To find the best life insurance companies, we evaluated both term life and permanent life insurance for each company:
- For term life insurance analysis, we used our own research and data provided by AccuQuote, a national online life insurance agency. AccuQuote has been in business for over 30 years and works only with insurance companies that have top financial strength ratings.
- For cash value life insurance analysis, we used data provided by Veralytic, an independent publisher of life insurance research and analytics. Veralytic measures the competitiveness of permanent life insurance products and can provide a customized analysis to you and your financial advisor of policies you own or are considering buying.
Our evaluation was based on:
Term life insurance rates (20% score): We used term life insurance rates for healthy buyers ages 30 and 40 for policies for 10, 20 and 30 years. The coverage amounts analyzed were $250,000, $500,000, $1 million and $2 million.
Cost competitiveness of cash value policies (30% of score): This measures the level of premiums and internal policy charges, including the cost of insurance, fixed administration expenses and cash value-based wrap fees.
Historical performance (15% of score): This measures whether the historical performance of the company’s investments that fuel cash value growth are superior to other companies’ comparable products.
Reliability of policy illustrations (15% of score): This factor measures the reliability over time of the company’s illustrations for its permanent life insurance products. When you plan to be holding on to a policy for decades and counting on cash value to accumulate, you want an illustration that’s accurate.
Financial strength (10% of score): This measure incorporates the insurer’s financial strength ratings from four major ratings agencies: AM Best, Fitch, Moody’s and Standard and Poor’s. Financial strength is particularly important when you’re relying on a company’s ability to pay claims many decades from now.
Access to cash value (10% of score): This measure evaluates the liquidity of cash value and a policyholder’s access to it. Some policies will build cash value better in the early years, and with other companies you may be waiting several years before you have meaningful cash value within a policy. Generally speaking, the higher the liquidity, particularly in early policy years, the better—but some insurers charge more for greater liquidity, so consider the possible tradeoff.
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