State Farm Life Insurance Review: Quality Service and Policies Backed by a Financially Stable Company

State Farm Life Insurance Review: Quality Service and Policies Backed by a Financially Stable Company

Provides a great customer experience but does not offer the cheapest rates among the top life insurance companies.

Good for

  • Financial stability
  • Customer service
  • Online quote system for term and whole life insurance

Bad for

  • Variable or indexed universal life insurance policies
  • Cheap rates

Editor's Rating

4.5/5.0

Find the Cheapest Life Insurance Quotes in Your Area

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State Farm Life Insurance is a great insurer, whether you want short-term protection with term insurance or lifelong coverage through permanent insurance. Rates are competitive when compared to other insurers, but if you smoke, you may be able to get better quotes through a different insurance provider. State Farm offers many basic policies but does not provide more 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 local 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 the 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. Furthermore, 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. Furthermore, 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 structured slightly different in the level of coverage available and term lengths:

  • Select Term
  • Return of Premium
  • Instant Answer

Select Term Life Insurance

State Farm's most basic term policy is the Select Term plan. This is standard term life insurance that provides level death benefit coverage for a particular period of time. Select Term life insurance policies have term lengths of 10, 20 and 30 years with coverage starting at $100,000. Often, term insurance works best if you need life insurance coverage 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.

State Farm vs Top Competitors

As you can see, State Farm offers competitive pricing for standard and senior rates, although quotes for smokers are slightly more expensive when compared to other top life insurance companies. Furthermore, State Farm is far from the cheapest option available 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 all traditional life insurance policies, State Farm has similar health ratings to other life insurance providers. But it also has an additional rating of "super preferred," which is the highest health rating State Farm can give. Although this rating will get you the best quotes, it is nearly impossible to receive super preferred, as you need to be in near-perfect health.

Return of Premium

The Return of Premium life insurance policy through State Farm is similar to the Select Term plan 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.

State Farm Life Insurance Term vs Return of Premium

Instant Answer

The Instant Answer life insurance policy is a smaller term policy that is meant to be used as final expense insurance, covering any minor debts or 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. Its standard whole life policy has a minimum face value amount of $100,000. Premiums for this policy are paid throughout your life but are also level, meaning they will not increase or decrease for any reason. Although whole life provides lifelong coverage, it can be very expensive when compared with term life insurance—often costing 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 would be subject to a surrender charge. If you need to surrender the policy, you would fill out a form but we would recommend speaking to your agent before such a decision. Furthermore, an agent can also help you fill out a beneficiary designation form, if you decide to change the beneficiary on your life insurance policy.

Below we have provided a comparison of life insurance quotes between term and whole life for different coverage amounts.

State Farm Life Insurance Term vs Whole

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 plan is similar to its standard policy but requires premium payments only for a set period of time—10, 15 or 20 years. These policies have more expensive premiums because you do not need to make payments throughout your life.
  • Single Premium: This policy is identical to the standard form of whole life insurance but can be fully funded with one 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 through a dividend to owners of these policies. Dividend payments can be received either 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 if you are 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 dividend payments.

State Farm also offers joint and survivorship universal life policies. These plans provide life insurance protection 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 among the insured. For example, say you have a joint policy that covered you and your partner. If your partner passes away first, then you would receive the death benefit from the insurance plan. Other than this difference, these life insurance plans do not differ from standard universal life.

Unlike other life insurance companies, 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 the company's customer reviews demonstrate that it cares about its 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, coming ahead of both Northwestern Mutual and Nationwide. The study provides a rating for each insurer, reviewing the company on a variety of 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.

Comments and Questions

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.