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State Farm is one of the largest life insurance providers in the U.S., with a powerhouse financial rating and a stellar record of pleasing customers—two of the most important factors to consider when choosing a life insurance provider. The company may have special appeal for insurance shoppers looking for whole life policies that pay dividends or for hard-to-find return-of-premium term insurance.
However, State Farm’s pricing for term policies is disappointing, ranking among the worst of the companies we researched. And while the company offers a decent range of policy types, we found it lacking when it comes to some important riders that competitors offer at no charge.
- Pros & Cons
- Company Overview
A++ financial stability rating
Outstanding customer satisfaction
Whole life policies are eligible for dividends
Offers return-of-premium term insurance
Bundling option can save you money
Poor price for term insurance
No free living benefits
Limited options for no-medical-exam policies
State Farm was founded in 1922 by a retired farmer and insurance salesman named George Jacob (G.J.) Mecherle in Bloomington, Illinois. Today, if you need help finding the right State Farm life insurance product to suit your needs, you’ll have more than 19,000 agents throughout the U.S. ready to assist you. This large network of agents means you should be able to find one to connect with near you if you live in State Farm’s coverage areas.
State Farm Life Insurance Company and its partner State Farm Life and Accident Assurance Company together sell insurance in all states except Rhode Island.
- Year Founded 1922
- Kinds of Policies Term, universal, final expense, whole life
- Payment Options Check, money order, credit card, debit card, ACH payment.
- Customer Service 800-STATE-FARM (800-782-8332)
- Official Website https://www.statefarm.com/insurance/life
- A++ financial stability rating: State Farm received the highest grade possible that the ratings agency AM Best gives for financial strength. An A++ indicates that State Farm has a “superior” ability to meet its ongoing financial obligations. Fewer than 10% of the 91 companies we reviewed received this rating.
- Outstanding customer satisfaction: State Farm ranked #1 out of 21 companies in a 2021 J.D. Power customer satisfaction survey. It also had a low number of customer complaints for a company of its size, according to the National Association of Insurance Commissioners (NAIC).
- Whole life policies are eligible for dividends: As a mutual insurance company, State Farm may pay dividends to whole life policyholders (no dividends were announced for 2022).
- Offers return-of-premium (ROP) term insurance: ROP policies refund some or all of your premiums if you outlive the policy. They’re more expensive than regular term coverage and can be hard to find. Less than 15% of the companies we reviewed offer ROP insurance.
- Bundling can save you money: You may be able to lower your premiums by purchasing a State Farm life insurance policy with a State Farm auto policy.
- Poor price for term insurance: State Farm ranked in the priciest 15% of the companies we gathered term quotes for.
- No free living benefits: Living benefits, also known as accelerated death benefit riders, let you access part of your death benefit early under certain conditions. The only one that State Farm offers is a long-term care rider, and you’ll need to pay extra for that. Other top companies offer more accelerated death benefit riders, often at no extra cost.
- Limited options for no-medical-exam policies: Unlike its closest competitors, State Farm does not offer life insurance without a medical exam for coverage over $50,000. This means you’ll need a paramedical exam performed if you want a death benefit greater than $50,000. Some other companies offer offer no-medical-exam life insurance coverage well over $1 million.
State Farm received far fewer complaints than expected for a company of its size. In fact, it did better than two-thirds of all the insurers we reviewed in terms of the number of complaints it received from customers. We averaged State Farm’s NAIC complaint index score over three years and came up with an average index of 0.0.
Here’s how the index works. The NAIC tracks customer complaints and comes up with a number that shows how many complaints a company has received relative to its size. If a company has a complaint ratio over 1.0, that indicates that it received more complaints than expected for a company of its size. A ratio below 1.0 indicates that fewer complaints than expected came in. State Farm’s score of 0.0 is the best a company can have.
With an A++ rating, State Farm is considered by AM Best to be extremely financially stable. Only eight of the 91 insurance companies we reviewed received a grade that high.
State Farm also earned the highest mark possible in the 2021 U.S. Individual Life Insurance Study. The J.D. Power research surveyed life insurance customers about their satisfaction with 21 large insurance companies based on factors including communication, price, and product offerings. State Farm ranked #1, scoring 822 out of a possible 1,000 points—well above the industry average of 776.
|State Farm||Guardian||Pacific Life|
|Types of Coverage||Term, universal, final expense, whole life||Term, universal, variable universal, whole life||Term, universal, variable universal, indexed universal, whole life|
|Dividends for 2022||Nearly $600 million (2021)||$1.13 billion||Not applicable|
|Online Application||Not available||Not available||Not available|
|AM Best Rating||A++||A++||A+|
|Price for Term Policies||Poor||Average||Excellent|
|NAIC Complaint Index (averaged over 3 years)||0.295||0.110||0.056|
|J.D. Power Ranking||1||11||4|
The NAIC complaint index indicates how many complaints a company receives relative to its size. A score lower than 1.0 indicates fewer customer complaints than expected; a score greater than 1.0 indicates more complaints than expected. The closer the index is to 0, the better.
