State Farm brings its people-centric approach to everything it does, from an intuitive website packed with useful info on its variety of products to legendary customer service and treating employees well. The insurer also happens to be number 36 on the Fortune 500 list and receives top financial ratings. Unfortunately, State Farm’s pricing and strict underwriting mean only the healthiest among us will find competitive rates.
State Farm: Great for healthy consumers looking for term life
You probably know State Farm because of its auto or homeowners insurance. After all, it’s the single largest insurer of cars and homes in the US. Unfortunately, State Farm’s life insurance isn’t as competitively priced as those more popular products.
Strict underwriting standards mean few people make it into State Farm’s “very good” category and get the company’s best rates. And the permanent life insurance options underperform as investments compared to competitors.
State Farm gains back some ground with its bundling discounts when you buy more than one qualifying product, and you can rest easy that representatives will take good care of your loved ones at claim time. Finally, term life policies have more competitive rates than permanent insurance options.
If your needs line up with the company’s strengths or you want one company to handle multiple financial and insurance requirements, State Farm might be the right choice. If not, use our quote tool or call us to find a competitive life insurance policy to suit your goals.
Things to consider about State Farm
State Farm, which is approaching its 100-year anniversary, initially offered only auto insurance. Since then, it’s developed an extensive home insurance product line, along with life, health, liability, and other forms of insurance. The company even offers banking, credit, investment, and other financial services.
State Farm does it all, and that’s great if you’re looking for a one-stop shop or a convenient way to add life insurance to your other coverage. The company has plenty of life insurance products and rider options, too, so there’s a good chance you’ll find a policy that meets your needs.
Whether you’ll get a good price, however, is a different story.
While State Farm offers the chance to bundle life insurance with other kinds of insurance for discounts, these markdowns may not be enough to offset high life insurance rates.
Still, State Farm serves a lot of happy customers. It’s a mutual company, which means it’s not publicly traded. Instead, policyholders own a small share of the company when they become customers, and State Farm is free to do what’s best for them without worrying about how that affects its stock prices.
If State Farm doesn’t seem right for you, read up on the best life insurance companies instead.
In a nutshell, these are the pros and cons of State Farm life insurance:
- High financial ratings mean the insurer has a bright future
- Policy transparency on its website makes understanding its many products easy
- People-centric practices make both customers and employees happy
- Strict underwriting makes it hard to qualify for great rates
- A specialty in auto and homeowner’s insurance doesn’t translate well to life insurance
- Few living benefits mostly limit rider options to those related to keeping up with your premiums
State Farm insurance products
State Farm offers a wide variety of products, so there’s a good chance you’ll find the right policy for you.
State Farm Policies
|Coverage Range**||Age Range**||Exam Required?|
|Return of Premium||$100K+||20–60||Yes|
|Limited Pay Life||$100K||Life||Yes|
|Single Premium Life||$15K+||0–80||Yes|
*Tables created using information available at statefarm.com as of 11/1/2018.
**Coverage and age options vary by type of policy, term, and other factors.
***Only available in New York State.
****Coverage until insured turns 100.
State Farm focuses on term and whole life offerings and requires a call to an agent to get universal life quotes. Since most people choose term or whole, this extra step isn’t surprising.
The biggest difference between whole and term life is how long you need coverage. If you want to protect your family while your kids are still dependent on you or until your mortgage is paid off, term life may be a better option.
If you want to give your spouse lifelong income support or leave an inheritance to your children, you might choose whole life. Whole life also has a cash value you can draw on or borrow against, but State Farm’s premiums are higher and returns are typically lower than other investment opportunities.
You can keep track of State Farm’s investments on the stock market yourself to find out exactly how they’re performing, of you can use a site like Zacks.com. Zacks ranks stocks and makes recommendations on whether to buy, sell, or hold onto them.
Many of State Farm’s investments don’t have a Zacks rank.1 Of those that do, few have earned a “buy” or “hold onto” rating.
What’s the best life insurance for you? The policy that allows your loved ones to keep the same standard of living if you die and is inexpensive enough that you can keep up on the premiums.
