Best Term Life Insurance Companies in 2016

In 2014, 57% of all people in the United States were covered by some type of life insurance. In 2015, total life insurance premiums totaled $151.5 billion, with impressive year on year growth since 2013 according to statistics published by the Insurance Information Institute. The facts speak for themselves, and there are plenty of companies seeking to claim a share of the lucrative market. With so many options, you may not know where to turn to purchase your own term life insurance, but with due diligence it’s possible to find a product that meets your needs without breaking the bank to ensure financial security in the event of your death. To start out, define your specific requirements, and then gather term life insurance quotes using an online insurance comparison tool or premium calculator. Once you have a list of products that are suitable, it’s time to spend a bit to research the companies behind the policies and see if they offer the level of service and security you expect.

Top Term Life Insurance Companies

When you’re shopping for term life insurance, compare as many companies and products as possible to narrow down the list of suitable options. You should obviously search for competitive term life insurance rates, but cost isn’t the only factor. Determine what your requirements are, and satisfy yourself that an individual term life insurance policy is the right choice. Some employers offer group term life insurance as a benefit for all employees, so you may already have some coverage through work, or you may find that a whole life (permanent life) coverage plan is more viable.

If you need term life coverage, consider all aspects of the insurance provider, including history, financial strength, current size, prospects for future growth and customer service. The following companies are some of the biggest insurance policy providers in the U.S. with strong financial positions and comprehensive product catalogs featuring term life insurance.

Transamerica

Transamerica dates back to 1904 when entrepreneur Amadeo Giannini created the Bank of Italy in San Francisco. The company has provided life insurance under the Transamerica name since 1961.

  • Term life coverage up to $1,000,000 for a maximum of 30 years
  • $1,068 billion of in-force policies in December 2015
  • Licensed in all states except New York
  • Low 0.57 complaint ratio for life insurance policies in 2015
  • A+ rating with A.M. Best and AA- rating with Standard & Poor’s

New York Life

The New York Life Insurance Company dates back to 1845. It’s a mutual insurance company that doesn’t have shareholders, and instead pays dividends to holders of select insurance policies.

  • Term life coverage for a maximum of 20 years
  • Option to upgrade from term life to whole life
  • Operates in all 50 states and Mexico
  • Low 0.13 complaint ratio for life insurance policies in 2015
  • A++ rating with A.M. Best and AA+ rating with Standard & Poor’s

Northwestern Mutual

Northwestern Mutual offers a comprehensive range of insurance and investment products, which is convenient if you want to purchase everything from a single source to keep your portfolio manageable. As a mutual company, there are no shareholders, and certain insurance policies are eligible to receive annual dividends.

  • Term life coverage for 20 years, or until you’re 80 years old
  • Option to upgrade from term life to whole life
  • Low 0.04 complaint ratio for life insurance policies in 2015
  • A++ rating with A.M. Best and AA+ rating with Standard & Poor’s

State Farm

G.J. Mecherle founded State Farm in 1922 in Illinois. The company has grown to become the number-one auto insurer in the U.S., and it offers a comprehensive selection of term and whole life insurance products.

  • Term life coverage starting at $100,000 for a maximum of 30 years
  • Option to upgrade from term life to whole life
  • Low 0.13 complaint ratio for life insurance policies in 2015
  • A++ rating with A.M. Best and AA rating with Standard & Poor’s

Ohio National Life Insurance Company

Ohio National’s origins date back to a stock company formed in 1909, and it’s been a mutual company since 1959. The company is now an industry leader and has a comprehensive Business Continuity Plan to ensure continued operations and services in the event of a major emergency.

  • Term life coverage for 10, 15 or 20 years
  • Option to upgrade from term life to whole life, even with deteriorating health
  • Operates in all states except New York
  • Low 0.07 complaint ratio for life insurance policies in 2015
  • A+ rating with A.M. Best and AA- rating with Standard & Poor’s

Gerber Life Insurance Company

Gerber has been in operation since 1967. The company specializes in policies for young families with limited budgets, providing cost-effective products to help people of all ages find suitable coverage for their needs.

  • Coverage from $25,000–$150,000 for a maximum of 30 years
  • No medical exams for customers ages 18–50
  • Operates throughout the U.S., Canada and Puerto Rico
  • Low 0.55 complaint ratio for life insurance policies in 2015
  • A+ rating with A.M. Best and AA- rating with Standard & Poor’s

Prudential Financial

John Fairchild Dryden founded the Prudential Friendly Society in 1875 as the first company to offer insurance to the working class. The business later became the Prudential Insurance Company of America and started using the Rock of Gibraltar as a company logo to symbolize strength and security.

  • Term life coverage for 10, 15, 20 or 30 years with the option to upgrade to whole life
  • Fortune’s #1 in the life and health insurance industry category for 2016
  • Operates all over the world
  • Low 0.02 complaint ratio for life insurance policies in 2015
  • A+ rating with A.M. Best and AA- rating with Standard & Poor’s

MetLife

MetLife dates its origins back to 1863 and the formation of the National Union Life and Limb Insurance Company. Today, the company is an international provider with 90 million customers in more than 50 countries around the world.

