12 Best Life Insurance Companies

In this article, we take a look at the 12 best life insurance companies. You can skip our detailed analysis of the insurance industry and go directly to 5 Best Life Insurance Companies.

The global life insurance industry is experiencing a slowdown due to the ongoing economic downturn. It is especially true for term-life policies since high inflation risks decreasing the death benefit.

Regardless, the industry is grounded across the world, and especially in the US, with three in four Americans having some sort of life insurance policy according to a Forbes survey.

The life insurance industry has grown at a relatively faster pace in the developing world, with the expansion of its middle class. Figures from McKinsey show that the developing world has added 52{a652ac39cb023ff8fd1cc85f4393f5b1bb70bf2f880b7bee35f712e4bd8633f7} in the growth of global premium in the past decade.

Industry Analysis

McKinsey’s 2023 Insurance report shows a significant gap between economic growth and premium growth around the world. For instance, the US and the EU had a nominal GDP growth at a CAGR of 5{a652ac39cb023ff8fd1cc85f4393f5b1bb70bf2f880b7bee35f712e4bd8633f7} in the past 20 years. However, life insurance premiums grew at a CAGR of only 2{a652ac39cb023ff8fd1cc85f4393f5b1bb70bf2f880b7bee35f712e4bd8633f7}.

There are several reasons for this. The most important one being the problem of cost base. Cost, as a share of revenue, has increased by 23{a652ac39cb023ff8fd1cc85f4393f5b1bb70bf2f880b7bee35f712e4bd8633f7} in the life insurance industry since 2003. For comparison, it has only increased by 5{a652ac39cb023ff8fd1cc85f4393f5b1bb70bf2f880b7bee35f712e4bd8633f7} in the Property and Casualty Insurance industry.

This, combined with high earnings-volatility, low performance mobility and risk opacity has largely driven investors away from the industry. This trend is reflected in the life-insurance industry’s market cap in the US relative to other financial services. It decreased from 40{a652ac39cb023ff8fd1cc85f4393f5b1bb70bf2f880b7bee35f712e4bd8633f7} in 1985 to 17{a652ac39cb023ff8fd1cc85f4393f5b1bb70bf2f880b7bee35f712e4bd8633f7} in 2005, to just 9{a652ac39cb023ff8fd1cc85f4393f5b1bb70bf2f880b7bee35f712e4bd8633f7} in 2020.

However, some new trends might change things for the better. For example, numerous life insurance companies have moved away from affiliated distribution due to increased commoditization of the insurance products.

Affiliated distributors have lost the market by 4{a652ac39cb023ff8fd1cc85f4393f5b1bb70bf2f880b7bee35f712e4bd8633f7} in the past decade, per the iii.org. Conversely, independent distributors have gained popularity, with their market share increasing from 44{a652ac39cb023ff8fd1cc85f4393f5b1bb70bf2f880b7bee35f712e4bd8633f7} in 2012 to 50{a652ac39cb023ff8fd1cc85f4393f5b1bb70bf2f880b7bee35f712e4bd8633f7} in 2021. The trend is smoothed out across the world.

Another key statistic from iii.org reveals that traditional life insurance has also lost mainstream popularity in favor of life/annuity policies, which made up 48{a652ac39cb023ff8fd1cc85f4393f5b1bb70bf2f880b7bee35f712e4bd8633f7} of premiums written in the year 2021.

Future Outlook

According to Research and Markets, the global life insurance market is expected to grow at a modest CAGR of 4.4{a652ac39cb023ff8fd1cc85f4393f5b1bb70bf2f880b7bee35f712e4bd8633f7} and reach $3.5 trillion in value by 2025. Further, it is projected to reach $4.2 trillion in 2030, growing at a CAGR of 3.7{a652ac39cb023ff8fd1cc85f4393f5b1bb70bf2f880b7bee35f712e4bd8633f7} during the forecast period of 2025-2030.

The growth is mainly going to be driven by transforming technologies like AI and Big Data, allowing for highly personalized policies. Personalized life insurance is expected to greatly transform the industry since different people have different needs that are hard to pin down in a few categories.

Traditionally, life insurance coverage has been estimated using Needs-Approach, and while it does account for unique needs of different individuals, it does not offer nearly the same level of detail that can be achieved using Big Data and AI. The industry is already adapting, with AI startups like Loadsure, Concirrus and Sherpa.

As far as industry players go, some of the most prominent companies in the life insurance industry are MetLife, Inc. (NYSE:MET), The Charles Schwab Corporation (NYSE:SCHW), Prudential Financial, Inc. (NYSE:PRU), Lincoln National Corporation (NYSE:LNC) and State Farm. In the case of Prudential Financial, Inc. (NYSE:PRU), it offers term, universal, indexed universal and variable-universal life insurance policies.

Below, we list the 12 best life insurance companies.

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Our Methodology

For our list of the 12 best life insurance companies, we’ve identified the consensus picks from Investopedia, US News, Forbes Advisor and Nerdwallet that rated insurance companies from 1 to 5 stars. We’ve ranked companies based on number of positive ratings, with their mean score being the tiebreaker. We’ve factored-in the AM Best grading for companies’ financial stability in our ranking, as the most important metric. AM Best is a credit rating agency specializing in insurance companies that grades their financial stength from A++ to S, with grade A++ indicating the highest level of financial strength and S representing the lowest.