The company also offers several riders you can add to a policy to customize it further, but these mainly focus on adding other insured people to your plan, such as children or a spouse, or riders that make paying your premiums easier under certain circumstances.
Unlike many companies that offer critical illness insurance or long-term care riders, State Farm provides few benefit options if you’re still living.
Finally, if you’re not sure what type of life insurance is right for you, read about types of life insurance policies. Or give us a call and we’ll help you get covered.
State Farm term life
Term life policies typically offer both the lowest cost and the most straightforward form of coverage, and they protect you for a set number of years. These policies are ideal for ensuring your beneficiaries have income during high-expense years, such as the length of a mortgage or until the kids get through college.
State Farm prices its term life insurance more competitively than its permanent life policies. Choose from Select Term (basic term life), Return of Premium (get a partial refund if you outlive your term), Mortgage Protection, or Instant Answer (no exam).
Available in 10-, 20-, and 30-year options, Select Term policies start at a $100,000 death benefit that’s paid out to your beneficiaries in a lump sum if you die while covered. Pay premiums monthly or annually. Insure children with the children’s term rider, or add a waiver of premium for disability rider to suspend premiums in case you become disabled.
If your term runs out and you want to renew your insurance, the policy becomes an annual renewable term (ART) policy. You can continue to renew it each year until you turn 95 with increasing rates up to the maximum premium noted in the policy’s fine print.
Return of premium
With this type of policy, you can recoup some of your premiums if you outlive your policy. They’re available in a 20- or 30-year term with death benefits starting at $100,000, and they can have a children’s term rider or waiver of premium disability rider as well.
These policies are explicitly designed to help protect your home. Death benefits start at $50,000, but beware: payouts depend on how much you owe on your mortgage, so the payout will decrease as you pay down your mortgage. Choose from 15 or 30 years of coverage.
State Farm’s no medical exam option allows applicants to avoid both needles and a lengthy approval process. You could get life insurance coverage in just a few minutes, but your premiums may be higher than exam required policies.
Coverage is available with only a $50,000 death benefit and protects you for 10 years or until age 50, whichever comes later. If avoiding an exam is important to you, it never hurts to look at multiple top no exam term life insurance companies.
State Farm whole life
Whole life insurance doesn’t end after a specific period but will cover you until death, provided you continue to pay premiums. Whole life policies also build cash value you can draw on or borrow against. Premiums for whole life policies are typically higher than term life.
With this type of policy, you can choose to pay premiums for 10, 15, or 20 years, but keep the coverage for life. Death benefits start at $100,000. You can add a waiver of premium for disability or payor insurance (if you’re not the insured) to wave premiums for a time while protecting your policy’s cash benefits if you become disabled.
Finally, the guaranteed insurability rider allows you to add to your coverage once every three years (age 17 to 49) without taking a medical exam.
If paying periodic premiums for life insurance doesn’t suit you, consider reaching into your wallet just once for lifetime coverage. You’ll still get cash value, and you may earn dividends and interest over time. Coverage starts at $15,000.
While the fixed $10,000 death benefit is designed to help beneficiaries pay funeral expenses, it can also be used as your loved ones see fit. You can get this coverage if you’re age 50 to 80 (or 50 to 75 in New York State), and you can stay covered until you turn 100.
State Farm universal life
This life insurance allows you to change your premium and death benefit amount throughout your life to ensure you’re getting the coverage you need for a price that’s right at various life stages. Add life insurance coverage for your family, guaranteed insurability, or a disability waiver rider.
Coverage starts at $25,000 for ages 0–19.
State Farm’s variable universal life allows you to choose how the provider invests the cash value of your policy. You could increase your returns, but you also risk losing cash value if those investments plummet.
While universal life insurance offers more choices, that flexibility may not be worth the higher premiums that usually accompany these policies.
Most folks choose either term or whole life, depending on their budget and goals. You can compare them in depth in our term life vs. whole life insurance article.
