State Farm Life Insurance provider Review dives deep into the offerings of this major insurance company. State Farm is a household name synonymous with car insurance, but they also offer a variety of life insurance products to help you protect your loved ones financially in the event of your passing. This review will examine State Farm's life insurance options, including term life, whole life, and universal life policies. We'll assess their customer service reputation, financial strength, and overall value proposition to help you decide if State Farm is the right fit for your life insurance needs.
In today's world, life insurance plays a crucial role in safeguarding your family's financial security. It provides a payout to your designated beneficiaries upon your death, helping them cover expenses, maintain their lifestyle, or pay off debts. Choosing the right life insurance provider is a significant decision, and State Farm is a major player in this market. Let's explore what they offer and how they might stack up against the competition.
Introduction State Farm Life Insurance Review
As a leading entity in the life insurance market, State Farm garners respect for its formidable financial stability and consistent customer satisfaction—key elements in selecting a life insurance company. The firm is particularly attractive to those seeking dividend-paying whole life insurance policies or the less common return-of-premium term insurance options. On the downside, State Farm's term life insurance pricing does not compete well, falling short compared to other providers we've analyzed. Although State Farm presents a satisfactory variety of policy options, it does not offer certain beneficial riders that are standard and complimentary with other insurers.
Pros:
- Top-Tier Financial Stability
- Exceptional Customer Satisfaction
- Dividend-Eligible Whole Life Policies
- Availability of Return-of-Premium Term Insurance
- Savings Through Policy Bundling
Cons:
- High Cost of Term Insurance
- Charges for Living Benefits
- Restricted No-Medical-Exam Policy Options
Specifications
| AM Best Rating | NAIC Score (avg.) | Years In Business | Policy Types | Accepts Credit Cards |
|---|---|---|---|---|
| A++ | N/A | 100 Years | Whole, Term, Universal (UL), Final Expense | Indeed |
Pros and Cons Explain
Pros Explain
Top-Tier Financial Stability: AM Best has awarded State Farm with an A++ rating, signifying a "superior" capacity to fulfill its financial commitments. This prestigious rating is bestowed upon less than 10% of life insurance companies.
Exceptional Customer Satisfaction: In the realm of customer contentment, State Farm has achieved the pinnacle, ranking first among 21 firms in the 2022 J.D. Power survey. Moreover, the National Association of Insurance Commissioners (NAIC) records a minimal volume of customer grievances for a corporation of State Farm's magnitude.
Dividend-Eligible Whole Life Policies: As a mutual insurer, State Farm is positioned to distribute dividends to holders of whole life policies, although no dividends were declared for 2022.
Availability of Return-of-Premium Term Insurance: State Farm provides ROP term insurance, a type of policy that reimburses some or all premiums if the policy term is outlived. These policies are generally pricier and rarer, with less than 15% of insurers offering them.
Savings Through Policy Bundling: Combining a State Farm life insurance policy with an auto policy from the same company can potentially reduce premium costs.
Cons Explain:
High Cost of Term Insurance: When it comes to term insurance pricing, State Farm is positioned in the most expensive 15% of the companies surveyed.
Charges for Living Benefits: Unlike other leading insurers that provide living benefits at no additional cost, State Farm only offers a long-term care rider for an extra fee.
Restricted No-Medical-Exam Policy Options: State Farm's offerings for life insurance without a medical exam are limited to coverage amounts not exceeding $50,000, necessitating a paramedical exam for higher death benefits. Competitors, in contrast, provide no-medical-exam policies with coverage well above $1 million.
Complaint Index Overview:
State Farm received much fewer complaints than is typical for a firm of its size. In fact, it outperformed two-thirds of all the insurers we studied in terms of consumer complaints. Over three years, we averaged State Farm's NAIC complaint index score and arrived with a 0.0 average.
This is how the index works. The NAIC monitors consumer complaints and generates a number indicating how many complaints a company has received in relation to its size. If a company's complaint ratio exceeds 1.0, it means that it received more complaints than expected for its size. A ratio of less than 1.0 implies that fewer complaints were received than expected. State Farm's score of 0.0 is the greatest a corporation can achieve.
Third-Party Evaluations:
Endorsed with an A++ rating by AM Best, State Farm is acknowledged for its exceptional financial stability. It is one of only eight insurers among 91 to achieve such a high rating. Additionally, State Farm secured the highest score in the 2022 U.S. Individual Life Insurance Study by J.D. Power, with 839 points out of 1,000, surpassing the industry average of 774.
