The Best Life Insurance Companies June 2021

Cash value policies are good for buyers whose life insurance need does not have a time limit. For example, cash value policies can be used for estate planning purposes, to fund a trust that will support a lifelong dependent such as a special needs child, to accumulate cash value for investment purposes, or to simply provide a legacy for heirs.

Permanent life insurance policies with cash value include whole life insurance and universal life insurance.

Buyers of cash value life insurance policies have many considerations that may not be obvious at first. While many life insurance shoppers focus on the annual premiums that are quoted, factors such as internal policy costs and a company’s investment performance can greatly affect the financial benefits of the policy in the future.

Here are some tips for buying cash value policies, based on the factors we used to identify the best life insurance companies.

Insist that cost disclosures be included in any proposals for universal life insurance. A life insurance quote reflects what you’ll be billed for, but doesn’t tell you anything about a policy’s internal costs, such as expenses and fees, and the cost of insurance within the policy.

Be sure to insist that any universal life insurance illustration include the detailed expense pages or policy accounting pages. It’s important to look at the year-by-year policy charges instead of just comparing premiums.

Products with a low premium quote but higher costs have a greater risk that higher premium payments will be required in the future, or that the actual growth of cash value will be low.

Look at financial strength ratings. A strong financial strength rating is more than just peace of mind that the company won’t go out of business decades from now. Insurers with greater financial strength can be less likely to need to increase internal policy costs and premiums in response to challenging financial times.

Ratings are available from agencies such as S&P and A.M. Best, and are usually found on insurers’ websites.

Don’t assume insurers offer competitive pricing for everyone. Insurers want your business, but they all operate from their own playbooks. Premiums and internals costs can vary wildly, and a company that offers competitive costs for one customer may not have a good deal for someone else.

Each life insurance product can have more than 10,000 different prices when you consider that:

• Each product has different pricing at every age
• Males vs. females get different pricing
• Pricing varies for up to five different health classes
• There can be two or three price variations for smoking status (smoker/non-smoker/never-smoked)
• There could be four to six rate bands depending on how much coverage you buy
• Rates can vary if you want a product that accumulates cash value faster

Be aware that your life insurance quote may not reflect what you’ll actually end up paying over the years to keep the policy.

“Current regulations in some states and for some products permit insurers to ‘quote’ a low premium while charging high costs—without disclosing that you may need to pay additional premiums later in order to avoid a lapse,” warns Barry Flagg, founder of Veralytic.

That means it’s essential to insist that proposals include year-by-year disclosure of policy charges (for universal life insurance) or the dividend interest crediting rate (for whole life insurance).

Using data provided to Forbes Advisor by Veralytic, we rated 25 companies large life insurance companies that sell cash value life insurance. Veralytic maintains a database of thousands of life insurance products and measures the competitiveness of each product against industry benchmarks to score each policy.

Companies that sell all or mostly term life insurance products were not included, nor were some companies that are direct writers, meaning they sell policies either directly to consumers or only through their own exclusive agents.

Because costs are usually top of mind for life insurance buyers, we put weight on costs in our scoring. Each company was evaluated based on:

1. Cost competitiveness (40% of score) of premiums and internal policy charges, including the cost of insurance, fixed administration expenses and cash value-based wrap fees.
2. Pricing stability (15% of score) looks at whether a company’s pricing (the cost of insurance, policy expenses and the illustrated earnings rate on cash value) appear to be adequate and reasonable, based on the insurer’s historical experience with pricing.
3. Access to cash value (15% of score) evaluates the liquidity of cash value and restrictions on accessing the policy account. Generally speaking, the higher the liquidity, particularly in early policy years, the better, but some insurers charge more for greater liquidity, so consider if there’s a tradeoff.
4. Historical performance (15% of score) measures whether the historical performance of the company’s investments that underlie policy account values are superior to similar products.
5. Financial strength (15% of score) incorporates the insurer’s financial strength ratings from four major ratings agencies.

• What To Know About Cash Value Life Insurance
• Permanent Life Insurance Options
• Need Cash? Tap Your Life Insurance Policy
• How and Why to Convert Term Life to Permanent Life Insurance
• How To Choose The Right Life Insurance Company
• How Life Insurance Fits Into A Financial Plan