State Farm history and financial strength*
Founded in 1922 by a farmer from Illinois, State Farm is a mutual company. Policyholders, not stockholders, own the company, so there’s no conflict between doing what’s right for customers and paying investors. The insurance provider’s 65,000 employees and 19,000 independent agents sell and service more than 83 million policies across the United States.2
This insurance company has received numerous awards as an employer, as well as top financial ratings and few official complaints. Furthermore, the State Farm website has tons of information about its policies, which speaks to an effort toward transparency.
All that adds up to one excellent insurance company.
|A.M. Best 3||A++|
*All ratings current as of 11/1/2018. Ratings reflect the evaluations of rating agencies but are not intended as a recommendation to purchase from any company. Rating agencies may update, suspend, or withdraw their ratings at any time.
A.M. Best, the insurance industry’s financial ranking entity, gives State Farm its highest possible rating of a stable A++ for a superior ability to meet ongoing financial obligations.
Standard and Poor’s gave State Farm its second-highest rating, AA and stable. In 2011, Fitch affirmed a stable rating of AA+ (just under the highest mark possible), but then withdrew it.
Finally, the National Association of Insurance Commissioners (NAIC) received few official complaints against State Farm relative to the company’s premium earnings.
As a result, State Farm’s complaint ratio is 0.13, compared to a national average of 1.00 for all companies. Unfortunately, more of the company’s complaints regarded life insurance than other kinds of insurance.
How State Farm’s premiums stack up
State Farm has reasonable term life pricing, but its permanent insurance options will cost you more than they would elsewhere.7 If you take advantage of State Farm’s bundling opportunities with your home or auto insurance, however, you could get a better deal.
Check out State Farm’s quotes online, and you’ll see reasonable rates, especially when it comes to term life. Unfortunately, the company’s rather strict underwriting practices mean you probably won’t qualify for the health level you might get elsewhere.
State Farm might place perfectly healthy applicants in the “good” (third-best) category due to a family member who has cancer. Only “average” level applicants are permitted high cholesterol or a major illness such as diabetes.8
State Farm Sample Rates
50-year old male
|10 year||20 year||30 year||Lifetime|
25-year old female
|10 year||20 year||30 year||Lifetime|
*Rates per month. Compiled from statefarm.com and current as of 11/6/2018. Information is based on a 50-year old male who smokes, but is in good health and a 25-year old female who doesn’t smoke and is in excellent health.
Unlike many other insurance companies, State Farm makes it fast and easy to look up sample rates for its term and whole life insurance. You answer a couple of questions and pick your coverage, and sample rates pop up on the next page. You don’t even have to call an agent.
Quick quotes like this are typically less accurate than what an agent will give you, though, since they’re based on just a few pieces of information and a lot of assumptions. But they’re great for comparing generalized rates between multiple companies without having to sink too much time into a search.
If you want an easy way to compare other insurer’s rates, use our life insurance quote tools or give us a call.
Other products from State Farm
State Farm’s life insurance may not be the right fit for you, but the insurer is a top competitor for auto and homeowners insurance. The company offers other kinds of insurance and financial products as well.
The very first State Farm policy sold was an auto insurance policy, and over the last century, this company has perfected that part of its business. State Farm will insure just about any vehicle, from your family commuter to one-of-a-kind collectibles or even adrenaline-pumping motorcycles. It will even insure your boat, motorhome, or ATV.
Combine your auto policy with a Select Term, Limited Pay, or other life insurance policy for a bundling discount. At claim time, use the mobile app to file a claim from anywhere quickly.
Homeowners and property insurance
If you own a home, condo, or rental property, State Farm has a policy for you. The company also offers renters insurance and personal articles insurance to help protect your most valuable possessions, such as cameras, sporting equipment, collectibles, jewelry and fashion items, medical devices, computers, fine art, and more.
State Farm offers individual health plans under the Affordable Care Act, as well as Medicare Supplemental (Medigap) and supplemental health insurance to cover health care costs beyond what an employer-offered plan might include.