State Farm has a modest portfolio of policy types compared to some competitors. You’ll find term life insurance, whole life, final expense or burial insurance, and universal life policies as well as a return-of-premium term policy, which is less common. But if you’re interested in indexed universal or variable universal, you may want to try one of State Farm’s competitors, such as Nationwide or Protective, both of which made our list of best life insurance companies.
Term Life Insurance
Unlike a permanent life insurance policy that’s intended to cover you for the rest of your life, a term life insurance policy gives you coverage for a set period of time (say, 20 years). Its premiums are typically far lower than those of a permanent policy, and it’s intended to provide funds for your loved ones to meet obligations if you die before the term is up, such as paying a mortgage or going to college.
- Select Term Life: State Farm’s level term policy (meaning, your premium payment stays the same over the life of the policy) can last 10, 20, or 30 years, and coverage starts at $100,000. You can renew coverage beyond the term, up to age 95, but your premiums will increase.
- Return of Premium Life: Return of premium (ROP) insurance pays your premiums back if you outlive your term (in this case, only 20-year and 30-year terms are available). Premiums for ROP are typically significantly higher than for regular term insurance, but unlike regular term insurance, State Farm’s ROP term builds a cash value you can borrow from.
- Instant Answer Term: As the name implies, you can apply for this term insurance and, if approved, buy the policy, all within minutes (though you’ll need to do so in an agent’s office). It only provides $50,000 in coverage and only until age 50 or for 10 years, whichever comes later, so it’s best if you just need short-term coverage for modest expenses.
State Farm term life insurance can be converted to permanent life insurance any time before you turn 75 without a medical exam.
Whole Life Insurance
Whole life insurance policies are a type of permanent coverage designed to last the rest of your life and build a cash value tax-free. You pay the same premium for the life of the policy, and can borrow against the cash value.
State Farm’s whole life policies are eligible for dividends, though dividend payments are not guaranteed. You can choose a policy on which you pay premiums until you’re 100 years old, or you can choose two other ways to pay:
- Limited Pay Whole Life: You choose whether to pay level premiums for 10, 15, or 20 years. After the policy is paid up, your coverage continues for life and you pay nothing more. This kind of plan can save you from paying premiums in your retirement.
- Single Premium Whole Life: You can make one payment for the life of the policy and never have to make another payment again. This plan is available to applicants up to age 80 for coverage starting at $15,000.
If you fail to repay the amount you borrow from a policy’s cash value (with interest), your death benefit and cash value will decrease.
Universal Life Insurance
A universal life insurance is also a form of permanent coverage that builds a cash value but the cash value grows based on current interest rates. Premiums and the death benefit may be flexible.
- Universal Life: This policy allows you to lower or raise your coverage and premium amount as needed. You can choose to either have a level death benefit or a death benefit that varies based on your payments and the policy’s account value. Coverage starts at $25,000 and policies can be issued up to age 85.
- Survivorship Universal Life: Two people are covered with a survivorship policy. The death benefit pays when the second person dies.
- Joint Universal Life: Similar to survivorship insurance, the Joint Universal policy covers two people. But the death benefit is paid when the first person dies.
Final Expense or Burial Insurance
In addition to these choices, State Farm also offers a type of whole life called burial insurance.
- Final Expense (called $10,000 Whole Life in New York State): Designed to pay a fixed $10,000 death benefit, this policy is available to applicants aged 50 to 80 (50 to 75 in New York). Premiums are payable until age 100.
Riders let you customize policies to get additional coverage or features. Unlike some competitors, State Farm doesn’t offer riders that allow you to access your death benefit if you’re diagnosed with a critical or terminal illness, and the one living benefit it does offer, for long-term care, costs extra. But it does have some riders that we consider important.
Guaranteed Insurability Rider
A guaranteed insurability rider can be good for younger people who don’t need much coverage when they get a policy, but think they may need more as they get older. With State Farm Life Insurance’s guaranteed insurability rider, you’re able to purchase additional amounts of insurance at certain times in your life at standard rates without having to complete a medical exam. Coverage is between $25,000 and $100,000 and is available to those ages 37 or younger. You can get the rider with a Limited Pay whole life or Universal Life policy.