  • Buy coverage for $100,000 or less online with no medical exam
  • Operates in all states
  • Low 0.40 complaint ratio for life insurance policies in 2015
  • A+ rating with A.M. Best and AA- rating with Standard & Poor’s

Mutual of Omaha

Founded in 1909, Mutual of Omaha is a Fortune 500 company. It offers two term life policies with a range of optional benefits.

  • Coverage from $100,000 for a maximum of 30 years
  • Option to upgrade from term life to whole life
  • Operates in all states
  • Excellent 0.00 complaint ratio for life insurance policies in 2015
  • A+ rating with A.M. Best and AA- rating with Standard & Poor’s

Guardian Life Insurance Company of America

Guardian Life Insurance Company dates back to 1860 and prides itself on maintaining a strong set of values. As a mutual insurance company, it doesn’t have shareholders, and certain products entitle policyholders to annual dividends.

  • Coverage or 10, 15, 20 or 30 years
  • Option to upgrade from term life to whole life
  • Operates in all states
  • Low 0.04 complaint ratio for life insurance policies in 2015
  • A++ rating with A.M. Best and AA+ rating with Standard & Poor’s

What Is Term Life Insurance?

Term life insurance is a type of insurance policy that offers coverage for a defined period. Companies offer various terms, usually ranging from 1–30 years, and if you pass away within that timeframe, your named beneficiary receives the death benefit. If you outlive the policy, it has no value, and you must renew it or let your coverage lapse. Some companies offer the opportunity to switch from term to whole life coverage once your term ends.

There are three main types of term life insurance, each with its own uses.

Insurance TypeCharacteristicsAdvantages
Level termSpecified term length
Level premiums
Cost-effective
Coverage typically up to 30 years
Useful for supplementing other coverage
Yearly renewable termNo specified termFlexible
Decreasing termSpecified term
Level premiums
Decreasing benefits
Cost effective
Useful for covering a decreasing debt

Insurers often refer to term life coverage as “pure” life insurance, as it only covers you for premature death and doesn’t accrue any cash value.

Term vs. Whole Life Insurance

Term life insurance provides coverage for a finite period; whole life insurance provides coverage for the rest of your life while it also accrues a cash value that’s available for withdrawal or for raising a loan. Whole life insurance may seem like the ideal financial option, but term life coverage has the advantage of lower premiums, which lets you purchase more insurance protection than you could with a whole life policy, depending on your budget. Because many term life policies allow you to switch to whole life coverage later, you get the benefit of immediate coverage with the option to switch to a more comprehensive plan later on. Besides the finite period of coverage, the main disadvantage is that the premiums for term life insurance go up over time, while premiums for whole life insurance are level.

How to Evaluate a Life Insurance Company

So many companies offer insurance products, and the choice can feel daunting, but once you know what kind of coverage you need the process becomes much easier. Many companies offer specialized products, serve particular demographics or only operate in certain states. Many also offer a great deal of flexibility and let you tailor policy details based on term, benefits, premiums and optional coverage. If several companies offer the product you need, compare their financial strength and complaints history.

Financial Strength

When you’re shopping for term life coverage, consider the financial security of the company. If you’re purchasing a product that lasts for up to 30 years, you need to be reasonably confident that the company is still going to be in business and profitable if you ever need to make a claim or need benefits paid out years into the future. Ratings from companies such as A.M. Best and Standard & Poor’s are good indicators of financial strength and a company’s potential to make money, with A-rated and better companies representing the safest options.

All of the companies considered in this article are rated highly by the four main issuers of financial ratings:

  • A.M. Best
  • Standard & Poor’s
  • Fitch
  • Moody’s

Complaints

In addition to confidence in the company’s ability to continue operating, you need confidence in the company’s ability to act fairly and pay death benefits promptly. The National Association of Insurance Commissioners maintains a database of information supplied by state insurance departments and uses this information to publish company complaint ratios. The ratio is a company’s U.S. market share of closed complaints compared to the company’s U.S. market share of premiums for a given policy type. The national median is 1, and lower scores are better because they represent relatively few complaints considering the size of the company.

All of the companies evaluated in this article have low complaint ratios for life insurance policies, which indicates a low number of complaints, but source data for the statics are voluntarily supplied by state departments. Thus, the NAIC’s database may be incomplete. As ratios may be incorrect, you shouldn’t use them as the sole basis for choosing or rejecting an insurance product from a company.

Making the Right Choice

Term life insurance is useful for covering decreasing debts such as a mortgage, supplementing whole life insurance or getting sufficient short-term life coverage that would otherwise be too expensive. Most insurance providers offer some form of term life coverage, and with so many options to consider, it pays to do your research before committing to any one product. Use online insurance comparison tools, read reviews and listen to word-of-mouth reports from existing customers before you sign on the dotted line. Bear in mind that the right insurance policy for you is the one that matches your requirements and budget, and one which comes from a reliable company with good financial strength. Do your research and choose the product that ensures your family’s financial security.

You can trust that we maintain strict editorial integrity in our writing and assessments; however, we receive compensation when you click on links to products from our partners and get approved.
Published September 6, 2016
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