Business Insider’s Life Insurance Review Methodology

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How Business Insider Rates Life Insurance

At its core, life insurance is an agreement in which a policyholder pays a premium so that upon their death, their beneficiaries receive a payout known as a death benefit.

Over the years, life insurance companies created policies with more benefits and more complicated policies. Many life insurance policies will benefit the insured’s life as well as the beneficiaries’, offering cash value growth and retirement tools in addition to that death benefit.

Whatever your life insurance goals are, finding the right plan can help you prepare for the future and build generational wealth. People looking for life insurance have a choice between term and permanent life insurance. We’ve decided to rate these as two different products.

Business Insider’s personal finance team is here to help you pick the best life insurance company for your needs.

Term Life Insurance Rating Methodology

Policy Options (30%)

Under this category, we look at the terms and options of the policy. We’ll consider minimum and maximum death benefits, term length options, and additional riders available. The more options, the better a provider scores in this category.

Under this category, we’ll also look at whether a term life insurance policy can be converted to a permanent policy and at what point. Some policies have very limited periods in which a policy can be converted.

Cost (30%)

Because term life insurance is one of the cheapest options an insurance provider can offer, it’s one of the most important factors in reviewing a life insurance company. When available, we obtain quotes for a 20-year, $500,000 policy for males and females in excellent health across a variety of ages from 20 to 60 years old. We compare these against industry averages.

Application Process (20%)

This category looks at the application process for term life insurance. We look at age requirements and application processing times.

We also look to see if a company has any policies that do not require a medical exam to enroll and any limitations it has, such as convertibility and maximum death benefits.

Customer Service and Ratings (20%)

Customer service encompasses both the application process and the claims process for beneficiaries. The last thing you want is for your loved ones to have to fight an insurance company while grieving. To get an idea of how a company treats its customers, we look at reviews from sites like Trustpilot and the Better Business Bureau. We read these reviews with a grain of salt, as online reviews tend to skew negatively.

To supplement these reviews, we also look at ratings from third-party organizations like the Company Complaint Index from the National Association of Insurance Commissioners, which indicates if a company’s volume of complaints exceed expectations given its share of the market.

We also look at customer satisfaction surveys from JD Power and financial stability ratings from AM Best.

Permanent Life Insurance Rating Methodology

Policy Options (30%)

Under this category, we look at the policy itself, including minimum and maximum death benefits and variety of riders, including those that are optional and included. The more flexibility a policy offers, the better it fares.

Cash Value Growth (20%)

Cash value growth is a key component to permanent life insurance, especially high-value policies.

We look at cash value growth differently depending on the type of permanent life insurance a company offers. For example, mutual companies — companies owned by policyholders and customers instead of shareholders — that offer whole life insurance often offer a dividend payout to whole life policyholders.

Indexed and variable universal policies offer cash value growth according to movements in certain investment choices made by the customer. We’ll look at the variety of investment options at the policyholder’s disposal and guaranteed minimum interest rates that prevent a policyholder’s cash value from dropping.

Customer Service and Ratings (20%)

The quality of customer service an insurance company provides is exceedingly important, especially when it comes to permanent life insurance. Choosing a company with poor customer service dooms you to long response times and flaky agents for the rest of your life.

Like term life insurance, we gauge customer service quality based on third-party customer review sites like Trustpilot and the Better Business Bureau. However, we also consider ratings from the National Association of Insurance Commissioners and JD Power.

We also pay particular attention to AM Best’s financial stability rating, as it indicates a provider’s future ability to pay its claims.

Average Premiums (20%)

Holding all factors equal, we compare premiums between life insurance companies. More affordable companies receive a five-star rating. Companies with higher premiums that are only selling plans with more features fall in the middle. Our one-star rating is used for companies only offering life insurance plans with low benefits and high monthly premiums for the expected benefit.

Application Process (10%)

We look at the application process to see if there are any options for people who do not want to take a medical exam. We’ll look at age requirements and application processing times, and take note of policy transparency online. Some insurance companies are tight-lipped online about how their policies work. The easier it is to find detailed information about policy options without having to talk to an agent, the better.

How Editor Ratings Are Assigned to Life Insurance

Once we assess a provider, we score the company in all categories from 1 to 5. We weigh these scores according to our percentages, which yields the final score.

We have reviewed a lot of excellent insurance companies striking a balance to serve customers better. These include both general providers and those offering specialty coverage.

Life Insurance Products We’ve Reviewed