The Best Whole Life Insurance Company

Northwestern Mutual

Best Policy Options

Why we chose it

The most riders

Northwestern Mutual has an impressive 15 of the 16 add-on riders we looked for, so you’d be hard-pressed to find a more customizable policy. Some options we didn’t see anywhere else; among these are an Accidental Death rider, which pays up to double the policy’s value if you die in an accident, a Critical Illness rider that pays a lump sum at the time of diagnosis, and a Disability Income rider to supplement your finances if you can’t work. With such a wide array of options, this company allows you to craft a truly individual policy. For a complete list of Northwestern Mutual’s offerings, see our life insurance buying guide.

Quality of product

Fortune ranks Northwestern Mutual “Number One for Quality of Products and Services,” and we generally agree. This company ticked every box we looked for in whole life insurance: solid financial backing, highly-rated customer service, and plentiful policy options. This company is absolutely No. 1 in terms of quality of products — any customer will be able to build a whole life plan that fits their individual needs. And, at the end of the day, the first priority of insurance is to keep you covered no matter what.

Points to consider

Support systems

The one place Northwestern Mutual didn’t totally sell us was its support systems. When we sent emails looking for policy information, Northwestern Mutual was the slowest responder (it took more than a day to receive any response). And when we got its reps on the phone, they weren't terribly accommodating. NWM did garner five stars in J.D. Power’s customer service poll, so maybe we caught it on an off day. Still, if it’s your first time buying life insurance, a more responsive company like Mass Mutual might be a better bet.

MassMutual

Best Recent Dividend Performance

Why we chose it

Excellent dividend record

MassMutual won us over with its recent dividend record. Not only are its dividend rates a percentage point or two higher than our other top picks, but they’ve also risen slightly in recent years. This caught our eye, especially considering that almost all of the 12 companies surveyed have seen a consistent decline in dividend rates. If you’re looking to make the most of a participating whole life policy, we recommend starting your search here.

The right riders

Alongside Waiver of Premium and LTC riders, some highlights include an Accelerated Death Benefit rider and a Term Rider that allows you to tack on extra coverage for a set number of year. This can increase policy value during a critical period of time, like while your kids are living at home. And with MassMutual earns near-perfect financial scores, you can trust these policies to stand the test of time.

Points to consider

Customer service scores

This company also ranked a couple notches below NWM and Guardian in J.D. Power’s customer survey. But when we reached out ourselves, MassMutual’s service was by far the best of the group. MassMutual’s friendly reps responded quickly and answered our questions comprehensively. We’ve found that customer service will vary depending on the agent who picks up your phone call. J.D. Power’s survey pulls information from a large pool of customers, and its rating is a more encompassing view — thus a more negative outlook.

Guardian

Most Payment Models

Why we chose it

Unique payment options

Guardian lets you choose from eight different cash-accumulation models, each designed to fit a personal savings goal. If you prioritize a cheaper premium and larger death benefit over cash value, choose its L121 policy. If your goal is to build cash value fast, Ten Pay Whole Life lets you pay all of your premiums over the first 10 years. This is a unique system — by contrast, MassMutual has just five different structures, and Northwestern Mutual only three. To speak with an agent about the right payment structure for you, use Guardian’s Find an Advisor Tool.

Competitive stats

Guardian, in keeping with our high standards, enjoys top-notch financial strength and customer satisfaction ratings, coming in just six points behind NWM in overall J.D. Power score. And it’s almost on par with MassMutual for rider options; including Waiver of Premium and LTC.

Points to consider

Higher premiums

Keep in mind that rapid cash value accumulation will always mean higher premiums. Guardian’s savings-heavy premium structures are the best fit for folks who have a chunk of capital to invest right off the bat. If you’re not ready for that commitment, though, there’s a good chance you’ll find a match with one of its entry-tier policies. Guardian’s website is light on the details, so we recommend making a call to see what this whole life insurance company can offer you.

Guide to whole life insurance

Know your policy

15 years to return value

Whole life insurance has significant front-end costs, including agent commissions that can be 130–150 percent of the first year’s premium. You can’t really get around these; they go to the agent who sells you the policy. That means with any whole life insurance, you won’t be able to start saving until these hefty agent fees are out of the way.

Once you’re past the setup costs, your policy’s cash value begins to grow. Since investments are only part of each premium — the other part goes towards your death benefit — cash value builds very slowly at first. It takes time for those earnings to compound. Unless you opt to pay bigger premiums up front, as with Guardian’s Ten Pay Whole Life plan, you won’t have much cash access in the first few years.

On top of that, most companies charge “surrender fees” to discourage people from canceling their policies in the first 15 years. That’s the point at which your cash value is expected to balance out the cost of premiums.

All of this means that if you cancel your policy in the first 15 years, you’ll most likely have lost money. The only way a whole life policy is worth the cost is if you own it for a long stretch. It’s vital to make sure you’ll be able to afford the premiums for at least 15 years. If you’re hesitant about making such a big commitment, term life insurance is a much cheaper way to get coverage during critical years.

