State Farm Life Insurance is a great insurer, both for short-term protection with term insurance or lifelong coverage through permanent insurance. Its rates are competitive compared to other insurers, although smokers may get better quotes elsewhere. State Farm offers many basic policies but does not provide complex life insurance products like variable or indexed universal plans. If you are interested in life insurance with State Farm, you can get a quote from its website or contact a State Farm agent.
State Farm Life Insurance Products
State Farm is primarily an auto and home insurance provider, but the company also offers term and permanent life insurance policies. In the event you pass away, your beneficiaries would receive a death benefit from the life insurance policy.
State Farm has an excellent online quote portal that can give you fast quotes for term and whole life insurance. If you are interested in universal insurance, the website can produce a life insurance illustration that shows the monthly premium and projects the future value for the policy.
No-medical exam life insurance is available through State Farm, but this policy only has a face value of up to $50,000. As with other life insurance companies, no-exam policies through State Farm will require you to complete a medical questionnaire during the application process to determine your overall health.
Term life insurance
State Farm offers three term life insurance products that are slightly different in the level of coverage available and term lengths:
- Select Term
- Return of Premium
- Instant Answer
State Farm's most basic term policy is the Select Term plan. This is standard term life insurance that provides a death benefit for a set period of time. Select Term policies have term lengths of 10, 20 and 30 years with coverage starting at $100,000. Term insurance is often a good choice if you need life insurance for a set period of time. In the graph below, we have compared sample monthly quotes for the Select Term policy from State Farm against average premiums from the largest life insurance companies.
As you can see, State Farm offers competitive pricing for standard and senior rates, although quotes for smokers are slightly more expensive compared to other top life insurance companies. However, State Farm is far from the cheapest option for life insurance. For example, for a 20-year standard policy with $250,000 in coverage, State Farm is within $1 of the average monthly cost among the five largest insurers. However, State Farm is 35% more expensive than the cheapest term policy offered by Protective Life Insurance.
For traditional life insurance policies, State Farm has similar health ratings to other life insurance providers. It also has an additional rating of "super preferred," its highest health rating. This rating will get you the best quotes, although you need to be in near-perfect health to receive super preferred.
Return of Premium
State Farm's Return of Premium policy is similar to Select Term in that you can get a policy with more than $100,000 in coverage for either 20 or 30 years. But this policy allows you to receive all the premiums you paid back if you outlive the term length. Due to this added benefit, the Return of Premium policy is much more expensive. For example, a 30-year-old's premiums would cost $60 more per month for a $250,000 policy. In the graph below, we have compared quotes for the two term life insurance products.
The Instant Answer policy is a smaller term life insurance policy that is meant as final expense insurance, covering minor financial needs after your death. The policy provides up to $50,000 of coverage with a length of 10 years or until you turn 50, whichever occurs first. The Instant Answer policy requires no medical exam, but you'll need to answer basic health questions during the application process.
Whole life insurance
State Farm's whole life insurance policies offer lifetime coverage with level premiums that build cash value over time. The standard whole life policy has a minimum face value of $100,000. Premiums are paid throughout your life and are level, meaning they will not increase or decrease for any reason. Although whole life provides lifelong coverage, it can be very expensive compared with term life insurance—often over 10 times as much for the same policy death benefit.
State Farm permanent policies can be surrendered for a portion of the policy value but have a surrender charge. We would recommend speaking to your agent before deciding to surrender a policy. An agent can also help you fill out a beneficiary designation form, if you decide to change the beneficiary on your policy.
Here is a comparison of term and whole life insurance quotes for different coverage amounts.
As you can see, for $250,000 in coverage, whole life insurance monthly premiums are $275 more expensive when compared to term. This is due to the added benefits of cash value accumulation. A portion of your premiums for a whole life policy would be added to an investment account, creating the cash value, which grows with interest over the duration of the policy.
In addition to a standard policy, which is paid on a monthly basis, State Farm offers whole life policies that can be paid in different ways:
- Limited Pay: State Farm's Limited Pay is similar to its standard plan except you pay premiums for a set number of years. The premiums are more expensive since you pay for only 10, 15 or 20 years rather than your entire lifetime.
- Single Premium: This policy is identical to standard whole life insurance but is fully funded with one large premium payment at the start of the policy.
Whole life insurance is a participating policy, meaning it is eligible for dividend payments. Since State Farm is a mutual insurance company, any excess money earned by State Farm can be distributed as a dividend to policyholders. Dividends can be paid in cash, as an increase to your death benefit or as a deduction to your premiums. Though dividends are not guaranteed, State Farm has paid them consistently throughout its history.
Final expense insurance
State Farm also offers a final expense whole life plan that is designed to ease the financial burden of burial expenses. This policy has a fixed death benefit of $10,000 and is available to those between 50 and 85 years old.
Universal life insurance
State Farm offers standard universal life insurance that provides lifetime protection with coverage amounts starting at $50,000. Universal life provides flexibility in that premiums can be adjusted up or down—subject to a minimum—to fit your financial needs. Cash value grows tax-deferred and can be borrowed against. As with whole life, State Farm's universal policy is participating, meaning policyholders can receive dividends.
State Farm also offers joint and survivorship universal life policies. These plans provide life insurance for two lives and are often cheaper than purchasing two individual policies. Joint and survivorship universal life insurance policies differ in when the death benefit is paid out.
Joint universal life pays out the face value of the policy when the first death occurs, while survivorship pays out when the second death occurs. For example, say you have a joint policy that covers you and your partner. If your partner passes away first, then you would receive the death benefit from the insurance plan. Other than this, these life insurance plans do not differ from standard universal life.
State Farm does not offer a variable universal life insurance policy or an indexed option.
State Farm customer reviews and complaints
State Farm is financially stable, and customer reviews demonstrate that the company cares about customer experience. Its National Association of Insurance Commissioners (NAIC) complaint ratio, which indicates a company's number of complaints in relation to its size, is 0.12, which is far below the national median of 1.00.
In addition, State Farm received J.D. Power's highest award for customer satisfaction among U.S. life insurance companies, ahead of both Northwestern Mutual and Nationwide. The study provides a rating for each insurer, reviewing the company on categories including pricing, policy offerings, interactions, billing and overall satisfaction.
State Farm has also received a top AM Best rating of A++ and a Better Business Bureau (BBB) rank of A-. These scores indicate State Farm is financially stable and focuses on addressing any negative reviews that policyholders have filed.
State Farm is headquartered in Bloomington, Illinois, but has satellite offices throughout the United States. These offices have independent agents who can answer questions about different State Farm life insurance policies and provide in-person customer service.