State Farm Life Insurance

Northwestern Mutual Life

New York Life

Nationwide Life Insurance

MassMutual Life Insurance

Guardian Life Insurance

If you have dependents — people who rely on your income, like children, a non-working spouse, or aging parents you support — you need life insurance. If you don't have dependents but do have debt or own a business, you might also want to consider it.

The best life insurance policy for you depends on your budget and financial goals. There are two main life insurance policies: permanent life and term life.

Term insurance lasts for a specified period, and when your term is up, you can reapply for coverage. However, premiums will most likely increase as you age and your health deteriorates.

Permanent life insurance has a death benefit for your beneficiaries and a cash value that you can use during your lifetime. It's like owning a home, where you gain equity that can be used as collateral. After you pass, your home can be left to your heirs.

Term life policies

There are several types of term life insurance policies; some are more popular and expensive than others based on the specialty of the coverage. You may also opt-out of a medical exam with a term life-simplified issue.

• Level premium: A level term policy pays the same benefit amount if death occurs during the term (five, 10, 20, or 30 years). Level premium is the most popular type of term life insurance. 
• Annual yearly renewable: If a policy is "renewable," that means it continues in force for an additional term or terms, up to a specified age, even if your health (or other factors) would cause you to be rejected if you applied for a new life insurance policy.
• Return of premium: For most types of term insurance, if you haven't had a claim under the policy by the time it expires, you get no refund. But some insurers have created term life with a "return of premium" feature, which returns part or all of the money you've already paid if you haven't used the policy once your term ends. You'll pay extra for this feature.
• Guaranteed issue: These policies are easier to get because they don't require a medical exam. You must be 50 and older. Also, the policy might not pay a full death benefit for the first few years of coverage, according to Guardian Life.
• Simplified issue: No medical exam is required with a simplified issue policy, but you still have to complete a health questionnaire and provide access to medical records. There is no age limit. If you fail to disclose a condition and die, the insurance company can deny death benefits to your beneficiaries. Some insurance companies may not pay a full death benefit for the first few years.
• Convertible: This allows you to convert a term life policy into permanent life insurance without additional evidence of insurability.
• Group life insurance: This is employer-provided life insurance and is usually offered for free. However, if you are discharged, retire, or quit, you will lose coverage.
• Final expense: This type of guaranteed issue policy can be term or whole life, with a low death benefit that covers funeral and burial expenses.

Permanent life policies

There are different types of permanent life insurance policies. All permanent life policies offer death benefits and a cash value that grows in a tax-deferred account. The most significant difference between permanent life insurance policies is how the cash value component is invested.

• Whole life: Guarantees the same payment for the life of the policy. The insurance company invests your premium with its portfolio. The attraction is that your payment stays the same for the policy's life. Many whole life insurance companies also offer to increase the death benefit over time. 
• Universal life: Created in the 1980s when interest rates were high, universal life insurance policies allow you flexibility. If your circumstances change, you can raise or lower your death benefit and change your premium payments. 
• Variable life: This type of permanent life insurance policy was created years after universal life for people who didn't like how whole and universal life commingled their investments with the insurance company. Variable life is for those who want control over the way their cash value earns interest. Your money is invested in the stock market rather than the insurance company. If the market does well, so do you, but if the market falls, so does your cash value, making it riskier than a whole and universal life. 
• Variable universal life: Variable universal life combines universal and variable life insurance. You can raise or lower your death benefit and invest your cash value in the stock market. Again, this is risky, but if the market goes up, so does your cash value. 

Traditionally, the rule of thumb is to get life insurance worth 10 times your annual income — so if you make $75,000 a year, you'd get $750,000 worth of coverage.

However, some experts consider that to be a low estimate, especially if you'd want your life insurance payout to cover your child's college tuition or if you have a mortgage on your home you'd want to pay off. Others choose to get millions in coverage.

Generally, you'll want to get as much life insurance as you can comfortably afford each month. If it would be a struggle to make your premium payments, it's probably too much for you.

