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Term Life Insurance Review

Financial advisors agree: The best term life insurance providers issue robust coverage, plenty of riders, level premiums, and term-to-permanent conversion options. We sized up 71 life insurance companies based on these criteria and narrowed it down to the three with the best term life policies. The final step, finding the cheapest premium, will be up to you. Term life.

How we chose the best term life insurance company

We started by vetting 71 providers for their nationwide availability, financial strength, and ability to sell individual policies. Nineteen life insurance companies met our initial criteria. They’re all reputable providers with the resources to offer great coverage — meaning variable term lengths, easy ways to extend your coverage, guaranteed level premiums, and a robust selection of riders.

Flexible term policies

Our favorite life insurance companies offer two important policy options: guaranteed renewability and term-to-permanent conversion without a medical exam. These give you the option to extend your coverage out as far as your family needs it without jacking up your premium too much.

A guaranteed renewable policy (a.k.a. Guaranteed Insurability Rider, Renewal Provision, or Additional Purchase Option) ensures that you can renew your coverage when it’s about to expire. This could be important in light of major, unexpected life events. For instance, if a child opts for grad school, you may choose to extend your coverage until their schooling is finished. Whatever the circumstance, you’ll want to be sure your coverage is in place until your beneficiaries would no longer be in need of it.

We also required the option to convert a term policy into a permanent one — again, without a medical exam. A conversion option adds flexibility to your policy. You may, for instance, have a special needs child who requires care into adulthood. Or perhaps you come into some money later in life and have more complex estate planning needs. Scenarios like these may call for a permanent life insurance policy that never expires and provides a channel for passing an inheritance on to your family.

We cut any insurance providers from the running that do not offer both of these options. While you may end up not needing to renew or convert your policy, it’s important to have those safeguards in place — life is unpredictable, and your life insurance should accommodate.

Variety of available term lengths and riders

After narrowing down our list based on availability, financial strength, and term flexibility, we were left with five serious contenders for the best term life insurance company.

Because life insurance is so personal, it’s important to choose a provider with robust features that let you tailor your coverage to your needs. In policy terms, this means the ability to choose an appropriate term length, comprehensive coverage, and add-ons that protect against the contingencies you’re worried about. Some companies also offer certain “living benefits,” which can add value to your policy even if you never need to access its death benefit.

Rider options to customize your policy

Life insurance add-ons (known as “riders”) can make your policy extra flexible and increase your financial security. Some protect you in the event that you’re unable to pay your premiums: The Waiver of Premium rider, for example, forgives your payments if you become permanently ill or disabled and can no longer work. Some, like the Spouse Insurance rider and the Child Term rider, allow to you extend coverage to your family members for a small fee.

Some riders can be considered “living benefits” — in other words, they may be valuable to you while you’re still alive. As financial advisor Gordon Conwell puts it, “you don’t have to die to get benefits from your life insurance policy anymore.”

The Accelerated Death Benefit rider, for example, allows a portion of your death benefit to be used for medical and end-of-life expenses. This can help alleviate your family’s financial burden and in some cases pay for a potentially life-saving treatment.

We profiled premiums, but didn’t cut for it

Because life insurance is so incredibly personal, there’s no way we could evaluate which is the cheapest — you’ll need to shop around for the best premium prices when choosing a policy. Carriers price their policies according to a variety of risk factors, which differ from company to company. They all take into account things like age, physical build, medical history, heredity, driving record, and “risky” hobbies (BASE jumping, anyone?).

While these prices certainly are a small sample, there is one clear takeaway from our quote experiment: While some companies will cut you a better deal, the best way to save is by reducing your “risk factor” as much as possible. Within any given group, prices varied only slightly from company to company — but they doubled in every smoker/non-smoker comparison. In order to get the best price possible, take steps to minimize your risk factors prior to your initial medical exam.

The 3 best term life insurance companies

State Farm — Best Customer Satisfaction

Banner life insurance

TIAA Life — Easily Convertible Policies

State Farm

Why we chose it

Award-winning customer satisfaction

You don’t have to take our word for it — State Farm has held the highest customer satisfaction rating for four years running, according to J.D. Power’s 2017 survey. We take these customer rankings into strong consideration: When it comes to a product as personal and weighty as life insurance, you want to find a provider that offers great coverage and makes the insurance process go as smoothly as possible.

Impressive financial strength

State Farm also boasts some of the best financial strength ratings in the industry: A++ from A.M. Best, AA from Standard & Poor’s, and Aa1 from Moody’s. Among our top picks, it’s second only to TIAA’s perfect score. Financial strength is especially important when it comes to life insurance. Such contracts can last anywhere from five years to the rest of your life. Your provider needs to remain solvent for many years down the road, and top financial strength scores are the best way to guarantee it won’t go under.

