State Farm Review
- April 13, 2018 - In order to provide the most up-to-date information, we've revised our review of State Farm life insurance to include current policy information. In light of awarding State Farm Best Overall in our review of the Best Term Life Insurance, we've also expanded this review with more information about riders and plan options.
Our State Farm Life Insurance Review
State Farm is one of our favorite providers for term life insurance thanks to its diverse offerings. Customers can choose from four different term structures depending on their needs; for instance, you might select a standard 20-year term, a 10-year no-exam policy, or a 15-year plan with decreasing premiums meant to insure your mortgage payments. On top of that, State Farm offers a good selection of policy add-ons, so its policies are fairly customizable.
And while State Farm also carries multiple options for whole life insurance, it’s worth noting that it isn’t our top pick for whole life — in large part because it has fewer “living benefits” than other providers like Northwestern Mutual and New York Life. These benefits often become more important as the insured grow older, as they can be used to cover medical treatments and other end-of-life costs.
Keep in mind that there isn’t a single best policy or provider for everyone. The right company for you will depend on who extends the best premium for the coverage you need. We suggest requesting a quote from State Farm along with a few other companies to see how your options stack up. If you do choose State Farm, you’ll be well taken care of: the company has been rated number one for customer satisfaction four years running, and it has rock-solid financial backing.
State Farm's Claim
State Farm’s new slogan is “Here to help life go right.” But what does that mean, exactly? For State Farm, it’s a promise to be there for customers at all times — not just when something goes wrong. Customers are assured a great experience and sound insurance, says State Farm, thanks to superior customer satisfaction and financial strength ratings.
Is it true?
We put a lot of stock in customer experience and financial strength, as those are the biggest indicators of what it’s actually like to work with a provider. In that sense, State Farm’s ratings are its biggest selling factor. State Farm is number one for customer service in J.D. Power’s rankings, with respondents ranking the company five out of five in every category: from price to policy to service. Coupled with top financial strength scores from the independent agencies A.M. Best, S&P Global, and Moody’s, State Farm a solid bet for most insurance customers. Policyholders should expect strong customer support and smooth sign-on and policy management — and if that policy is ever needed, there’s no question State Farm will be able to pay out.
Of course, State Farm wouldn’t have gained this status without having strong insurance offerings in the first place. After doing a deep dive into State Farm’s policy options, we’re impressed with the variety of life insurance it carries. Beyond providing term, whole, and universal life options, State Farm lets customers choose from a diverse list of payment structures; that way, most people can find the right size policy at a price point they’re comfortable paying for.
In terms of coverage, State Farm is about equal to other top providers. It offers 11 out of the 16 popular coverage options (or “riders”) we looked for. That’s on par with providers like New York Life, Transamerica, and Amica Life Insurance. The only big omission coverage-wise is the lack of an Accelerated Death Benefit Rider. This add-on, which lets customers use part of their policy for end-of-life costs, is one of the most important “living benefits” out there. Customers looking for permanent life insurance, or those at risk for certain illnesses, may be better off with one of our top whole life insurance companies. For shorter term policies, though, State Farm offers a good range of protection and policy options.
The other caveat to signing on with State Farm is that it’s likely not your cheapest life insurance option. When we compared term quotes for a variety of profiles, State Farm had the highest premiums across the board (compared to TIAA, Transamerica, Amica Life, New York Life, and The Globe). The company has also been knocked by a few independent insurance agents for overpricing its life policies.
However, price comparisons for life insurance should be taken with a grain of salt. It’s important to remember that life insurance prices are set by the company’s underwriting process, which evaluates how “risky” it is to insure you. A company’s perceived “risk factors,” and by extension your quote, will look a little different with every company — meaning State Farm could end up being the most affordable provider for one customer, and the most expensive for another. That’s why it’s important to compare quotes from more than one company before committing to a policy. With its robust policies, reliable service, and strong financials, State Farm should be one of the candidates on your list.
