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Choosing from the best life insurance companies is like walking into a grocery store with a significant sweet tooth. Where do you even begin?

The candy aisle? The checkout lane with the grab it and go choices? Or do you take a walk down the baking aisle and consider a cake, brownies or specialty cookies? You know, a box of ice cream bars or a big bucket of Neapolitan may go great with any of the aforementioned items…Let’s say you decide ice cream does, in fact, sound like the winner. So you make a bee line to the frozen section sure you know exactly what you want. Yet, when you arrive at the aisle, there are six different doors, all with huge selections of brands, flavors, and different options to choose from. Overwhelmed again?

This can sometimes be how it feels to buy life insurance. At first, you can’t decide what type you need, and once you do make a decision, you have to go find the best company to satisfy your needs and wants. We’re going to attempt to help you make this decision, or at least make it simpler, so you only find yourself working with the top life insurance companies.

FINDING THE BEST LIFE INSURANCE COMPANIES

If you’re like many people we’ve worked with before, you don’t even know how many choices you really have when it comes to picking the best life insurance companies. There are more than 800 life insurance companies throughout the United States, all of which are different sizes, structures, and business models.

Just because you have your car, your homeowner’s, or your business insurance with a single company, does not mean it’s the best place to also buy your life insurance policy. In fact, you’re probably significantly better off not doing so, because you’ll have a much wider selection of companies all bidding for your business, with a larger selection of policy types as well. Don’t get tricked into thinking you can lower your rates by ‘bundling’ your policies, because it’s bogus.

To put this into perspective, you wouldn’t expect to buy every piece of clothing you have from the same retailer, right? I can’t imagine a scenario where someone would try to purchase all their clothes at the same store just to not have to go look somewhere else for a better deal, a better fit, or a better style.

Buying your life insurance privately will almost always yield you better premium payments, so long as you find a good life insurance company for your own situation. The best life insurance rates don’t always come from the same carriers.

The best insurance companies for life insurance are those who give you the exact policy you need, for the best price you can get (based on your age, gender and health), with the stability and financial foundation we all expect of a multi-million or multi-billion dollar institution. If you aren’t confident the company you do business with is going to be here in 5, 10, or 20 years, how can you be confident in a product which needs to last just as long?

There are several characteristics you need to focus on when narrowing down your top life insurance companies to choose from:

  1. Financial Strength
  2. Type of Company
  3. Type of Agent
  4. Level of Service
  5. Premium
  6. Risk Tolerance

There are more than this, but focusing on these will help you get down to 8 or 10 which are most appropriate for you; remember, just because you haven’t yet heard of a life insurance company doesn’t mean they are not great. While some companies might have what you need, it might not be the best solution because of the health rating you’ll get, the level of service you require, or simply, price.

FINANCIAL STRENGTH

This one is paramount, and should be included in all insurance reviews. Choosing a company that will be outlasted by its own product is not one you want to deal with. While it would be nearly impossible to sit down and rummage through the financial documents of all the possible companies, it is possible to get a good idea of where they stand financially by reviewing their financial ratings through independent rating agencies. The most reputable life insurance companies are rated by independent agencies, by request.

For quick reference, here is a list of the best life insurance companies and their current financial ratings:

TYPE OF COMPANY

There is more than one type of life insurance company, and it’s the internal structure and operating personnel which make them different. One type of company is called a mutual life insurance company, and the other is a stock held life insurance company.

A mutual company is one who is owned entirely by those who do business with the company. The only way to own a piece of the company is to own their product, and they answer directly to their customers. Typically, dividends, or excess gains and funds acquired throughout the year, are distributed back to consumers.

These dividends are never guaranteed, but some companies have been paying for over 160 years in a row. The type of agent you’ll deal with is more likely to be an in-house, or captive, agent, so you may need to find a local agent or call the company directly to make a purchase.

A stock held company is one who has gone public, and it’s not owned by its policy owners. They are traded on a stock exchange, like the New York Stock Exchange (NYSE) available for anyone to become a part owner. In other words, profits go back towards those who own stocks first, not those who own a life insurance policy, like a dividend paying company might.

TYPE OF AGENT

As briefly alluded to above, there are also two types of agents: captive life insurance agents and independent life insurance agents. By choosing a certain type of agent you prefer, it could limit what life insurance companies you have access to because of what affiliations (called appointments) your agent has.

Captive agents are those who are employed directly by the company for whom they offer insurance. They typically do not sell for any other life insurance companies, although certain types of contracts now allow it. However, first and foremost, they must continue to sell their company’s insurance in order to keep their active status. These will also be local agents more often than not, operating in small towns to big cities all across America.

Independent agents are those who are not employed directly with any one life insurance company, but rather as many of the life insurance companies as they need. If you’ve heard of the coined term broker in regards to life insurance agents, they are one in the same.

By offering many companies at once, they are able to ‘shop your rate’ quickly and efficiently, and knowledgeable independent agents are well versed with different products and their underwriting guidelines. If you want access to a mutual life insurance company’s policy, however, they may not be able to assist you.

LEVEL OF SERVICE

As with any industry, the level of customer service you receive from a company can vary widely. This will be the hardest component of a carriers reputation to judge. You can first ask around from people you know for a reference to a company or agent who they were exceptionally satisfied with. You can also read reviews online, dial a few companies to see how quickly you can get access to someone, or even reach out to several agents to see who is most responsive and helpful.

The fact of the matter is, you won’t need to talk to your life insurance agent all that much, in the long run. Communication is very important in the beginning as you’ll both need to come to terms on what your goals are, your budget is, and what product and insurance company are the best fit.

But, other than that, you will likely only speak with your agent at annual reviews, product changes like conversions or adding new riders, and when maintenance is required for contact information or beneficiaries. An exceptional agent is one who is proactive, not reactive, in these matters.

PREMIUM

For most consumers this is going to be one of the larger determinations in where they’ll place their business. A life insurance policy is no more than a promise on a piece of paper, so it’s not uncommon to think they’re all the same and the lowest cost policy is the right one.

But, there is some truth to it. All the top life insurance companies in the United States are essentially selling the exact same thing, with minor differences.

Should you need a very basic policy without any bells and whistles, your price sensitivity has merit. If you need something like estate planning completed, stop and think twice because the quality of company will really make a difference based on what you need to accomplish. Age plays a big role, as does the policy type, so life insurance for seniors is usually more expensive than their younger counter parts.

Consider asking your estate lawyer for a referral, but don’t skip on researching your own reviews for life insurance companies, too. At the end of the day, you’re the one purchasing the life insurance policy, not the lawyer.

RISK TOLERANCE

If you really have a low risk tolerance, you’re probably more likely to go with a brand you already know rather than the company you’ve never heard of, and that’s perfectly fine. There are a handful of insurers who have been around for a very long time who have very household names. There’s no reason not to do business with them. The trade off may be a higher price, but many consumers are okay paying for a little extra peace of mind.

If a big brand name doesn’t matter to you and you want the simplest coverage at the most affordable rate, then you probably have a higher risk tolerance. You can forego the discussions of financials and company types and simply seek out what policy solves your needs with the right price.