Note on the NAIC Complaint Index:
The NAIC complaint index is a critical measure of customer feedback relative to company size. A score below 1.0 suggests fewer complaints than expected, while a score above 1.0 indicates more. An index approaching 0 is indicative of superior performance.
Competition
| Insurance Company | Offered Coverages | 2022 Dividends | Online Application Status | AM Best Rating | Term Policy Pricing | Complaint Index (3-yr avg.) | J.D. Power Ranking |
|---|---|---|---|---|---|---|---|
| State Farm | Term, universal, final expense, whole life | Approx. $600 million (2021) | Not available | A++ | Poor | 0.295 | 1 |
| Guardian | Term, universal, variable universal, whole life | $1.13 billion | Not Available | A++ | Average | 0.110 | 11 |
| Pacific Life | Term, universal, variable universal, indexed universal, whole life | Not applicable | Not available | A+ | Excellent | 0.056 | 4 |
Policy Selection:
State Farm offers a select range of life insurance policies, including term life, whole life, final expense insurance, and universal life options. Notably, they provide a return-of-premium term policy, which is a less frequently encountered option. However, for those interested in indexed universal** or variable universal life insurance, exploring other providers like Nationwide or Protective, which are highly rated in the industry, might be beneficial.
Term Life Insurance Explained:
Term life insurance from State Farm is designed for a predetermined duration, such as 20 years, offering coverage at a lower premium compared to permanent life insurance. It's structured to support beneficiaries with financial obligations like mortgages or education costs in the event of the policyholder's untimely demise.
Select Term Life: This policy maintains a fixed premium throughout its term, which can be 10, 20, or 30 years, with a starting coverage of $100,000. Post-term renewal is possible until age 95, albeit with increased premiums.
Return of Premium Life: Unique to State Farm, this policy refunds premiums if the policyholder outlives the term, available in 20-year and 30-year options. While costlier than standard term insurance, it accrues a cash value that can be borrowed against.
Instant Answer Term: For immediate coverage needs, this policy offers a swift application and purchase process for a $50,000 coverage, lasting until age 50 or for 10 years, whichever is later.
Tip: State Farm's term life insurance can transition to permanent coverage without a medical exam before the age of 75.
Whole Life Insurance Insights:
Whole life insurance with State Farm is a permanent coverage solution that accumulates tax-free cash value. Premiums remain consistent, and policyholders have the option to borrow against the cash value.
Dividend-Eligible Policies: While dividends are not assured, State Farm's whole life policies qualify for potential dividend payments.
Limited Pay Whole Life: This plan allows for premium payments over 10, 15, or 20 years, after which the policy is considered paid up, and no further premiums are required.
Single Premium Whole Life: With a one-time payment, this policy secures lifetime coverage, available to individuals up to age 80, starting at $15,000 coverage.
Important: Borrowing from the policy's cash value and not repaying it will reduce both the death benefit and cash value.
Universal Life Insurance Overview:
Universal life insurance at State Farm is another permanent coverage option with a cash value component that grows with current interest rates. It offers flexibility in premiums and death benefits.
Universal Life: Policyholders can adjust their coverage and premiums, with the choice of a level death benefit or one that fluctuates with payments and account value. Coverage begins at $25,000, available up to age 85.
Survivorship Universal Life: This policy covers two individuals, paying out the death benefit upon the second person's passing.
Joint Universal Life: Similar to survivorship, this policy also covers two individuals but pays out upon the first person's death.
By presenting these options in a clear and structured manner, State Farm caters to a variety of life insurance needs, though some niche products may be sourced from other insurers.
Final Expense or Burial Insurance Overview:
State Farm extends its insurance offerings to include a whole life variant known as burial insurance.
Final Expense Insurance: Marketed as $10,000 Whole Life in New York, this policy guarantees a $10,000 death benefit and is open to individuals aged 50 to 80 (50 to 75 in New York), with premiums due until the age of 100.
Insurance Riders Explained:
Insurance riders are optional add-ons that enhance a policy with extra benefits or coverage. State Farm's selection does not encompass riders for critical or terminal illness benefits, except for a chargeable long-term care option. However, several key riders are available:
Guaranteed Insurability Rider: Beneficial for younger policyholders who anticipate a future need for increased coverage, this rider allows for additional insurance purchases at predetermined life events, without a medical exam, for those 37 or younger. Coverage options range from $25,000 to $100,000 and are compatible with Limited Pay Whole Life or Universal Life policies.