A Closer Look at State Farm's Features
|Life Insurance Types Available||Term, Whole, Universal Life|
|Annual Premium||Quotes will vary|
|Important Coverage Options||
|Term Lengths||10, 20, or 30 years|
|J.D. Power 2017 Customer Satisfaction Score||853/1000
"Among the best"
Ranked first out of 24 companies
|NAIC Customer Complaint Ratio||2015-2017 average: 0.00
Well below average
(National Median: 1.00)
|Best For...||People who value customizability in policies and payment plans|
|Not For...||People with long-term whole life needs|
*With Term Life policies
Our Deep Dive
Below, we’ll take a look at State Farm’s credentials and policy options in further detail. If you need to brush up on life insurance basics before jumping in, take a look at our Life Insurance Review. It walks through the different types of insurance we’ll be talking about and covers need-to-know terms.
Best-In-Class for Customer Satisfaction
State Farm is currently enjoying its fourth year running as J.D. Power’s top-rated life insurance company. The J.D. Power study, which surveyed over 6,000 customers in 2017, ranks life insurance providers based on their price, service, policy offerings, and billing process. State Farm has the happiest customers across the board; it’s rated five out of five in every category. In addition, the National Association of Insurance Commissioners reports that there hasn’t been a single complaint filed against State Farm life insurance in the last three years. When taken together, that’s a solid indicator of a great customer experience.
Industry-Leading Financial Ratings
Along with great customer ratings, State Farm earns just about the highest financial strength scores a company can receive: A++ from A.M. Best, AA from S&P Global, and Aa1 from Moody’s. For policyholders, that means total peace of mind about their financial security. State Farm will be able to make good on its obligations, whether you need to file a claim one year from now or fifty. This stability is especially important for life insurance, as it will usually be decades down the road before a policy is needed.
Four Distinct Term Life Options
State Farm has some of the best term Life insurance on the market, and not just because of its excellent ratings. The company’s range of policy options is impressive — it offers four types of term life insurance, whereas most companies only have one or two. The right one for you will depend on your financial goals and coverage needs.
- Select Term Life Insurance is the most affordable and flexible option. It provides coverage for 10, 20, or 30 years at a low cost and expires once the term is up.
- Return of Premium Life Insurance is pricier than Select Term (about twice the premium), but with a distinct benefit: If you outlive the term, all the premiums you’ve paid will be returned to you. Return of Premium Insurance can last 20 or 30 years.
- Mortgage Term Life Insurance is meant to provide enough coverage to settle your mortgage should you pass away before you’re finished paying it. Like a mortgage, this insurance lasts 15 or 30 years, and the death benefit decreases as you get closer to paying your house off. This can be an affordable choice for those longer-term plans.
- Instant Answer Term is State Farm’s response to no-medical-exam life insurance. It allows you to skip the initial health evaluation and select a flat $50,000 of coverage, lasting until age 50 or for 10 years, whichever is later. Consider this coverage with care. No-exam insurance tends to be pricier than traditional term, because providers are unable to assess risk and need to compensate for potential payouts.
Protection for as Long as You Need It
We also appreciate State Farm’s generous extension options for term life. If you realize down the road that you need more insurance than the term you signed on for, the company will let you renew your policy through age 95 “regardless of health or occupation.” It will also allow you to convert to a whole life policy through age 75 — again, without a second health exam. That “regardless of health” qualifier is important: It means you won’t be refused coverage or upcharged if you’ve developed a serious illness during your term.
A Variety of Whole Life Payment Structures
In terms of flexibility, we like that State Farm offers multiple payment plans for whole life insurance. Since whole life is the most expensive option by far (up to 10 times the price of term life), it’s important to be able to choose a payment schedule you’re comfortable with. Here's what those different options look like:
- Traditional whole life insurance has the most affordable premiums of the lot — starting at $78 per month for a 25-year-old in excellent health — and requires regular payments for your whole life. The longer you pay in, the greater your policy’s cash value.
