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How to choose a life insurance company

From household names to new players, here’s how to find your perfect match.

There are nearly 800 life insurance companies across the US, according to the Insurance Information Institute. With so many companies to choose from, picking a provider can be overwhelming. These are the questions to ask before you buy coverage.

What to look for in a life insurance company

Life insurance is an investment in your family’s financial future, so you want to make sure you’re with a provider who meets your needs. When you’re comparing life insurance companies, consider the following questions:

Is the company financially strong?

Confirm the company’s financial strength. This is important because your beneficiaries might not file a claim for years — or even decades to come. In the US, there are four major ratings agencies that assess insurers’ financial stability: AM Best, Fitch, Moody’s and Standard & Poor. Each agency uses unique criteria and its own grading system, which means you might see different ratings for the same company.

These are the strongest ratings for each:

  • AM Best: A++ and A+
  • Fitch: AAA and AA
  • Moody’s: Aaa and Aa
  • Standard & Poor: AAA and AA

If you come across an insurer with a low rating, it might not have the financial resources to pay out claims.

The size of a company doesn’t always reflect its financial stability. There are many small and medium-sized life insurance companies that have proven financial strength, and larger companies that have fallen behind in their financial obligations.

What is the companies reputation?

Read reviews and complaints on consumer sites like the Better Business Bureau and TrustPilot to find out how the company treats its customers. The BBB assigns ratings to companies based on customer service, interaction and timely response to complaints. The highest possible rating is A+.

You can also search the National Association of Insurance Commissioners (NAIC) website. NAIC awards each insurance company a complaint ratio score, which is based on the number of complaints made to state insurance departments in relation to the insurer’s market share. The median score is 1, so any score lower than 1 means the insurer has less complaints than the average company.

You can also confirm details on your state’s insurance department website. Since life insurance laws vary by state, these departments are responsible for regulating the industry. They track things like complaints, claims disputes, misleading sales information and policy cancellations.

What products does the company offer?

Some providers offer a full suite of term and permanent life insurance policies, while others have a more niche focus. To narrow your list of providers, review each one’s product lineup to make sure it offers the type of policy and coverage amount you want. Then, look at the list of riders to learn how you can customize your coverage to suit your needs.

Some insurers have unique policy features and riders that might appeal to you. For example, John Hancock offers discounts and rewards for wearing a device like a FitBit and meeting the health and fitness goals set out in your policy.

Be wary of brokers and agents who push for permanent life insurance. They can earn a much higher commission on whole life, variable life and universal life products, so it’s important to do your own research to make an informed decision.

Are the rates fair?

Each insurer has its own underwriting standards, so you might be offered different rates for the same policy. To make sure you’re getting the best possible premium, take the time to shop around. Get quotes from a range of insurers, and see how the rates compare.

Some insurers are stricter than others. If you’re quoted an expensive rate by one company or denied coverage altogether, don’t give up — you might have better luck with another insurer.

Can I earn dividends?

Find out if the company is mutually owned. While publicly traded companies are owned by stockholders, mutual companies are owned by their policyholders. As a result, policyholders might earn annual dividends based on the company’s profits. You can choose to collect the cash, or use the money from dividends to pay your premium or pay off policy loans.

You’ll need to hold a permanent policy, like whole life, to receive dividends. And they’re not guaranteed — but some companies have consistently offered dividends for years. MassMutual is one of them. The insurance giant has paid out dividends every year since the 1860s, and approved a record $1.72 billion payout to policyholders in 2019.

Questions to ask before buying a policy

To drill down even further, ask your insurer these key questions. Their answers should be honest and transparent.

  • How much does the policy cost? Life insurance is an expense, and you want to make sure you’re buying a policy you can afford.
  • Which riders can I add to my policy? Riders enhance your coverage and some can provide benefits while you’re alive. For example, an accelerated death benefit rider pays out a portion of your death benefit if you’re diagnosed with a terminal illness, while a waiver of premium rider puts your payments on hold if you’re injured or disabled and unable to work. Depending on the provider, you might need to pay a fee for these add-ons. Review common life insurance riders to know what to look for.
  • What’s the claims process like? You don’t want your loved ones to have difficulty claiming the proceeds of your life insurance policy. Research the provider’s claims process, and the forms that need to be filed.
  • What are my payment options? Depending on the carrier, you could pay your premium monthly, quarterly, semi-annually or annually. As for the form of payment, most insurers accept credit card payments, electronic transfers and checks.
  • How can I expect my policy to perform? If you have a permanent policy, part of your premium is invested to give your policy a cash value. That cash value grows at an interest rate determined by the insurer. Ask about the expected or guaranteed rate of return, and any caps the insurer places on returns.

Compare life insurance companies

Name Product Issue age Minimum Coverage Maximum Coverage Term Lengths Medical Exam Required
18 - 60 years old
5, 10, 15, 20, 25 and 30 years
Compare 40+ insurers and apply online to get the lowest possible price — no medical exam required.
Policygenius - Life Insurance
18 - 85 years old
10, 15, 20, 25, 30 years
Depends on provider and policy
Compare 12+ top insurers side-by-side to get the best possible deal, and shop return of premium policies online.
18 - 60 years old
10, 15, 20, 25, 30 years
Get a quote in less than 10 minutes with on-the-spot approval and no medical exam.
Everyday Life
20 - 75 years old
10, 15, 20, 25, 30, 35 and 40 years.
Ladder multiple life insurance policies to save on the coverage you need for all your debts.
20 - 60 years old
10, 15, 20, 25 or 30 years
No, for coverage up to $3M
Apply for term life insurance online without the medical exam. Get an instant decision and adjust your coverage at no charge.

Compare up to 4 providers

Bottom line

Ultimately, the best life insurance company is the one that aligns with your values and needs. After you confirm a company’s financial strength and customer reputation, make sure they offer the kind of coverage and riders you want.

Before choosing a company, compare life insurance providers to see how their rates stack up.

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