The 7 Best Life Insurance Companies for Young Adults in 2020

Important long-term protection for your loved ones

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Life insurance is an important financial protection for your loved ones. For many young adults, that might mean their parents or future loved ones. Whether you have a family that depends on you today or plan to have a family in the future, getting life insurance while you’re young helps you lock in the best possible rates.

While few people want to think about dying, accidents and surprise illnesses do happen. In 2017, accidental deaths in the United States totaled nearly 170,000, including 40,000 from car accidents, 36,000 from falls, and 65,000 from unintentional poisoning. Without life insurance, loved ones may need to rely on savings or a loan to fund final expenses.

We checked out 25 top insurers to come up with this list of the best life insurance for young adults. We review them based on types of insurance offered, overall coverage, price, and more.

The 7 Best Life Insurance Companies for Young Adults in 2020

Best Overall: Protective Life

Protective Life gets the nod for best overall thanks to low rates with the longest list of riders available, along with excellent financial health ratings.

Pros
  • Competitive, low prices for term life insurance

  • Excellent financial health ratings

  • Term quotes available online

Cons
  • No quotes for whole life or universal life insurance online

  • Rates increase quickly for smokers and people in poor health

Protective Life is a major insurer based in Birmingham, Alabama, founded in 1907. It holds an A+ financial strength rating from AM Best and scores “about average” in J.D. Power’s 2019 U.S. Life Insurance Study, with a score very close to the national average. The company was started by a former Alabama governor and has completed more than 55 acquisitions, including the 2018 purchase of Liberty Life Assurance Company of Boston.

Protective Life offers multiple types of policies including term life, whole life, child life, and universal life. Term life insurance quotes are available completely online or through a third party agent. If you're seeking a whole life or universal life policy, you’ll have to work with an agent.

For a quote for a healthy 25-year-old male, rates were $28.87 per month for a $500,000 policy with a 30-year term, one of the lowest costs for this coverage and term length available. For a $1 million term policy, the cost was $49.27 per month.

Focusing on more than just price, Protective Life has ample riders available. These include an accidental death benefit rider, accelerated death benefit rider, waiver of premiums (in case you are disabled), disability income rider, and others.

Term policies are available from $100,000 to $10 million with terms of 10 to 30 years.

Best Term Life: Transamerica

Transamerica is our best term life option because it offers a low-cost term insurance policy that has living benefits, which is unusual among insurance carriers.

Pros
  • Competitive rates for term life insurance policies

  • Superior A+ financial strength rating

  • Wide range of policies and riders

Cons
  • No online quotes at Transamerica website

  • Below average J.D. Power customer satisfaction rating

  • Low-tech experience requires updates with paper forms

Transamerica is a well-known life insurer founded in San Francisco, California, in the iconic Transamerica Pyramid, a unique building that until 2018 was the tallest structure in San Francisco. Its current headquarters are in Baltimore, Maryland. With roots going back to 1904, Transamerica is a stable insurer with an A rating from AM Best and a middle-of-the-road customer satisfaction rating of “among the rest,” according to the 2019 J.D. Power life insurance study. Transamerica is now a division of Aegon, a Dutch financial company founded in 1844.

This carrier offers a range of investment and insurance products. Its life insurance products include term, whole, and universal life insurance policies. There are two term life options: Trendsetter Super and Trendsetter LB. The latter is unique in that it offers living benefits as a term policy. This insurer also offers a policy to help cover final life expenses, such as funeral or cremation costs.

Quotes are available online but not through the Transamerica website. You can call Transamerica, find a local agent, or use an online agent to buy a policy.

In a quote for a healthy 25-year-old male for a 30-year term life insurance policy, the cost was $29.24 per month for $500,000 in coverage or $49.88 for $1 million. These are very competitive rates that are slightly more expensive than the very best in our comparison.