There are a few ways to approach getting life insurance once you've decided how much coverage and what type of policy you need. 

You can find policies through insurance companies directly or through online agencies, which major insurance companies back. Online agencies let you bypass the need for an in-person insurance agent and often offer the ability to get a quote and buy your policy entirely online. 

If you want to go the more traditional route, you can work with an agent. Like Northwestern Mutual, you'll need to work with an agent to get a policy with some of the companies above. Companies will generally either help connect you with an agent or provide a list of agents in your area. 

If you're working with a company that doesn't require an agent, you can go ahead with the application process yourself. After completing some questions about your health history, hobbies, and travel plans, you may need to complete a medical exam. However, some companies are changing their medical exam policies due to COVID-19. Talk with your prospective insurer to arrange an exam you're comfortable with. 

After completing these steps and being approved by the insurer, you'll get your final monthly payment. From there, you'll start paying for your policy and have your coverage in place. It's important to talk to a financial advisor about your financial situation and goals to determine what life insurance is best for you.

Like any other type of insurance, term life policies have many factors influencing the price you'll pay for coverage. Your age, health, location, and amount of coverage necessary will all change the monthly premium. The company you choose will look at all of these factors differently. This will result in different prices for every company and policy.

To get the best possible deal on life insurance, you'll want to shop around and compare quotes. Some carriers on this list don't offer online quotes, so it may be challenging to get an estimate. But when available, comparing four or five quotes is an effective way to save a few dollars each month on your premium. Since you'll pay life insurance for 20 or 30 years, that savings will add up.

The difference between term life insurance and permanent life insurance is similar to the difference between renting an apartment (term life) and owning a home (permanent life). When you rent, you have a lease for a certain term. When that lease is over, you can renew — but most likely with a rent increase.

Likewise, term insurance lasts for a specified period, and when it's up you can reapply for coverage, but the premiums most likely will go up as you age and your health deteriorates. Term life insurance is best suited for those who want to protect their family since it's more affordable.

Permanent life insurance never expires, has a death benefit for your beneficiaries, and a cash value that you can use during your lifetime. It's like owning a home, where you gain equity that can be used as collateral — and your home can be left to your heirs leaving a legacy. This is why permanent life insurance is considerably more expensive than term life insurance.

Most people only need term life insurance or coverage for 10 to 30 years. Term life insurance is usually the right choice for families with young children, people with mortgages, or anyone with debt. While the policy will expire eventually, it will expire when you pay your debts and children are grown and on their own. It covers you when you have the most at stake. Generally, they cost between $20 and $40 per month, depending on your health and the age when you start.

Permanent life insurance, however, works differently. It never expires and has a cash value component in addition to the death benefit. You can use the cash value during your lifetime and use it to build wealth or leave a legacy. There are different types of permanent life insurance: whole life, universal life, and variable life. Permanent life insurance is significantly more expensive every month, but it is guaranteed to payout when you die, no matter your age. Permanent life insurance also offers cash value that accumulates interest over time.

Financial advisors suggest a combination of permanent and term life insurance. For example, if you have $200,000 in permanent life and $300,000 in term for 20 years, at the end of 20 years, the term life insurance policy goes away, but you still have your $200,000 permanent policy that has earned cash value.

Whether you choose permanent or term life insurance, you will need to undergo the underwriting process. The underwriting process is how the insurance company determines your insurability — determining how much of a risk you are and how much to lend you. It may require a medical exam, which includes the collection of a blood and urine sample. 

If you are on a fixed income with limited means, final expense, known as burial insurance, could be best for you. If you have health issues that may prevent you from traditional coverage, you may want to consider no medical examination life insurance.

It's wise to consult an accountant, estate planner, and financial advisor to help you understand a life insurance's tax benefits and implications, as well as determine which insurance type is best for you. It's worth taking the time to find the best policy because once you've signed, it's tough to adjust your coverage.

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