You can only add this rider if you’ve also got the waiver of premium for disability rider on your policy.
A child rider can be a good way for parents to buy life insurance for their children without having to get a separate policy. State Farm’s Children’s Term Rider is available with its Select Term, Return of Premium, Universal Life, and Whole Life policies. It allows you to provide temporary insurance for children under 18 years old when you add the rider up to their 25th birthday or until you turn 65, whichever is sooner. One rider can provide up to $20,000 in coverage per child.
Once an eligible child turns 18, you can purchase up to five times the amount of Children's Term Rider coverage and then you have the option to convert this rider into a permanent policy for up to five times the amount of coverage when your child turns 25. Coverage ranges from $5,000 to $20,000 for each eligible child in the family.
Waiver of Premium
State Farm Life Insurance offers a waiver of premium rider on some of its term and whole life policies that lets you forgo paying premiums if you become completely disabled for six straight months before you turn 60. The Waiver of Premium for Disability rider waives premiums as long as you’re totally diabled (as defined in the policy). If you become disabled between 60 and 65, premiums will only be waived for up to a few years. A similar rider called Waiver of Monthly Deduction for Disability is available on the company’s universal life policies.
Accelerated Death Benefit: Long-Term Care Rider
It is possible to add a long-term care rider to your State Farm Life Insurance policy, but only if you have a universal life policy. The Flexible Care Benefit Rider is not available in California or New York. With the rider, if you become chronically ill, you may be eligible to access up to 2% of your policy’s death benefit while you’re still alive.
If claim requirements are met, you will not have to pay the cost of insurance, monthly charges for riders, or monthly expense charges.
Select Term Rider
You can add this rider to a Select Term or Whole Life policy to provide coverage up to age 95 for you or an additional insured person. The premiums are level for 10, 20, or 30 years and coverage starts at $100,000.
Level Term Rider
With a Level Term rider, you can add coverage for either person who’s insured on your Joint Universal Life or Survivorship Universal Life policy. Minimum coverage is $100,000 and it lasts until age 95.
You can contact State Farm customer service with general questions by filling out an online form or by calling 800-STATE-FARM (800-782-8332). For life insurance cliams, the number is 877-292-0398. Payments can be made online or with the app, or by calling (800-440-0998) at any time.
You can’t apply for a policy or file a life insurance claim online, and, as is common in the life insurance industry, no live chat is available on the State Farm website.
Of the companies we were able to get term life insurance quotes from, State Farm had among the worst prices—ranking 29th out of 32. Our analysis is based on rates we gathered for 30-year, $250,000 term policies for healthy females and males aged 25, 40, and 55 years old living in either the 90666 or 94027 ZIP code. (State Farm does not offer 30-year policies to 55-year-olds, so we only gathered quotes for the younger two age groups.)
Keep in mind that State Farm offers dividends for whole life policies and has excellent customer service and financial strength—qualities you may not mind paying extra for. You may also be able to shave a little bit off your premium by bundling your life and car insurance. But if you’re price sensitive, you may want to check out other companies such as Protective and Banner, which we found to have the cheapest term rates of all the insurers we surveyed.
Is State Farm Life Insurance Company Life Insurance Right for Me?
If you’re willing to pay extra, State Farm is a great choice for consumers seeking whole, universal, or term life insurance—especially if you’re looking for ROP term, which is hard to find elsewhere. With enviable customer satisfaction and customer complaint ratings, the company is also a great pick if you value excellent customer service. And you can’t beat its financial strength rating.
But while dividends may help mitigate the cost of State Farm’s whole life premiums, it not be the company for you if the price of term insurance is highly important. Its quoted rates were among the worst we found. For rates that may be better, check out competitors such as Protective and Banner. You’ll also need to look elsewhere for indexed universal or variable universal policies, and for riders that let you access your death benefits early if you get a critical or terminal illness.
How We Review Life Insurance Carriers
We designed a comprehensive ranking methodology based on consumer priorities and life insurance company fundamentals to rank more than 90 insurers across five general categories: financial stability, customer satisfaction, product and feature variety, the overall buying experience, and cost.
In order to do this, we collected over 5,000 data points and scored each company based on 55 metrics. We grouped metrics by category to see how insurers performed in each; we then weighted category scores to determine how companies performed overall.
To learn more, read our full Life Insurance Methodology.