While supplemental health insurance can be helpful if any members of your family expect to accrue higher-than-average out-of-pocket costs, a policy can be especially comforting if you have a child with a chronic illness.
If your child spends a lot of time in a children’s hospital, for example, State Farm’s supplemental plans can help cover deductibles, private rooms, and nurse duty fees, or even transportation and lodging if you need to travel for children’s healthcare.
If you want to protect your income in case of disability, State Farm offers both long-term and short-term disability insurance. That said, health and disability insurance aren’t State Farm’s top-selling policies. Find other top-rated disability insurance companies to check out more options.
State Farm also offers small business, liability, and group insurance (which you may have access to with a payroll deduction at work). However, State Farm doesn’t provide accident insurance or accidental death riders.
Life insurance and financial planning often go together, so it’s not uncommon for insurers to add financial services to their list of products.
But State Farm goes above and beyond, offering traditional products like annuities, estate planning, and mutual funds, as well as banking services, savings, and loans.
State Farm claims and customer service
State Farm is also good to its employees, and has received numerous awards for diversity and inclusion from organizations such as G.I Jobs magazine, the National Association of Female Executives (NAFE), and Black Enterprise Magazine.10
FAQ about State Farm
Still have questions about State Farm? These FAQs may help.
How much is a $500,000 life insurance policy?
Rates vary widely depending on your age, your health, and the type of policy you choose. A healthy 25-year-old woman, for example, can get a $500,000 term life policy from State Farm for $20 to $30 per month (depending on the term), but a whole life policy with the same benefit will cost her a whopping $695.15 per month.11
Which is better: Term or whole life insurance?
That depends on whether your life insurance needs are short-term (10 to 30 years) or will stay with you throughout your entire life (whole life). Overall, State Farm’s term life policies are more competitive, cost-wise, than its whole life policies.
What is the best life insurance to have?
Every person’s life insurance needs and situation are different, so there’s no easy answer. If you’re not sure what’s best for you and your loved ones, ask an independent licensed TermLife2Go agent to help you decide. Unlike State Farm agents, who only sell State Farm products, our licensed sales agents can help you choose between numerous insurance companies.
Bottom line: State Farm is right for healthy bundlers looking for term life
State Farm is a phenomenal auto and homeowners insurance provider, but there’s a good chance you’ll find good value for life insurance elsewhere. However, if you’re young and healthy, looking for term life, and can bundle your policy with other State Farm products, this company is absolutely worth considering.
Not sure State Farm life insurance is right for you? Use our life insurance quote tool to compare policies from multiple companies. May the best policy win.
ǂA.M. Best’s financial rating scale is the following: A++ (Superior), A+ (Superior), A (Excellent), A (Excellent), B++ (Good), B+ (Good), B (Fair), B- (Fair), C++ (Marginal), C+ (Marginal), C (Weak), C- (Weak), and D (Poor). A.M. Best’s Financial Strength Rating (FSR) is an independent opinion of an insurer’s financial strength and ability to meet its ongoing insurance policy and contract obligations. An FSR is not assigned to specific insurance policies or contracts and does not address any other risk, including, but not limited to, an insurer’s claims-payment policies or procedures; the ability of the insurer to dispute or deny claims payment on grounds of misrepresentation or fraud; or any specific liability contractually borne by the policy or contract holder. An FSR is not a recommendation to purchase, hold, or terminate any insurance policy, contract, or any other financial obligation issued by an insurer, nor does it address the suitability of any particular policy or contract for a specific purpose or purchaser.
- Zacks, “State Farm Search Results”
- State Farm, “Company Profile”
- A.M. Best, “State Farm Life Insurance Company”
- Fitch Ratings, “State Farm Mutual Automobile Insurance Company”
- Standard and Poor’s, “State Farm Life Insurance Co.”
- NAIC, “Consumer Information Source”
- Top Ten Reviews, “State Farm Life Insurance Review”
- State Farm “Determine Coverage”
- State Farm, “Get a Quote”
- State Farm, “Diversity & Inclusion Recognition”
- State Farm, “Get a Quote”
Leave a Comment