• December 15, 2017 - We’ve updated our review to clarify the difference between term life and whole life policies. To stay current, we’ve also reevaluated companies offering term life insurance. Our top picks remain as trustworthy and comprehensive as ever, but we removed one former runner-up, Lincoln Financial, for losing financial stability since we first published our review.

Life insurance is one of those things — like 401(k)s and crow’s feet — that are hard to grasp when you’re young but hit you like a ton of bricks as you get older, often right around the time you get married or have your first kid. If there are people in your life who depend on your income, the best life insurance can add stability to your long-term financial plans.

There are lots of policy types to choose from, but for most people, term life insurance is the most affordable, allowing you to pay for only the years that you need coverage (until the kids are out of the house, say, or until retirement), at a price that won’t cripple your budget. The second most common option, whole life, is more expensive upfront and tends to be best only if you’re maxed out common retirement options like your 401(k). You can learn more about this option in our review of Best Whole Life Insurance, or read more about both types below.

Stay-at-home spouses should consider life insurance too.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.

Our top pick for best term life insurance, TIAA Life, is financially secure, so you know it’ll be there when you need it. Unlike some of our former runners-up, it’s retained its “excellent” financial strength rating since we first published our review in 2016, and TIAA offers a range of term lengths and coverage options that make it a practical addition to most budgets.

We’d also suggest looking into New York Life. This company offers the greatest flexibility in term lengths — you can choose any number of years between 10 and 20. That’s a plus if you want insurance coverage tailored to a very specific timespan — maybe you won’t need protection after your retirement benefits kick in exactly 14 years from now. A third provider, Amica, also stood out, thanks to a unique rider that ensures your death benefit keeps pace with inflation: The present day value of your policy will remain intact regardless of whether the dollar loses ground 30 years from now. We’d suggest getting quotes from all three of our finalists to compare rates.

How does term life insurance work, and why is it best for most people?

When it comes to life insurance types, the two major players are term life insurance and permanent life insurance (also called whole life). Term life insurance provides coverage for a set timeframe — 10 or 20 years, say. If you outlive it, the policy expires with no cash value. Whole life insurance never expires, as long as you keep paying the premiums. This option offers your family a guaranteed payout, but the tradeoff is that it’s much more expensive — generally 10 times the price of term.

“Nobody thinks they should get something back for car insurance without an accident. You’re paying to be insured. But life insurance companies have done a good job convincing people to look at life insurance as an investment. It’s the only type of insurance where people expect cash value.”

Shopping for policies for a tobacco user?Risk factors like tobacco use can drive up the price of term policies. We look at which companies are willing to take on this risk in our review of best cheap life insurance providers.

The financial advisors we spoke with warned us that, just because you want to pass a nest egg down to your family, it doesn’t necessarily follow that a whole life policy is best. Instead, most people will be better off paying for a less expensive term policy, and investing whatever they can afford in a mutual fund or 401(k). Your family’s need for a life insurance payout usually reduces as you build up other assets, and term lets you pay for coverage just through the years when protection is critical. (For many people, term is also the only affordable option: Think $20-30 a month, rather than $300.)

That said, if establishing a financial legacy is important to you, and you’ve already invested heavily in more typical retirement funds, whole life represents an additional avenue for passing money down to your family tax-free. Just make sure that you’re in a financially comfortable position before taking this leap. (A whopping 20% of whole life insurance policies lapse in their first year.)

Our Picks for Best Life Insurance Companies

  • TIAA Life

    Best Overall

  • New York Life

    Most Flexible Terms

  • Amica Life Insurance

    Standout Rider

Our Picks for the Best Life Insurance

Best Overall - TIAA Life

TIAA Life Insurance Logo

TIAA Life has elite financial strength ratings from both A.M. Best (A++) and Standard & Poor’s (AA+), but what really sets the company apart is its conversion allowance. TIAA allows you to convert from your term insurance to any of its permanent policies at any time during your initial term. The company also lets you convert your policy without “further evidence of insurability” (read: no medical exam). If, down the road, a serious illness leaves you reconsidering how much your family needs your insurance payout, you’ll be left with plenty of good options for extending your coverage.

TIAA also offers a broad range of term limits: From 10 to 30 years in 5-year increments (the lone exception is the 25-year term). Coupled with the company’s generous conversion policies, this means you could theoretically purchase a 30-year term policy when you first learn that you’re going to be a parent (say at age 30), secure a sizable benefit for your family at an affordable and stable premium for the entire term, and even if you develop a chronic illness in year 30, you’ll still be able to convert your term policy to any of TIAA’s permanent life products.

