We reviewed State Farm and they are a winner.
As the slogan goes: Like a good neighbor, State Farm is there.
Rated A++ by A.M. Best, the highest rating available, you can depend on State Farm Insurance Company
State Farm is one of the leading providers of life insurance nationwide.
They have one of the best whole life insurance policies available.
Unfailing customer service appears to be one of the company’s top priorities, as their consistently high customer satisfaction ratings indicate.
Founded in 1922, State Farm offers three types of life insurance plans – Whole life insurance, Term life insurance, and Universal life insurance. Currently, the company is the 8th largest life insurance provider, servicing close to 8 million policies throughout the U.S. and Canada.
Table of Contents
State Farm’s Financial Strength
State Farm finished off 2016 financially strong with over $76 billion in total revenue. In fact, State Farm Life and Accident Assurance Company and State Farm Life Insurance Company held $5.7 billion in life insurance premiums, while paying out $584 million in dividends to its policyholders.
With over $873 billion of life insurance policies active, State Farm is up nearly $30 billion since 2015.
As of 2019, State Farm has an A++ rating from A.M. Best, which is the highest rating available. Other insurance rating agencies, such as S&P, Fitch, and Moody’s also award State Farm with the highest rating year after year.
And we all know the line: It’s Jake from State Farm
Life Insurance Products Offered by State Farm
- Term Life Insurance
The life insurance provider offers level term life insurance in 10, 20, and 30-year terms guaranteed to be renewed until the age of 95. This policy can be converted to a permanent form of coverage but is subject to age restrictions.
State Farm also offers a return of premium term life insurance policy. Once the insured’s term ends, and the insured has survived the term, the premiums are then returned to the insured. However, if the policyholder passes during the term, the lump-sum benefit is given to the named beneficiary.
State Farm also offers a 5-year term life insurance policy. Coverage provided ranges between $50,000 and $90,000, and the insured may choose to renew for additional 5-year terms until the age of 85 (80 for New York). Although life insurance rates increase with age, there is a conversion option that allows the insured to lock into a permanent life insurance policy if needed.
- Whole Life Insurance
An additional coverage option available with State Farm is whole life insurance. Costing roughly five times more than term life insurance, whole life policies from State Farm come in three types – Traditional Whole Life Insurance, Final Expense, and Limited Pay Life Insurance.
This form of permanent coverage should be used when long-term life insurance coverage is needed, such as in funding trusts or starting a new business. Whole Life from State farm has a cash value feature, which can be borrowed against in case of unexpected emergencies.
- Limited Pay Life Insurance
A form of single premium life insurance provided by State Farm is Limited Pay Life. With this policy, the insured pays a single lump-sum premium payment. However, with this policy, the tax benefits that come along with the cash value component is lost, but once the premiums are paid in full, the policy remains in force and no further premiums are due.
- Universal Life Insurance
Providing flexible lifetime coverage, State Farm’s Universal Life Insurance is similar to whole life insurance. The premium payments are pursuant to the insured’s financial needs while being subject to policy minimums. The cash value component increases according to the interest credited to the cash value account and generally provides a guaranteed rate of interest.
State Farm also offers survivorship life insurance, also known as “second to die” insurance. Once both the two named insureds pass away, the death benefit is paid to the beneficiary. This is an excellent life insurance and estate planning tool. Additionally, Joint Universal Life Insurance provides coverage for two individuals as well, except that the policy pays out when one of the insured’s dies providing an income for the surviving spouse, or other named insured.
- Final Expense Life Insurance
State Farm does offer a $10,000 policy for what is referred to as burial life insurance and final expense life insurance. A guaranteed issue life insurance policy will also assist in providing coverage for final expenses.
- Whole Life Insurance Riders
Life insurance riders that are available with State Farm include Waiver of Premium, Disability, and Guaranteed Insurability. These options are great in cases where the insured suffers from a disability or injury and doesn’t have the available income to pay premiums. State Farm will waive the premium(s) due so that the policy doesn’t cancel.
Additionally, State Farm offers a guaranteed insurability rider which allows the policyholder to purchase more life insurance coverage later on despite any changes in circumstances, such as risky hobbies and lifestyle changes.
Drawbacks of State Farm Life Insurance
As mentioned in other State Farm Life Insurance reviews, the company offers superior products, such as renters and homeowners insurance, auto insurance, life insurance, and health insurance. Unfortunately, there are times when State Farm’s pricing on whole life, term, and universal life insurance might run significantly higher than its competitors. And let’s face it, not everyone wants to bundle their health, life, and homeowners insurances together.
State Farm Underwriting
Sometimes, State Farm’s underwriting guidelines are a tad strict. For example, the insurance company recommends an applicant’s cholesterol to be lower than 175 in order to qualify for the excellent health premium rates. State Farm will have you take a medical exam for life insurance. When it comes to State Farm’s rigorous underwriting criteria, it’s important for an individual to understand that there are alternative options. If you are looking for a no exam life insurance policy, try some of these companies:
- Assurity Life Insurance Company
- American National Life Insurance Company
- Lincoln Financial
- North American life insurance Company
- Transamerica Life Insurance Company
Fortunately, even if State Farm turns down an applicant, it does not mean that they cannot obtain life insurance elsewhere. There are some tips to help you pass your medical exam. Get a good night’s rest, take the exam in the morning and drink plenty of water. There are even some companies that will not require a medical exam. State Farm is known to not underwrite Diabetes Type 1, and the company is somewhat restrictive when it comes to underwriting Diabetes Type 2.
Summary of State Farm
As remarkable as State Farm is, the reality is that they are but one of many life insurance companies. If you are in the market to shop around for life insurance, try working with an independent insurance agent that can offer quotes from multiple companies. State Farm’s agents are referred to as captive agents, which means they can only write life insurance for State Farm. You need to know that you can only purchase life insurance from State Farm from a State Farm agent. This could be the reason that Dave Ramsey doesn’t endorse State Farm for life insurance.
Be sure to make an informed decision when selecting the company that will handle your life insurance. Ogletree Financial can help you get an accurate rate for life insurance.