Best Whole Life: Northwestern Mutual

We chose Northwestern Mutual as having the best whole life policies because of its financial strength backing its permanent insurance that has consistently offered annual dividends.

Pros
  • No. 1 rated life insurance company in a 2019 J.D. Power study

  • Highest level of financial strength ratings from major rating agencies

  • Policies come from financial advisors who can help you understand your life insurance needs

Cons
  • No online life insurance quotes

  • Fewer options for term life insurance

  • Whole life may not be a good fit for many households

Northwestern Mutual is a large insurer founded in 1859 with a headquarters in Milwaukee, Wisconsin. It holds a top A++ rating from AM Best and earned the No. 1 spot for customer satisfaction in the 2019 J.D. Power life insurance study. In addition to insurance, Northwestern Mutual offers a range of financial planning and investment management services.

For life insurance, you can find whole, universal, and term options at Northwestern Mutual. Other insurance available includes disability and long-term care. With whole life, your policy includes both insurance and savings components. You can tap into your cash value while still alive. The rules depend on the specific policy you choose.

You can buy additional riders to give you more flexibility with your policy, including a waiver of premiums rider that preserves your policy without payments if you become disabled. Whole life insurance policyholders at Northwestern Mutual also qualify for an annual dividend, which can give you a cash payout or add to your policy cash value without any extra payments.

You can’t get quotes for Northwestern Mutual life insurance products online. To get a quote, you have to fill out a short form for a call back from a licensed financial advisor.

Best for Young Families: State Farm

State Farm offers both child term riders on parents' policies and children's whole life insurance for reasonable prices, making it ideal for families with young children.

Pros
  • Excellent customer satisfaction ratings from J.D. Power

  • Highest possible A++ financial stability rating from AM Best

  • Easy-to-customize policies with multiple riders and options available

Cons
  • Higher monthly premiums than some competitors

  • Only most popular term lengths available

  • Very strict health review and underwriting

State Farm is a large insurance company founded in 1922 and based in Bloomington, Illinois. It holds a top-level A++ rating from AM Best and the second-highest rating for customer satisfaction in the 2019 J.D. Power study, with an “among the best” status. State Farm is a diverse financial company best known for insurance, but it also offers banking and investment products.

Insurance products include auto, home, property, health, disability, business, liability, and life insurance. Term, whole, and universal life insurance options are available. It’s easy to add multiple helpful riders, such as a waiver of premiums if disabled, a children's term insurance, and guaranteed insurability.

There are several types of whole and universal coverage available and at least six different riders to upgrade or customize your policy. Parents can also purchase child whole life insurance for those as young as a day old. You can get quotes online or through an agent.

For a 30-year term life policy for a healthy 25-year-old male from California, the cost of $500,000 in coverage was $37.84 per month. Additionally, $1 million in coverage costs $63.49 per month. Comparable whole life policies were $392.79 per month for $500,000 or $779.49 per month for $1 million. Whole life is not the cheapest life insurance around, but it could be a good choice for many families who want lifelong protection.

Best for Individuals: AIG

AIG gets the nod for individuals because its term life insurance is not only among the least expensive quoted, but it is also convertible to adapt to an individual's changing needs.

Pros
  • Competitive pricing for term life insurance coverage

  • Large, stable insurer with worldwide operations

  • Convertible term life insurance policies can be converted into permanent (whole) life

Cons
  • Lowest customer service ratings among large insurers in J.D. Power study

  • Poor reputation from instability during the fallout of the 2008 financial crisis

AIG, short for American International Group, is a major insurance company around the world. It was founded in 1919 and is based in New York, City. It holds an A financial strength rating from AM Best, a turnaround from past years. According to customer satisfaction ratings, it has some room for improvement in customer service. It received a low score of 722 out of 1,000 in the 2019 J.D. Power life insurance study.

AIG offers a wide range of individual and business insurance products as well as investments. Life insurance products include term life, guaranteed issue whole life, quality of life, universal life, and variable universal life insurance.