Range of term lengths

State Farm is the only company we looked at that starts at just five years of coverage — with guaranteed renewal through age 95. It also allows you to convert your term policy to a permanent one through age 75, “regardless of health” (meaning no second medical exam). Terms between 10 and 30 years can only be bought in increments of 10 years, which does limit flexibility. However, a 20-year policy, which State Farm offers, remains the most popular option and “will do the job for 90%+ of Americans,” according to one life insurance expert.

Points to consider

Lacks Accelerated Death Benefit

The biggest drawback to State Farm’s term life insurance is that it doesn’t offer an Accelerated Death Benefit rider for terminally ill policyholders. While the relative merits of this particular rider can be debated (using it automatically depletes the death benefit amount for your beneficiaries), State Farm stands out as the only provider that doesn’t offer it. That said, the company does offer the Critical Illness rider, which can be used to mitigate some medical costs.

TIAA Life

Why we chose it

Conversion allowance

TIAA allows you to convert from your term insurance to any of its permanent policies at any time during your initial term. The company also lets you convert your policy without “further evidence of insurability” (read: no medical exam). If, down the road, a serious illness leaves you reconsidering how much your family needs insurance, you’ll have plenty of options for extending your coverage.

Paired with TIAA’s broad range of term limits (from 10-30 years in 5-year increments), you could theoretically purchase a 30-year term policy when you first learn that you’re going to be a parent (say at age 30), and secure a sizable benefit at an affordable and stable premium. Then, even if you develop a chronic illness in year 30, you’ll still be able to convert your term policy to any of TIAA’s permanent life products.

Near-perfect financial strength

TIAA’s financial strength ratings were the best among our picks. It surpassed our required A or higher from A.M. Best with an A++. It also received a AA+ from Standard & Poor’s and Aa1 from Moody’s. Life insurance is a promise that your provider will pay up to your beneficiaries if need be, so it’s crucial that your provider is — and will remain in the foreseeable future — solvent enough to pay out on its policies.

Online tools

Another thing we really liked about TIAA Life was how its website broke down the complex subject of life insurance: how it works, its central purposes, and the different types. It has quote tools for those who know what type of product they want and those who are just starting to think about buying a policy. The Life Wizard tool in particular was one of the most helpful we saw for assessing life insurance needs. With a few simple questions, it guides you from “do I even need life insurance?” to exactly what policy type and size you should consider based on your individual circumstances. It was also easy to get a TIAA agent on the phone to answer specific questions and go over the ins and outs of the policies.

Points to consider

Fewer rider options

Of our favorite companies, TIAA has the fewest options for policy add-ons. With eight rider options, it ranks third after the 11 you’ll find in New York Life and State Farm’s selection. With TIAA, you won’t find a Spouse Insurance rider (to extend coverage for a fee), a Disability Income rider (income if you become disabled), or a Critical Illness rider. If none of these are relevant to you, TIAA is still a top choice. But if you may want to add on some coverage for these unforeseen circumstances or want coverage for your family too — consider another one of our favorites.

New York Life

Why we chose it

Flexible policies

You can choose any term length between 10 and 20 years (although there’s no longer-term, 30-year option). You could buy a 16-year policy to coincide with the exact time your last child will graduate from college, or, say, an 11-year policy to match the age when your spouse’s pension kicks in. About the only thing that kept New York Life from sharing the top spot was its conversion privilege stipulation: If you decide to convert to a permanent policy after the first 10 years of your term, you’ll need to purchase a separate rider.

Consumer education

New York Life excels at consumer education. Its site has impressively easy-to-read explanations of tricky subjects, like the investment theories backing term insurance versus those in favor of permanent life insurance. It might not seem worthwhile to dive into the philosophy behind insurance policies on your first go-around — but we’re all only getting older (and therefore more expensive to insure). Now’s the time to figure it all out.

Points to consider

Limited term adjustment

New York Life only offers term limits between 10 and 20 years, its Policy Purchase Option does allow you to buy a new replacement term policy at several set dates (like when you hit a certain age or experience certain life events) without a second medical exam. However, the premium will increase based on your current age.

Fixed rate term life insurance

Guide to life insurance

How to build a term life policy

Amount will depend on your dependents

The industry rule of thumb is to multiply your annual income by 10, but that’s not a very precise method for calculating something so important. Our insurance guru, Tony Steuer, recommends following something called the economic life cycle theory of planning. This theory claims that the earnings-multiple method is insufficient for planning how your family’s finances are going to pan out over the long run. You don’t have to buy insurance to provide for a luxury future, you just want to provide for a steady continuation of your family’s quality of life.

