The 6 Best Life Insurance Companies for Parents in 2020

Provide for your family after you’re gone with life insurance you can afford

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Our Top Picks

Life insurance is one of the best ways to ensure that your family will be taken care of financially when you’re gone. A recent study showed that 69% of households would have trouble paying their living expenses in two years or less if they lost their primary wage earner. 

Unfortunately, the variety of life insurance policies available and the number of companies offering them makes it difficult to find the policy you need at a price you can afford. For example, term life insurance is often the cheapest but only covers you for 10 to 30 years. Whole life insurance, which protects you for your lifetime and offers many coverage options, can also be confusing, as is adding children to your life insurance.    

We looked at over a dozen life insurance providers for this review and chose the best based on reputation, coverage options, specific needs, pricing, and more. Here are our top picks.  

Our Top Picks

Best Overall: New York Life

New York Life

New York Life

New York Life was founded in 1845 and is the largest mutual insurer in the U.S. with an A++ rating from AM Best. As a mutual insurer, it has paid dividends to eligible policyholders every year since 1854. We chose it as the best overall because of its reputation, variety of life insurance policies, and the option to receive dividends on some plans.

New York Life lets you customize term, whole, universal, and variable universal life plans to suit your needs. The company offers term policies up to age 75 with level premiums that you can later convert to a whole life policy without a medical exam. You can also choose whole life policies up to age 90 that can make you eligible for dividend payouts.

New York Life also offers a variety of riders, including money-back on some universal life policies, living benefit options that include chronic and terminal illness, and a paid-up option that lets your surviving spouse purchase life insurance for themselves without a medical exam.

New York Life offers coverage amounts as low as $10,000 depending on the policy you build, but you will have to speak to an agent to get a quote.

Best for New Parents: Mutual of Omaha

Mutual of Omaha

 Mutual of Omaha

Since 1909, Mutual of Omaha has grown to become a leading provider of life, long-term care, and disability insurance, boasting an A+ rating from AM Best. Although the company is well-known for its excellent senior life insurance policies, we chose it as the best for new parents due to its simple plans, easy application process, and low premiums.

Mutual of Omaha offers whole life insurance that can be purchased for children ages 14 days to 17 years and provides death benefits from $5,000 to $50,000. Policies come with guaranteed locked-in rates, accumulating cash value, and no decrease in benefits into adulthood. Mutual of Omaha also lets you buy more coverage at different age and life milestones, including marriage, the birth of a child, or buying a home.  

Getting a quote online is easy and no medical exam is required to apply for a policy. We found that Mutual of Omaha offers some of the lowest premiums for children’s life insurance. Using the online quote builder, a $10,000 policy for a 13-year-old came to just $5.50 per month while a $50,000 policy cost $23.50 per month.

Best for Seniors: John Hancock

John Hancock

 John Hancock

Originally founded in 1862 as a policyholder-owned insurance company, John Hancock is one of the top mutual life insurers in the U.S. and receives an A+ rating from AM Best for financial stability. We chose it as the best for seniors because it offers critical illness and long-term care riders, generous underwriting for health issues, and discounts for healthy lifestyle choices.  

As with most life insurers, John Hancock offers a variety of term, whole, and universal life insurance plans. It also offers a simple underwriting process with no medical exam requirement and covers people with health issues, including asthma, diabetes, and heart disease.

John Hancock’s term life insurance is available for 10 to 30 years up to the age of 90. You can also choose a whole life guaranteed issue final expense policy up to age 80 with a maximum death benefit of $20,000 or permanent life insurance up to age 121 and issuable up to age 90. All plans include death benefits, flexible premiums, cash value accumulation, and living benefit riders that include critical illness and long-term care.

Seniors can also take advantage of John Hancock’s Vitality Program, which allows them to get refunds on their premiums based on healthy lifestyle choices. There are also plans for diabetics and a Quit Smoking Incentive program that allows smokers to enjoy a non-smoker premium for the first three years to encourage them to quit.

Best for Flexible Coverage: State Farm

State Farm

State Farm

Originally founded by a farmer in 1922, State Farm offers home, health, life, disability, and liability insurance and earns an A++ rating from AM Best. We chose it as the best for flexible coverage because it offers cash value term life insurance, spouse and child riders, and a return of premium option.   

Although State Farm offers whole and universal life insurance, its term policies feature the most flexibility for the price. The Return of Premium Term policy offers level premiums for a 20- or 30-year term with a cash value you can borrow against. You can also get all your money back if you survive your term or opt to continue your coverage until you’re 95, although the latter option comes with higher premiums.    

State Farm also offers add-on riders that extend your coverage, including spouse and child riders convertible without a medical exam, waiver of premium for disability, and guaranteed insurability that lets children add coverage up to $100,000 based on various life milestones. 

State Farm’s online quote generator lets you build a term policy quote with riders in just minutes. A 20-year term life policy of $250,000 for a 30-year-old male in excellent health costs $18.72 per month. A quote for a woman in the same situation came to $20.44 per month.

Best for Living Benefits: AIG

AIG

 AIG

Originally established as American Asiatic Underwriters in Shanghai in 1919, American International Group (AIG) has grown to become a global insurance company with offices in more than 80 countries and an A rating for financial stability from AM Best. We chose it as the best for living benefits because it offers several insurance plans with generous and flexible living benefits.    