It’s a farfetched scenario — and a kind of grim one — but without this allowance, you might find yourself unable to purchase a policy that will provide for your family after you’re gone. This becomes even more important if you have a special-needs child who requires care into adulthood, or a “surprise” baby who won’t have yet gone to college when the initial term expires. TIAA Life covers these bases better than any of our other top contenders.

Another thing we really liked about TIAA Life was how its website broke down the complex subject of life insurance: how it works, its central purposes, and the different types. It has quote tools both for those who know what type of product they want, and those who are just starting to think about buying a policy. The Life Wizard tool in particular was one of the most helpful we saw for assessing an individual’s need for life insurance and the different options available. It was also easy to get a TIAA agent on the phone to answer specific questions and go over the ins and outs of the policies.

Most Flexible Terms - New York Life

New York Life Logo

About the only thing that kept New York Life from sharing the top spot with TIAA was its conversion privilege stipulation: If you decide to convert to a permanent policy after the first 10 years of your term, you’ll need to purchase a separate rider. Other than that, New York Life is nearly on par with TIAA for financial strength, and it gives prospective buyers unparalleled flexibility when designing their policy: You can choose any term length between 10 and 20 years (although there’s no longer-term, 30-year option). You could buy a 16-year policy to coincide with the exact time you expect your last child to graduate from college, or, say, an 11-year policy to match the age when your spouse’s pension kicks in.

And although New York Life requires that extra rider, it offers some nice perks for policyholders who decide to convert sooner. For instance, if you convert in the first five years of your term, you have the choice of either being insured as if you were still the same age as when you first bought the term policy (which could end up saving you significant money), or receiving a credit equal to one year of your term policy’s premium.

Even though New York Life technically only offers term limits between 10 and 20 years, its Policy Purchase Option does allow you to buy a new replacement term policy at certain set dates (like when you hit a certain age or experience certain life events) without a second medical exam. In this case, although the premium will increase somewhat based on your current age, your coverage will extend for longer, at lower rates, than if you waited to renew until the very end of your term.

The New York Life site also excels at consumer education, with impressively easy-to-read explanations of tricky subjects, like the investment theories backing term insurance versus those in favor of permanent life insurance.

New York Life Insurance - image from their webpage

It might not seem like you’re ready to dive into the philosophy behind insurance policies on your first go-round — but we’re all only getting older (and therefore more expensive to insure). Now’s the time to figure it all out.

Standout Rider - Amica Life

Amica Life Insurance Logo

Amica’s only real drawback is its conversion options: Unlike TIAA, there’s no option to convert after the first 10 years of the policy, and unlike New York Life, there’s no rider to make up for it.
However, Amica won points for offering a thoughtful rider that we didn’t see anywhere else: the Cost of Living Adjustment rider, which adjust the policy’s death benefit to keep up with inflation. “The effect of inflation on the death benefit is commonly overlooked, particularly longer-term policies — those lasting 20 or 30 years,” explains Weisbart. This is a legitimate concern: Even $500,000 won’t stretch as far in 30 years as it does today.

We were also impressed by the clarity and transparency of its website — particularly its term product breakdown. Whereas some sites made us work to locate specific policy info, Amica presented a streamlined list of what’s included and what’s optional. That doesn’t mean that Amica’s website is the prettiest to look at, but we found it easier to navigate and more informative than several more slick-looking insurance websites that proved frustratingly light on factual information.

Screen capture of Insurance Term definitions on the Amica website

We were impressed with the detail of Amica’s policy breakdown, and we love an on-call live chat option.

Other Life Insurance Providers to Consider

  • Transamerica enjoys a sterling industry reputation and stacked up pretty well among our finalists, but its limited menu of conversion-eligible permanent policies means it takes a backseat to our top three (just one term policy, their “Trendsetter Super,” can be converted.) We did like its consumer-education materials though, especially the Insurance Plan Explorer, which walks through a simple series of questions to recommend an insurance type.
  • State Farm has the second-best financial strength out of our six finalists (plus very high customer satisfaction, per JD Power), but like Transamerica, it isn’t as flexible with its conversion-eligible permanent policies and doesn’t offer an Accelerated Death Benefit rider for terminally ill policyholders. While the relative merits of this particular rider can be debated (using it automatically depletes the death benefit amount for your beneficiaries), State Farm stands out as the only provider that doesn’t offer it.