A more accurate figure takes into account how much your spouse and children will need to maintain their standard of living, whether any of your children will need help with college, and your mortgage and other debt — not to mention inflation. You should also factor in “hidden income” that isn’t part of your gross wages (like matching contributions to your retirement fund) as well as any end-of-life expenses.

And life insurance isn’t necessary for everyone. If your primary goal is simply to leave a monetary gift for your beneficiaries, you’re likely better off with a different investment vehicle, such as an IRA or a 401(k).

Lower your premiums with medical exams

When you apply for a life insurance quote, you’re asked a slew of questions regarding your physical health (age, height, weight, etc.) as well as lifestyle and medical history. When you’re ready to see if you qualify, you can sometimes opt for filling out a similar questionnaire, but more often you’ll need a medical exam. These are performed by a paramedic in your home or office at the insurance company’s expense.

Your health right now determines your premium for your entire term. If you sign up at 25, the insurance companies will use your health at age 25 to project your health at age 55. Companies don’t share their risk formulas, but most will look for similar red flags. A urine analysis can reveal diabetes risk as well as liver and kidney function. A stress test will disclose heart health. But unless you have reason to believe that these test results wouldn’t look good, know that undergoing an exam can usually secure a lower premium. And conversely, policies that don’t require an exam usually have higher premiums or a smaller benefit. “These insurers have to allow for something they would have caught on an exam,” Steuer says.

But because “insurability” is only measured at the beginning of your term, this means that even if you develop a serious illness a few years after purchasing the policy, the insurance company will continue to charge you based on your (healthier) medicals at the time of application. And remember: To insurance companies, younger means healthier. The later in life you start the policy, the more expensive the annual premiums will be.

Cut back on bad habits

No matter when you undergo an exam, preparation will help ensure you’re well-representing your health.

Detox — For the week leading up to your exam, swap out salt for leafy greens and guzzle as much water as you can hold. Reducing sodium and upping hydration can help lower both blood pressure and cholesterol levels.

Fast — 8-12 hours before the exam. It’s a good idea to schedule your exam in the morning for this reason. Eating before having bloodwork done can give inaccurate results and perhaps even paint a bad picture of your glucose levels and liver function.

Avoid anything that might skew your results — alcohol, caffeine, tobacco, strenuous exercise. All of the above can cause aberrations in your results or simply draw the truth in harsher strokes.

That said, staving off cigarettes for a brief spell before your exam won’t do much good if you’re a longtime smoker. The exam doesn’t test for nicotine, which actually disappears from the body fairly swiftly. Instead, they look for cotinine, which shows up in blood, urine, and saliva and leaves traceable amounts for about 10 times as long.

No prep can erase long-term bad habits, but it’s akin to riding a C average throughout the semester but then taking a good look at your notes the night before the final. It won’t bring you to the top percentile, but it may scrape you a low B.

Term Life Insurance FAQs

What is term life insurance?

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

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Term life insurance provides coverage for a set time frame — anywhere between 10 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 much more expensive — up to 10 times the price of term.

Of these two, most people will be best off buying a term life insurance policy. The main reason? Term is cheaper and simply more practical. It allows you to purchase coverage during the most critical period — say, during the 20 or so years that your kids are dependent on your salary — at a price that won’t break the bank. Think $20-30 per month, rather than $300.

John Espenschied, Agency Principal at Insurance Brokers Group, also points out that “over time, things [like a mortgage] will get paid off and savings will generally increase, reducing the need for life insurance.” In other words, after 20 years you will have built greater assets. Your family will no longer be dependent on your salary alone, so life insurance becomes less crucial.

Some people choose permanent life insurance over term for its cash value component. In short, permanent premiums are higher because part of what you pay gets invested, and grows into a savings account that you can later borrow from and earn dividends on. However, this should be a last-recourse savings option for most people. The financial advisors we spoke with generally agree that you’ll be better off paying for a less expensive term life insurance policy and investing all you can into traditional savings channels, like an IRA or 401(k).

That said, if you’ve already invested heavily in typical retirement funds, permanent life insurance can be an additional avenue for passing money down to your family tax-free. Just make sure that you’re in a financially comfortable position before taking this leap. A whopping 20% of whole life insurance policies lapse in their first year due to policyholders’ inability to pay the steep premiums that come with this type of coverage.

Should stay-at-home spouses get life insurance?

In 2014, surveyed more than 15,000 stay-at-home moms and found that their 10 most frequent responsibilities (which included daycare, driving, tutoring, and cooking) amounted to an annual market value of $118,905 — the amount a household would have to pay if that work was hired out. So yes, it absolutely does make sense for stay-at-home spouses to have their own life insurance policies.

The best term life insurance companies: summed up

Our other life insurance reviews

We've been digging into all kinds of life insurance policies and have published additional reviews for specific needs. Check them out below: