The Important Ways Life Insurance Companies Differ – and How to Assess Them

If you want to learn about the types of coverage available, how life insurance companies differ and how to assess which one might be the right fit for you, this guide will give you everything you need to know. 

Range of insurance types sold

Like most aspects of the insurance world, not all life insurers offer the same range of products. Some focus solely on term life insurance, which provides coverage for a set number of years – typically between 10 and 30. Term policies tend to be more affordable because their benefit expires at the end of the term. 

Other insurers offer permanent life insurance. There are multiple kinds of permanent life insurance, including whole life or universal life policies. Permanent life insurance is designed to last a lifetime. As long as you make on-time premium payments, your policy remains in place. Many – but not all – companies offer both term and permanent options. 

Even within the same policy category, insurers can differ when it comes to their choices in term lengths, coverage limits, available riders (such as accelerated death benefits or child and spouse coverage) and premium costs.  

Methods of purchase

How you actually buy a life insurance policy can vary by company. Some insurers sell directly to consumers using online or phone-based customer service platforms that don’t rely on a network of agents. 

There are also online insurance brokers that allow you to compare rates and features among policies from multiple insurers. These buying options can be fast and efficient, if potentially less suited to exploring the nuances of coverage, at least through chat or email. 

Other insurers use agents you reach in the same ways as company representatives, or through in-person appointments. Some are what’s referred to in the industry as “captive” agents, meaning they work for one company and sell only that company’s products. Others are independent agents offering products from multiple companies. Insurers that use agents have obvious appeal to customers who prefer to work with a locally based professional, and one they can meet face-to-face if they wish.  

Coverage options

Once you decide on a specific type of life insurance, you need to dig into the actual details of the policy, which can vary widely from one insurer to the next. The range of term lengths aren’t always the same; one company may offer terms of 10, 20 or 30 years, for example, and another of 15, 25 or 30 years. 

Insurers also vary in the policy features they offer. For example, not all insurers offer the option to convert a term policy to a permanent policy at the end of the term. 

Some insurers offer more flexibility of allowing you to adjust the amount of the death benefit if your needs change. Usually, such changes are more widely available for universal life policies. But some companies offer greater freedom than others to adjust the benefit for whole life and term life policies, which tend to be more rigid about such changes. 

Insurers also differ in their ranges of riders, which can be thought of as additional benefits and customizations for your policy. Riders usually cost extra, but can be a great way to help tailor your coverage to specific circumstances if a standard policy doesn’t quite meet your needs. 

Common (though not universally available) riders include: accelerated death benefits, which let you access part of your death benefits early if you’re diagnosed with a terminal illness; and accidental death benefits, which increase the payout on your policy if your death is the result of a covered accident. 

These options can make a significant difference in how well a policy conforms to your current situation and long-term needs, so it’s worth comparing the details closely before you choose. 

Premiums

Even if two policies from different companies offer the same type, term length and coverage amount, the premium costs can vary. That’s because each insurer uses their own proprietary formulas to assess risk, factoring in characteristics like your age, health, lifestyle and family medical history. Some may weigh specific details more heavily than others, which can result in different price points. 

As with most insurance products, it really pays to shop around. Comparing quotes from different companies can help you find the best value for your needs. Even a slight difference in the monthly premium can add up significantly over time, especially for longer-term or permanent policies. Plus, the cheapest policy may not always be the best choice if it lacks flexibility, or if it lacks features that could be important to you in the years to come.  

Customer service

Customer service is a huge selling point for many folks, especially as more aspects of our lives move online. Just as coverage options and pricing vary greatly by company, so does the service experience. 

Some insurers stand out for high customer satisfaction, earning accolades from consumer analytics firms like J.D. Power on attributes like responsiveness, quality of interactions and ease of policy management. Others may fall short. That’s something that’s important to consider if ongoing support and accessibility matter to you as a consumer.

There are also key differences in how you can communicate with insurance companies as a policyholder. Some offer 24/7 customer service via phone or online chat, while others may have limited hours or rely primarily on email support. If you prefer managing things digitally, it’s worth checking if a company offers a mobile app. You may want to evaluate factors like whether its interface is user-friendly, and if you can use it to perform tasks like paying premiums, viewing your policy and even updating beneficiaries.