Dividends aren’t guaranteed

All three of our top picks offer Participating whole life policies. They’re called “Participating” because policyholders “participate” in the companies’ investment fortunes: In other words, they get a share of profits in the form of annual dividends. Not every whole life provider offers this option, but most mutual companies do — including all three of our top picks.

Despite projections, it’s impossible to know what your actual rate of return will be. Emory Smith, a Principal at EJS Financial Management, calls dividends “a bit of a black box — there isn’t a simple way to describe how they work.” Your policy guarantees a minimum amount of cash gain, generally something like 3 percent per year. But providers often paint a rosier picture, showing what could happen in a best-case scenario. These projections assume that the company’s investments will perform as expected and that you’ll reinvest dividends into your policy, bumping up its earning potential each year.

“Policyowners have the flexibility to take dividends as cash payments, use them to reduce future premium payments, or have them added to the death benefit each year.”

The problem is that neither of these things is guaranteed to happen. You may choose a cash dividend instead of putting it towards your policy. And, even if the company’s portfolio performs well, it could still raise the cost of insurance due to revised mortality expectations. Your premium won’t go up if this happens, but less of it will go toward the cash component.

We still recommend choosing a mutual company, like one of our top picks, for a shot at good dividends. Just be aware that the expected returns may not be 100% true for every policy.

Policy loans should be emergency only

Once you’ve built up cash value in a whole life policy, you can use it as collateral for a loan from the insurance company. These loans are taken tax-free, and you technically never have to pay them back. But if you don’t, interest on the loan can snowball to the point where it eats away at the policy’s remaining value and reduces the amount your beneficiaries will be paid.

"A policy loan is effectively a cash advance on your death benefit, so if you don't pay it back, it's costing your heirs."

If you do pay the loan back, you have two options: You can pay it with interest, which gets pricey fast, or you can give up the policy and potentially pay surrender charges. In all three cases outlined, your insurance policy loses value and coverage is weakened. For this reason, insurance experts caution against taking policy loans except in cases of serious need.

Whole Life Insurance FAQs

What is whole life insurance?

There are two major types of life insurance to consider: Term and Permanent.

  • Term life insurance provides coverage for a set timeframe — anywhere between five 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 tradeoff is that it’s costly — up to 10 times the price of term.

Whole life insurance falls under the umbrella of permanent life. It’s generally much pricier than term insurance — think $200-300 per month, rather than $20-30. This is because part of the premium for whole life insurance gets invested into a savings account. This account, otherwise known as your policy’s “cash value,” grows with every premium payment and accrues interest over time. The perks of cash value: You can take loans from it tax-free or use it to offset premium payments; it can even act as a channel for retirement savings or estate planning.

So, is whole life insurance the right choice for you? Financial experts generally counsel that, as far as savings go, it’s more profitable to pay for a cheap term life policy and invest the difference into traditional accounts like a mutual fund or 401(k). If you’ve already contributed heavily to retirement funds, though, or have complex estate planning needs, investing in whole life insurance can be the right choice.

“Stage in life and lack of other tax-efficient alternatives (maxing out 401(k) contributions or no access to similar investment vehicles) can certainly warrant exploring permanent life insurance. And in other cases, such as the funding of a trust, paying estate taxes, or complex estate planning, permanent life insurance is not only appropriate but absolutely necessary.”

It’s important to correctly evaluate your investment options and life insurance needs before making the commitment to whole life. Remember, those premiums are steep: According to insurance literacy advocate Tony Steuer, a whopping 20% of whole life policies lapse in their first year due to policyholders’ inability to make payments. Ohman recommends working with a qualified estate planner like an attorney, CPA, or CFP, who can break down all the options and help you find exactly the right life insurance to suit your needs.

When it’s the right fit, whole life insurance is a great option. It ensures a death benefit payout to your beneficiaries, which is padded by the financial security of extra savings (all of which gets passed down tax-free).

What is GUL?

Guaranteed Universal Life insurance (GUL) is the other popular type of permanent life. It technically has an expiration date, but that date is set between 90 and 120 years of age, so it’s expected to have a payout. We recommend GUL primarily for seniors — you can learn more about it here.

The best whole life insurance company: Summed up

Northwestern Mutual
MassMutual
Guardian
Best Policy Options
Best Recent Dividend Performance
Most Premium Payment Models
A.M. Best Financial Strength Rating
A++
A++
A++
J.D. Power Customer Satisfaction Rating
802/1,000
787/1,000
796/1,000
Average Dividend Rate 2011-2016
5.68%
7.03%
6.46%
Moody's Financial Strength Rating
Aaa
Aa2
Aa2

Our Other Life Insurance Reviews

We’ve taken a close look at other kinds of life insurance policies and reviewed companies for specific needs.