The QoL Value+ Protector is a permanent whole life policy that can be used to fund your retirement. It builds cash value and includes living benefits at no cost and a death benefit up to age 100. One interesting feature about AIG's term life insurance is that it is convertible into whole life insurance, which provides extreme flexibility to policyholders.

In our quote for a healthy 25-year old male in California, the cost was $29.07 per month for a $500,000, 30-year term. The same policy with a $1 million policy value was $51.28 per month.

Best for Pilots: Mutual of Omaha

At Mutual of Omaha, Pilots don’t have to pay any more for life insurance and are treated with the same underwriting standards as those in non-risk professions.

Pros
  • Third best ratings in 2019 J.D. Power customer satisfaction survey

  • Strong financial stability ratings from AM Best

  • Pilots don’t automatically pay more for life insurance

Cons
  • A smaller life insurance company than many competitors on this list

  • Student pilots are automatically reduced from Preferred Plus to Preferred status and assessed an additional fee

  • Low-tech experience—you can’t manage everything online

Mutual of Omaha is a large insurance company founded in 1909 and based in Omaha, Nebraska. It holds a superior A+ rating from AM Best and received the third-highest overall rating in the 2019 J.D. Power U.S. Life Insurance Study, earning a “better than most” score. It offers insurance and investment services. For life insurance, there are term, whole, and universal plans.

Pilots might have to pay more for life insurance with other carriers—and that's if they even qualify to purchase a policy. With Mutual of Omaha, pilots get equal treatment in the underwriting process, meaning those who take to the skies can still get Preferred Plus rates with either a private or commercial pilot’s license.

Term and whole life insurance quotes are available online. In a quote for a healthy 25-year old male in California, the cost for a 30-year policy for $500,000 in coverage is $35.04 per month. A similar $1 million policy runs $61.28 per month. For pilots, rates vary depending on the type of license you have and how you fly. Pilots may also like the ability to add on accidental death insurance from Mutual of Omaha for even more protection for their loved ones.

Best for No Medical Exam: Haven Life

Haven Life has the most robust no medical exam policies that guarantee the issuance of life insurance with the ability to get up to $1 million in coverage.

Pros
  • Policies available with no medical exam

  • Part of an insurer with A++ AM Best rating

  • Simple and easy online experience

Cons
  • Parent company earns “about average” customer satisfaction ratings

  • Only life insurance is available

Haven Life is a newer brand, but it’s a division of well-known insurer MassMutual. Haven Life doesn’t get its own ratings, so it inherits those from its parent company. Mass Mutual was founded in 1851 and maintains a headquarters in Springfield, Massachusetts. MassMutual holds an A++ rating from AM Best and scored in the middle of the pack with an “about average” rating from J.D. Power in 2019. While policies say MassMutual, the customer experience at Haven Life is unique.

Unlike most life insurance policies, Haven Life doesn’t require a medical exam as part of underwriting for some applicants who pass the initial medical questions with no health issues or family history of problems. Most applicants, however, will still need to undergo the free medical exam to get approved for a policy. Haven Life makes it easy to apply online.

In a quote from the Haven Life website, a 25-year old male in excellent health would pay $31.30 per month for a $500,000 policy and $56.20 per month for $1 million. For the same $500,000 policy, someone in “good” health would pay $39.42 per month and someone in “average” health would pay $64.25 per month.

You can get a policy for up to $1 million with no medical exam. Increasing to the maximum $2 million limit, however, would require a medical exam. If you don’t qualify for the no medical exam product, called InterTerm, you’ll still have an option to complete the full application, including medical underwriting, at no added cost.

What Is Life Insurance for Young Adults?

Life insurance is a financial product that protects your loved ones in the event you pass away. Life insurance for young adults is the same type of life insurance anyone would purchase, just with different financial objectives. A young couple might want to protect each other in the event an income earner passes away unexpectedly. Yet, not every young adult who buys life insurance is in a relationship: a single adventurer who might die accidentally on a scuba diving trip to Mexico might protect his parents’ funds by having life insurance to bring his remains home for a proper burial.