- Limited Pay Life carries much steeper premiums than regular whole life, starting at $144 per month. But, depending on your payment plan, you’ll only pay for 10, 15, or 20 years. After that, your policy’s cash value grows slowly with interest.
- Single Premium Life lets you pay a large, one-time lump sum — starting at $20,000 — for a guaranteed $100,000 death benefit. The down payment is huge, but it will accrue interest much more quickly than the slow-growing cash value of traditional whole life.
Rigid Term Lengths
The biggest limit to State Farm’s flexibility is that it only offers 10-, 20-, and 30-year terms (or 15 if you opt for Mortgage Life Insurance). We prefer companies that give policyholders more agency in choosing their term length — that way, no one gets stuck skimping on coverage or paying for more than they need. New York Life, for example, lets customers choose any term length between 10 and 20 years. That said, experts attest that 20 years is the most popular term length; if you’re among the majority of policyholders that wants to start with a 20-year term, then State Farm has you covered.
Lacks One of the Most Important Riders
It’s important to note that State Farm has a decent rider selection. It offers 11 of the 16 popular policy add-ons we looked for, which is about on par with other top companies like New York Life and MetLife. However, State Farm is missing an Accidental Death Benefit rider, which many of our experts agree is the most important option. ADB allows you to use a portion of the death benefit for end-of-life costs, including medical treatments and care. Our other favorite life insurance companies all offer it, and we’re disappointed by the omission from State Farm.
Still, State Farm does offer alternate channels for accessing the death benefit during one’s lifetime. The Critical Illness rider, for example, will provide a lump sum payment at the time of diagnosis, and the Disability Income rider can help supplement income if the policyholder becomes injured and unable to work. These riders may be a good alternative to ADB. However, if you’re concerned about having greater living benefits, you may consider checking out a company like New York Life; its accelerated benefit allows you to use up to $250,000 of the policy’s value during your lifetime.
Moderate Online Resources
As far as customer resources go, State Farm is middle of the line. Its FAQ is barebones, covering the basic types of insurance and what you’ll need to know to sign up. Like most companies, it also provides a life insurance calculator for calculating the right death benefit.
State Farm’s one unique tool is this checklist of things you’ll need to file a life insurance claim. Life insurance claims are a tough subject to approach, and most providers avoid the topic online entirely, so we appreciate State Farm’s helpful, straightforward information. But beyond that, its resources aren’t especially helpful. If you have in-depth questions about building a policy or selecting the right coverage, you’ll likely have to reach out to and agent directly.
Has an App for Mobile Policy Management
State Farm does stand out from the competition with its mobile app. The app allows you to view your policy details, manage coverage, pay bills, and check the company’s FAQ on the go. While having an app seems commonplace, most life insurance companies haven’t made the move to mobile yet. Most people have gotten accustomed to managing their accounts and finance anywhere at any time — we appreciate State Farm for keeping up with the trends.
State Farm Life Insurance vs. The Competition
Since everyone’s needs are a little different, we always recommend checking out multiple life insurance companies before selecting a policy. The best provider for you will depend on what type of policy you need and who offers you the best premium. These top companies all offer their own unique benefits, and they’re great options as you begin comparing quotes.
State Farm vs. TIAA Life
If your main priority is finding the lowest premium, we recommend starting your search with TIAA Life. TIAA has many of the same benefits as State Farm, including guaranteed renewability and the ability to convert to a permanent policy at any point in the original term. But when we reviewed the Best Cheap Life Insurance Companies, it quoted us cheaper premiums for every sample profile.
That said, you may make small sacrifices for affordability. TIAA has fewer riders than many other companies — eight to State Farm’s 11 and New York Life’s 12. It’s lacking some living benefits like Disability, Critical Illness, and Long Term Care riders. This means its policies are less helpful in the event that your financial needs change down the road. Those with shorter terms or limited coverage needs may not mind, but if you want extended financial security, you may be better off with State Farm.
