higher price) but lets you cancel coverage anytime.
Learn more about New York Life’s customizable coverage options in our full overview.
|✓ Best For||✗ Not For|
|Flexible policy options||Long-term policies|
Transamerica earns a spot among our top five best term life insurance companies with its cost-effective policy options. Clients can choose from multiple term lengths with death benefits starting at just $25,000. This makes it easy to purchase a small-scale, extremely affordable policy that still offers substantial term coverage. In addition, Transamerica offers riders such as disability waiver of premium, accelerated death benefit, accidental death insurance, and long-term care insurance to ensure that even the most cost-effective policy meets your needs.
Get the complete coverage picture with our full Transamerica review.
|✓ Best For||✗ Not For|
|Cost-effective policies||op-tier customer service|
Pacific Life offers simple and straightforward term insurance policies with solid rider options. Clients can choose from 10, 15, 20, 25, or 30-year terms and easily add riders such as living needs, accidental death, or even child coverage so they don’t need to purchase a separate policy for younger family members. While Pacific Life has high financial strength ratings, it’s worth noting that the company doesn’t offer online quotes.
Get all the term life particulars in our full Pacific Life review.
|✓ Best For||✗ Not For|
| Straightforward term life |
Northwestern Mutual makes it easy for clients to adjust their policies to meet emerging needs. For example, you can alter term lengths if your insurance requirements suddenly change, or leverage the company’s term-to-permanent conversion option if extending your coverage is a top priority. Accidental death, disability income, and critical illness riders help further increase plan flexibility.
Discover more about Northwestern Mutual in our in-depth insurance review.
|✓ Best For||✗ Not For|
| Easy term |
|Online policy support|
- Types of life insurance policies
- Guide to Term vs. Whole Life Insurance
- How to Shop for Life Insurance
- 4 Things You Can Do With Cash Value Life Insurance
We selected the best life insurance companies by first looking at each provider by market share to determine availability.
The top providers were then evaluated based on factors including the provider’s financial strength as indicated by organizations such as AM Best and Standard & Poor’s, customer service ratings and support, as well as average premiums.
Term Life Insurance FAQ
Term life insurance is the most affordable type of life insurance and definitely worth considering if you have a family that is largely dependent upon your salary. Having a term life insurance policy in place can provide a valuable financial safety net for your loved ones. And, with the ability to select from a variety of term lengths, you could choose a length that will cover the time it takes for your children to get into college and start living their lives.
There are two major types of life insurance to consider: Term and Permanent.
- Term life insurance provides coverage for a set time frame — anywhere between 10 and 35 years. If you outlive it, the policy expires with no cash value.
Permanent life insurance never expires, so long as you keep paying the premiums. This option guarantees a payout to your family, but the trade-off is that it’s much more expensive — up to 10 times the price of term.
Of these two, most people will be best off buying a term life insurance policy. The main reason? Term is cheaper and simply more practical. It allows you to purchase coverage during the most critical period — say, during the 20 or so years that your kids are dependent on your salary — at a price that won’t break the bank. Think $20 to $30 per month, rather than $300.
John Espenschied, Agency Principal at Insurance Brokers Group, also points out that “over time, things [like a mortgage] will get paid off and savings will generally increase, reducing the need for life insurance.” In other words, after 20 years, you will have built greater assets. Your family will no longer be dependent on your salary alone, so life insurance becomes less crucial.
Some people choose permanent life insurance over term for its cash value component. In short, permanent premiums are higher because part of what you pay gets invested and grows into a savings account that you can later borrow from and earn dividends on. However, this should be a last-recourse savings option for most people. The financial advisors we spoke with generally agree that you’ll be better off paying for a less expensive term life insurance policy and investing all you can into traditional savings channels, like an IRA or 401(k).
“[Generally] by investing money in other places such as the stock market, people will end up with a much higher return on their investment than they will with a whole life policy,” says Thomas Rockford, financial advisor, retirement planner, and creator of LifeAnt.com.
That said, if you’ve already invested heavily in typical retirement funds, permanent life insurance can be an additional avenue for passing down money to your family tax-free. Just make sure that you’re in a financially comfortable position before doing so. A whopping 20% of whole life insurance policies lapse in their first year due to policyholders’ inability to pay the steep premiums that come with this coverage.
The best advice we can give for finding the best term life insurance policy is to shop around. Think about it like any major purchase: You shop around and compare prices. The same is true when looking for the best term life insurance. Get as many quotes from as many providers as you can. Our top three picks are a great place to start:
- Best Term Life Insurance for Customer Satisfaction: State Farm
Best Term Life Insurance for the Most Flexible Terms: New York Life
Best Term Life Insurance for the Most Affordable Policies: Transamerica
How we found the best term life insurance:
- Flexible term policies: We omitted any providers that didn’t offer the option of a guaranteed renewal policy and term-to-permanent conversion.
Quality of coverage: Once we had our initial list of candidates, we evaluated each provider’s available term lengths and coverage options.
Rider options: Term life insurance add-ons are known as “riders.” These can include Waiver of Premium, which forgives your payments if you can no longer work, and Accelerated Death, which lets you use a portion of your death benefit for end-of-life expenses. We tallied up the number of riders each company provided and compared available options.
To find the best term life insurance for you, try starting with our handy quote tool.
In 2014, Salary.com surveyed more than 15,000 stay-at-home moms and found that their 10 most frequent responsibilities (which included daycare, driving, tutoring, and cooking) amounted to an annual market value of $118,905 — the amount a household would have to pay if that work was hired out. So yes, it absolutely does make sense for stay-at-home spouses to have their own life insurance policies.
The funds you pay will be forfeit. If you think about term life insurance as a metaphorical bank, then think of all the people with term life insurance policies as different clients all depositing funds into the same bank as you. If you don’t die during the term length of your policy, then your funds will be put toward the payouts of those that do.
Generally, it can be summed up like this: Premiums you pay into a term life insurance policy provide a death benefit to your beneficiaries should you pass away during the life of that policy. So, if you signed up for a five-year term life policy and passed away within those five years, your beneficiaries would receive the death benefits from the premiums you paid. Whole life insurance builds up over time and lasts for as long as you do, allowing you to draw from these funds at a later time or continue to increase your death benefit payout.
Our Other Life Insurance Reviews
We’ve been digging into all kinds of life insurance policies and have published additional reviews for specific needs. Check them out below:
- The Best Life Insurance Companies
- The Best Whole Life Insurance Companies
- The Best Life Insurance Companies for Seniors
- The Best Cheap Life Insurance Companies
Editor’s Note (Oct. 25, 2019): TIAA Life, our previous top pick for Easily Convertible Policies, recently announced it is no longer accepting new life insurance applications. While it continues to service existing policies and pending applications, we’ve removed TIAA from our list of recommendations.