Term life insurance typically has a relatively low monthly cost for a fairly large payout. Regularly scheduled payments, typically monthly, are required throughout the term. If you outlive the policy’s term (commonly 10, 20, or 30 years), you don’t get anything back. Think of it as a relatively low-cost way to protect your family’s financial security.

Whole life and universal life are types of permanent life insurance. With these policies, a portion of your monthly payment includes your life insurance and a portion includes an investment component. That means you are guaranteed to get something back and may even be able to borrow from the policy’s value as it grows over time. This requires a much higher monthly payment than term life insurance, however, and isn’t cost-effective for most young adults.

Because a life insurance policy could last for decades, it’s important to consider long-term financial needs when deciding if life insurance is right for you and when choosing your policy value.

What Is a Good Age to Get Life Insurance?

There is no set age when someone should purchase life insurance, but realize that the cheapest life insurance you’ll most likely ever find is probably right now. The cost of life insurance tends to go up as you age because the risk of your passing away sooner increases. It’s never too early to get life insurance.

If you lock in a 30-year term policy at a low cost as a young adult, you’ll appreciate the savings compared to if you were to get the same policy five, 10, or more years later.

If anyone relies on you or your income, life insurance may be an essential protection. Anyone who plans to support a family in the future would be wise to buy life insurance when they’re young. As soon as you start your first full-time job as an adult, you should consider life insurance.

In some cases, you may want life insurance before you finish school. For example, parents may purchase a life insurance policy on their child to cover student loans in the event of a worst-case scenario.

What Is the Best Life Insurance for a Young Adult?

For most young adults, term life insurance is usually the best choice. The low monthly cost for hundreds of thousands of dollars in coverage makes it easy to buy and keep until you’re well on the road toward retirement.

Permanent life insurance can come with many perks and benefits compared to term life insurance. You could even withdraw from the value of a whole or universal life policy to pay for a down payment on a home or another major life event. However, the monthly cost is many times higher than term life.

What Are the Expected Costs of Life Insurance for Young Adults?

In our quote for a 25-year old male in California, $500,000 term life insurance policies with a 30-year term required a monthly payment starting around $30 per month. A policy for $1 million starts around $50 per month. These are the rates for the healthiest applicants with no history of major or family illnesses.

As you get older or add a more complex medical history, costs can go up quickly. Smokers pay higher rates than nonsmokers. If you have a risky lifestyle and participate in activities like flying, skydiving, bungee jumping, or extreme sports, you might face higher monthly premiums as well, or even policy exclusion.

Life insurance companies also offer policy add-ons called riders. These give your life insurance additional features for an added fee. For example, you could add long-term care coverage, a waiver of premiums if you are disabled, and other features.

Whole life insurance and universal life insurance costs quite a bit more than term life. In addition to paying for what’s included in term life insurance, you’re also making a contribution toward the cash value of your life insurance policy. This portion is guaranteed to grow over time in most cases, but you have to make much larger monthly payments, often multiple times what term life costs on its own.

How We Chose the Best Life Insurance Companies for Young Adults

To complete this review, we looked at 25 different life insurance companies. An important factor in evaluating the companies here was cost. Additionally, insurers needed high financial stability ratings. While we looked at other financial measures including credit ratings, AM Best financial stability ratings were the primary metric here. Financial stability demonstrates that a company will be around for a long time and is able to handle claims without a risk of running out of cash.

Customer service wasn’t the biggest factor, but it did play an important role in the evaluation process. To compare insurers in this area, the main metric used was the J.D. Power 2019 U.S. Life Insurance Study. If you ever want to make changes, have questions, or your beneficiaries need to file a claim, good customer service makes the entire experience easier to manage.

Article Sources

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