Here are the 12 best life insurance companies:

12. Mutual of Omaha

Number of Positive Ratings: 2

Average Score: 4.7

AM Best Grade: A+

Mutual of Omaha is 12th on our list of best life insurance companies. Mutual of Omaha has some unique offerings like Return-of-Premium-Term-Insurance as well as a disability-income rider.

It also offers at-least two accelerated death-benefit riders for the majority of its policies. A drawback is that the company does not offer whole-life insurance and variable-universal life insurance policies.

When it comes to term policies of the company, these vary from 10-year to 30-year terms. Mutual of Omaha has two term-life products, namely, Term-Life Answers and Term-Life Express. The latter does not require a medical exam.

11. Protective Life

Number of Positive Ratings: 2

Average Score: 4.8

AM Best Grade: A+

Protective Life is an Alabama-based life insurance company that is highly regarded for its term-life policies. It has a rating of 4.6 stars on Investopedia and 5 stars on Forbes Advisor.

Protective Life is one of the few life insurance companies that provides up to 40-year coverage in term-life policies. The coverage amounts anywhere from $0.1 million to $50 million. It also provides options to switch to permanent policies without the requirement of a medical examination.

10. Pacific Life

Number of Positive Ratings: 2

Average Score: 5

AM Best Grade: A+

Pacific Life is based in Newport Beach, California. It provides life insurance policies like term, whole and permanent life insurance, as well as annuities, pension plans and investment options in mutual funds. The company has a 5-star rating on Forbes Advisor for good performance in cash-value growth, cost competitiveness and reliability of policy illustrations.

Pacific Life also has a 5-star rating on Nerdwallet, with its indexed universal life insurance mentioned as one of the best for growing investments based on indexes like S&P 500. These policies come with a guarantee that the company will maintain the principal sum even if the stock market takes a nosedive.

9. Lincoln Financial Group

Number of Positive Ratings: 3

Average Score: 4.4

AM Best Grade: A+

Lincoln Financial Group is one of the best insurance companies according to various ratings. It is owned and operated by Lincoln National Corporation (NYSE:LNC). It has a rating of 3.9 stars on US News, 4.3 stars on Investopedia and a 5-star rating on Forbes Advisor.

Lincoln Financial Group offers term life and universal life insurance policies. One of the disadvantages with Lincoln Financial Group is that it does not offer whole life insurance. One of its advantages, on the other hand, is no upfront costs for some of its living-benefit riders.

There are six available riders from Lincoln Financial Group. Three of these are accelerated death benefits for terminal, critical and chronic illnesses.

Lincoln National Corporation (NYSE:LNC) is one of the top names alongside MetLife, Inc. (NYSE:MET) and Prudential Financial, Inc. (NYSE:PRU) when it comes to publicly traded insurance companies.

8. Nationwide

Number of Positive Ratings: 3

Average Score: 4.5

AM Best Grade: A+

Nationwide requires no medical exam for coverage of up to $5 million. It also includes at-least three living benefits in most of its life insurance policies. Nationwide is also one of the best insurance companies when it comes to customer satisfaction. Its 2021 NAIC index is 0.05, implying that it received far fewer than baseline complaints from policyholders than many other insurance companies.

Another feature that sets the company apart is its variety of life insurance policies. Nationwide offers term, whole, universal, indexed universal, simplified whole, variable life and final-expense life insurance policies. It has eight riders including benefits for chronic, critical and terminal illnesses.

7. USAA

Number of Positive Ratings: 2

Average Score: 4.5

AM Best Grade: A++

USAA is one of the best life insurance companies according to US News and Nerdwallet, where it has ratings of 4.1 and 5 respectively. It provides term, whole and universal life insurance policies.

Unlike its other policies, which are exclusive to military members and their families, its life insurance policies are available for regular US citizens and green card holders.

However, USAA provides additional perks to military members in their life insurance policies as well, such as expediting their application if they’re being deployed.

USAA is owned by The Charles Schwab Corporation (NYSE:SCHW). The Charles Schwab Corporation (NYSE:SCHW) is diversified across financial services apart from insurance services unlike Metlife, Inc. (NYSE:MET), which is entirely concentrated in the insurance industry.

6. New York Life

Number of Positive Ratings: 3

Average Score: 4.2

AM Best Grade: A++

New York Life is the third largest insurance company in the US. It has a rating of 3.7 stars on the US News, 4 stars on Investopedia and a 5-star rating on Nerdwallet. New York Life offers term, whole, universal and variable-universal life insurance policies.

It offers a huge selection of policy riders and even offers policies for 90-year olds. The company also offers flexible payment options on some of its whole-life insurance policies, enabling policyholders to pay off their premiums earlier. Nerdwallet describes the company as the best for high coverage amounts.

An attractive feature about New York Life’s whole-life insurance policies is that policyholders are eligible for annual dividends by the company and New York Life has consecutively paid dividends for 168 years, owing to its financial strength.

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Disclosure: none. 12 Best Insurance Companies is originally published on Insider Monkey.