This rider requires the inclusion of the waiver of premium for disability rider.
Child Rider: This rider enables parents to secure temporary life insurance for their children under 18, extendable up to their 25th birthday or the parent's 65th birthday, whichever comes first. Coverage per child can reach $20,000, with the option to convert to permanent insurance at age 25.
Waiver of Premium: This rider exempts you from premium payments in the event of total disability lasting six months before age 60, continuing as long as the disability persists. For disabilities occurring between 60 and 65, premium waivers are limited to a few years. The Universal Life policies feature a similar rider for monthly deductions.
Accelerated Death Benefit: Long-Term Care Rider: Exclusively for Universal Life policyholders, this rider allows access to a portion of the death benefit if chronic illness occurs, subject to eligibility. Not available in California or New York.
Tip: Meeting claim conditions exempts you from paying insurance costs, rider charges, and monthly expenses.
Select Term Rider: Attachable to Select Term or Whole Life policies, it offers level premiums for 10, 20, or 30 years, with coverage beginning at $100,000, extending up to age 95.
Level Term Rider: Applicable to Joint Universal Life or Survivorship Universal Life policies, it provides additional coverage with a minimum of $100,000, valid until age 95.
These riders allow for a tailored insurance experience, providing flexibility and security for various life stages and needs.
Client Support Services:
For general inquiries, State Farm extends its customer support through an online query form or via telephone at 800-STATE-FARM (800-782-8332). Life insurance claims can be addressed by contacting 877-292-0398. Payment transactions are facilitated online, through the mobile application, or by phone at 800-440-0998, available around the clock.
Note: Policy applications and life insurance claims cannot be processed online, and State Farm's digital platform does not feature live chat support, aligning with industry norms.
Pricing Structure:
In a comparative study of term life insurance quotes, State Farm's pricing was positioned lower, ranking 29th out of 32 companies. This assessment was based on 30-year term policies valued at $250,000 for healthy individuals aged 25 and 40, residing in ZIP codes 90666 or 94027. It is important to note that State Farm does not offer 30-year terms to individuals aged 55 and above.
Despite this, State Farm's reputation for robust financial health and superior customer service, coupled with the potential for dividend earnings on whole life policies, may justify the higher premiums for some customers. Additionally, premium costs may be reduced through bundling life and auto insurance policies. However, for those sensitive to price, exploring more cost-effective options like Protective and Banner is advisable.
Conclusive Assessment:
State Farm emerges as a commendable choice for those seeking comprehensive life insurance coverage, including whole, universal, or term life insurance, and is particularly notable for its return-of-premium term insurance, a rarity in the market. The company's stellar customer satisfaction and minimal complaint records, along with its unparalleled financial stability, make it an attractive option for those prioritizing quality service.
Nevertheless, if affordability is a primary concern, especially for term life insurance, State Farm's rates may not be the most competitive. For more favorable pricing, consider alternatives such as Protective and Banner. Additionally, for specific products like indexed universal or variable universal life insurance, and for early access to death benefits through riders for critical or terminal illnesses, other insurers may be more suitable.
Frequently Asked Questions:
Is State Farm Life Insurance Costly?
Compared to its competitors, State Farm's term life insurance is on the higher end of the price spectrum.
Does State Farm Require Medical Examinations for Life Insurance?
While most policies necessitate a medical exam, State Farm does offer some no-exam options. Policyholders under 75 can convert term life insurance to permanent coverage without undergoing a new medical examination.
Is it Possible to Withdraw Funds from State Farm Life Insurance?
Withdrawals are permissible from permanent life insurance policies with sufficient cash value accumulation.
What Circumstances Invalidate a Life Insurance Payout?
Disqualifying factors for life insurance payouts include suicide, fraudulent application information, homicide by a beneficiary, death due to risky behavior, or premium payment lapses.
Can Life Insurance be Cashed Out While Alive?
Owners of permanent life insurance policies may cash out the accumulated cash value. In certain scenarios, policies can also be sold for cash. However, the death benefit itself cannot be liquidated. Early cash-out may incur surrender charges from some insurers.
This rephrased content aims to provide clarity and facilitate understanding for a general audience, maintaining a professional and informational tone throughout.