AIG offers a wide range of flexible policies, including term, permanent, whole, universal, and guaranteed issue life insurance. The company also offers four add-on riders including a free terminal illness rider that lets you access 50% of your death benefit (up to $250,000) if you receive a terminal illness diagnosis. There is no restriction as to how you can use these funds.

AIG’s Guaranteed Issue Whole Life (GIWL) offers built-in living benefits for returns all of the premiums paid for chronic illnesses and up to 50% of your death life terminal illnesses. However, because this policy is only issued to individuals ages 50 to 80, the maximum death benefit available is limited to $25,000.      

Additionally, you can choose one of AIG’s Quality of Life (QoL) term insurance policies which comes with a robust set of living benefits built right in. These policies give you access to some of your death benefits if you become diagnosed with a chronic, critical, or terminal illness. Some QoL policies also include accumulated cash values you can borrow against that also provide flexibility in how you earn interest in your account.

Best Value: Transamerica

Transamerica

 Transamerica

Originally established as a bank in 1904, Transamerica offers financial products including life insurance and retirement plans and enjoys an A rating from AM Best. We chose it as the best value because it offers lower premiums than its competitors.

Transamerica offers two term life insurance plans with terms of 10 to 30 years in increments of five years and death benefits starting at $25,000. Depending on the plan you choose, you can convert your policy into permanent insurance at the end of your term, access living benefits, and select a maximum death benefit of either $2 million or $10 million.

Transamerica also offers whole, universal, and final expense life insurance plus a number of policy riders, including monthly disability income, children’s insurance, and accidental death riders.          

Transamerica offers the lowest premiums for life insurance that we’ve come across. Using the online quote builder, a 20-year term life policy of $250,000 for a 30-year-old male in excellent health costs $12.90 per month. A quote for a woman in the same situation came to $11.40 per month.

What Is Life Insurance for Parents?

Choosing life insurance as a parent can be different for young parents with newborns, middle-aged parents with older children, or seniors with adult children and grandchildren.

In all cases, each parent will want to name a beneficiary who will receive the full amount of the life insurance policy when that parent dies. Typically this is either the surviving spouse or one or more children. Add-on insurance riders can extend this protection by releasing a portion of the benefits if the policyholder has a chronic or terminal illness, continuing paying the premiums if the policyholder becomes unemployed or disabled, and adding coverage for children.

Coverage amounts can vary from $10,000 up to $10 million depending on the insurer and your health and financial situation. You can also choose term life insurance that can protect you for one to three decades or select more expensive whole life insurance that will cover you for life.       

What Does Life Insurance for Parents Include or Exclude?

Life insurance policies will only cover you if you continue to pay your monthly premiums. If it gets canceled for any reason, you’ll have to reapply and may pay more for your next policy. That’s why it’s important to know what options you have for keeping your policy going if you suffer a financial or health setback as well as what may not be covered by your insurance.


Pre-existing
conditions and declining health are two things that can raise your monthly premiums. A guaranteed insurability rider will let you purchase additional coverage without a medical exam at a reasonable rate when your term ends. If you become temporarily or permanently injured or lose your job, additional riders can ensure your policy continues even if there is a gap in premium payments.           

Additionally, most life insurance providers are reluctant to provide policies or will only offer policies with steep premiums for individuals with a history of self-harm, criminal behavior, or with high-risk lifestyles. In many cases, insurers won’t pay claims for deaths resulting from these situations.   

Why Should Parents Buy Life Insurance?

New parents will benefit from buying term life insurance to provide for their surviving spouse and children during the formative and vulnerable years of childhood. Term policies are also the least expensive making them suitable for a new family’s budget.

Aging parents may want to buy insurance for their grandchildren to help guarantee coverage for them when they become adults or that they can cash out for college tuition, getting married, or buying a new house. Older parents may also want to buy insurance with chronic or terminal illness riders that will let them borrow against their policy to cover medical expenses to ease the burden on their families.        

How Should Parents Spend on Life Insurance?

In general, the longer you want to be covered by life insurance, the more you’ll have to pay. Younger individuals are also less expensive to insure since they are generally considered healthier, as are older individuals who don’t smoke and are in their ideal weight range.

Most of the term life plans we reviewed came in at around $11 to $21 per month to insure a healthy, 30-year-old for 20 years with $250,000 in death benefits. Although we didn’t request quotes for whole life policies, our research showed that similar coverage for the same individual would come to around $150 to $250 per month.   

How We Chose the Best Life Insurance Companies for Parents

We looked at over a dozen life insurance providers for this review. We made sure to choose companies with a long history of providing life insurance since they were most likely to have the best service and options.

It was also important for us to choose providers that offered affordable premiums, especially for new parents and young individuals. Finally, we looked for companies that offered the best options for special needs, such as insuring children, providing living benefits, and providing special coverage for seniors preparing for their final years.

In the end, choosing life insurance isn’t something you’ll do just once in your life. As your family grows and your needs change, you want to ensure your provider can grow with you to give you the peace of mind of knowing that your loved ones will be taken care of after you’re gone.

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Article Sources
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  1. The ASA Group. "2017 Insurance Barometer Study." Accessed November 11, 2020.