Pros / It offers low rates on term policies. Life insurance ratings.
Cons / State Farm doesn’t have other financial and investment services.
Verdict / With affordable term plans, discounts on auto policies and an online claims process, State Farm is a good choice for basic life insurance coverage.
Like many other well-known auto and homeowners insurance providers, State Farm offers life insurance. It has an A++ rating from A.M. Best, which means it has sturdy financial footing and can be relied on to pay future claims.
Discount term life insurance
There are two types of life insurance policies: term and permanent. State Farm offers both. Term life insurance provides a set payout to your beneficiaries if you die during a pre-determined period of time – for example, $250,000 with a 20-year term.
A permanent life insurance policy lasts for as long as you pay your premium. It also includes a savings and investment element that increases the policy’s value as the years pass. In addition, a permanent policy gives you the opportunity to earn dividends. However, permanent policies cost more than term policies – sometimes up to 10 times more.
Because so many factors go into building each life insurance policy, including age, health, income, debt and plans for beneficiaries, we chose to focus on two scenarios. One was a 45-year-old smoker who is in good health and the other was a 33-year-old woman in excellent health. We kept income and debt the same in both scenarios to limit the number of variables. All the term policies we looked at had a value of $250,000 and a term of 20 years. Unlike other insurers, we were able to get a quote online, without calling State Farm.
State Farm’s term policies had some of the lowest rates we saw. Our 45-year-old man was quoted $130 a month, which is less than the average of $144 and significantly lower than the quote we got from John Hancock. The 33-year-old woman was quoted $19 a month – slightly lower than the $20 average.
The company’s permanent policies were more expensive, coming in around $50 above the average. State Farm also doesn’t offer investment and financial planning services, and its dividend rate isn’t as high as those at some other insurers. As such, if you’re interested in the financial planning parts of permanent life insurance, you may be better off with one of the companies that specialize in that type of plan.
State Farm also offers auto and homeowners insurance. If you decide to bundle those policies together, you may receive discounts on your premiums.