State Farm vs. New York Life
New York Life has State Farm beat for term flexibility. Customers can choose any term length between 10 and 20 years, as opposed to State Farm’s 10-year increments. That gives you the freedom to choose the exact amount of coverage you require without paying for any years you don’t. You could, for example, choose to pay for exactly 18 years of insurance to cover the period while your kids live at home.
However, New York Life is a little less amenable when it comes to policy conversion. If you decide to convert to a permanent policy any time after the first 10 years, you’ll have to purchase a separate rider to do so. With State Farm, conversion is guaranteed through age 75 — no additional purchase required. That means you’ll want to be fairly sure about sticking to your selected term length before signing up with New York Life.
State Farm vs. Northwestern Mutual
State Farm missed one of our main benchmarks for whole life insurance: It doesn’t offer great “living benefits.” These riders often become more important as you grow older, as they allow your policy to cover medical treatments, long-term care, and assisted living costs. The best whole life policies should offer plenty of these extra protections. They can be a huge help if your health or other circumstances change 30, 50, or 70 years down the road.
Northwestern Mutual excels in that department. It has a whopping 15 of the 16 riders we looked for — the most of any company we’ve reviewed. That includes plenty of good “living benefits,” like Accelerated Death Benefit, a Long Term Care rider, and a Disability Income Rider. Since your whole life policy will be with you for decades, we appreciate that Northwestern Mutual has the coverage to adapt to your changing life.
What Others Are Saying
Market research group WARC says hello to State Farm's new, customer-focused motto.
In 2017, State Farm replaced its signature jingle, “Like a good neighbor, State Farm is there,” with a new tune. The company now promises that it’s “here to help life go right” — part of a proactive, customer-focused strategy that the company is implementing. According to the World Advertising Research Center (WARC), State Farm is looking at a more holistic approach to the customer. It hopes to educate policyholders, promote their financial well-being, and improve their lives in general. This includes outreach strategies like connecting people with volunteer opportunities and opening a coffee shop in Chicago that holds money management courses.
We appreciate State Farm’s customer-first approach. The insurance industry can be complex and hard to navigate, which tends to mean strained relationships between providers and policyholders. Efforts like finance classes help State Farm connect with its customers on a personal level and facilitate a smoother insurance process. Such initiatives are likely part of the reason that State Farm scores so highly for customer satisfaction — they make people feel well-informed and cared-for. WARC’s research on the company’s campaign success is just another sign that State Farm is synonymous with a positive life insurance experience.
Full List of State Farm’s Policy Riders
- Guaranteed Renewability: Purchase additional term life insurance without undergoing a second medical exam.
- Term Conversion: Convert your term life policy into a permanent one without undergoing a second medical exam.
- Guaranteed Level Premiums Rider: Premiums are guaranteed to remain the same through the duration of your term life policy.
- Waiver of Premium Rider: Future premiums are waived if you become permanently disabled due to illness or injury and can no longer afford them.
- Spouse Insurance Rider: Extend your policy to cover your spouse for an additional fee.
- Child Term Rider: Extend your policy to cover a child for an additional fee.
- Accidental Death/Double Indemnity Rider: Pays an additional death benefit in the event of an accidental death, generally in an equal amount to the policy’s face value.
- Disability Income Rider: Provides a supplementary income if you become disabled and can no longer work, usually determined as a set percentage of the policy’s face value.
- Critical Illness Rider: Provides a lump sum of money in the event that you’re diagnosed with any of a pre-set list of illnesses (generally cancer, heart disease, stroke, etc.).
- Return of Premium Rider: Some or all of your premium will be returned if you outlive your term life policy.
- Family Income Benefit Rider: Pays the death benefit to your dependents as a regular income (in monthly installments) rather than as one lump sum.
The Bottom Line - State Farm Review
We recommend State Farm for all varieties of life insurance, thanks to its stellar customer satisfaction and financial strength scores. We’re confident that the company will be easy to work with and keep you in good hands financially. Just remember: Price always varies by company, so it’s important to shop around and find your best offer before settling on a provider. We suggest comparing your quote from State Farm with a few of the other Best Life Insurance Providers to see which is the right fit for you.