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Did You Know?

The amount of life insurance that you need depends on your dependents.

The industry rule of thumb is to multiply your annual income by 10, but that’s not a very precise method for calculating something so important. Our insurance guru, Tony Steuer, recommends following something called the economic life cycle theory of planning. The gist of this theory is that the earnings-multiple method is insufficient for planning how your family’s finances are going to pan out over the long run. You don’t have to buy insurance to provide for a luxury future, you just want to provide for a steady continuation of your family’s quality of life.

A more accurate figure takes into account how much your spouse and children will need to maintain their standard of living, whether any of your children will need help with college, and your mortgage and other debt — not to mention inflation. You should also factor in “hidden income” that isn’t part of your gross wages (like matching contributions to your retirement fund) as well as any end-of-life expenses, like funeral costs.

And life insurance isn’t necessary for everyone. If your primary goal is simply to leave a monetary gift for your beneficiaries, you’re likely better off with a different investment vehicle, such as an IRA or a 401(k).

Medical exams can help lower your premium.

When you apply for a life insurance quote, you’re asked a slew of questions regarding your physical health (age, height, weight, etc.) as well as lifestyle and medical history. When you’re ready to see if you qualify, you can sometimes opt for filling out a similar questionnaire, but more often you’ll need a medical exam. These are performed by a paramedic in your home or office at the insurance company’s expense.

Your health right now determines your premium for your entire term. If you sign up at 25, the insurance companies will use your health at age 25 to project your health at age 55. Companies don’t share their risk formulas, but most will look for similar red flags. A urine analysis can reveal diabetes risk as well as liver and kidney function. A stress test will disclose heart health. But unless you have reason to believe that these test results wouldn’t look good, know that undergoing an exam can usually secure a lower premium. And conversely, policies that don’t require an exam usually have higher premiums or a smaller benefit. “These insurers have to allow for something they would have caught on an exam,” Steuer says.

But because “insurability” is only measured at the beginning of your term, this means that even if you develop a serious illness a few years after purchasing the policy, the insurance company will continue to charge you based on your (healthier) medicals at the time of application. And remember: To insurance companies, younger means healthier. The later in life you start the policy, the more expensive the annual premiums will be.

Prepare for your medical exam by cutting back on bad habits.

No matter when you undergo an exam, preparation will help ensure you’re well-representing your health.

  • Detox — For the week leading up to your exam, swap out salt for leafy greens and guzzle as much water as you can hold. Reducing sodium and upping hydration can help lower both blood pressure and cholesterol levels.
  • Fast — 8-12 hours before the exam. It’s a good idea to schedule it in the morning for this reason. Eating before having bloodwork done can give inaccurate results, and perhaps even paint a bad picture of your glucose levels and liver function.
  • Avoid anything that might skew your results — alcohol, caffeine, tobacco, strenuous exercise. All of the above can cause aberrations in your results, or simply draw the truth in harsher strokes.
  • That said, staving off cigarettes for a brief spell before your exam won’t do much good if you’re a longtime smoker. The exam doesn’t test for nicotine, which actually disappears from the body fairly swiftly. Instead, they look for cotinine, which shows up in blood, urine, and saliva, and leaves traceable amounts for about ten times as long.

No prep can erase long-term bad habits, but it’s akin to riding a C average throughout the semester but then taking a good look at your notes the night before the final. It won’t bring you to the top percentile, but it may scrape you a low B.

If you’re healthy and you know it, tap your wrist.

The life insurance industry isn’t known for cutting-edge innovation, but thanks to big data and wearables, that may be changing. Strapping on a smartwatch or fitness tracker and sharing real time health metrics with your insurance provider could save you money (or at least get you an Apple watch for $25). Currently, these programs are few and largely experimental — it’s too soon in the game for insurance companies to know how to equate a person’s fitness with their insurability. Still, a 2016 survey conducted by LIMRA (Life Insurance Marketing and Research Association) found that 51 percent of millennials and 30 percent of Americans overall were interested in lowering their rates via wearables, suggesting that this trend may continue.

Best Life Insurance Policies: Summed Up

Life Insurance Policy

Best For…

1

TIAA Life

Best Overall

2

New York Life

Flexible Terms

3

Amica Life

Standout Rider

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More Life Insurance Reviews

We’ve been looking into life insurance for years now, and have taken a closer look at some other providers too. In the coming weeks, we’ll be updating these reviews with our latest findings, so stay tuned.