George Mecherle was a retired farmer when he launched State Farm in 1922. In its early years, their main product was automobile insurance for farmers.
Within the next couple of decades, their operation starts to include all other types of insurance such as homeowners, life, property, and casualty insurance. They’ve also dipped into annuities, mutual funds, and other forms of financial services.
Today, State Farm is the biggest auto, property, and casualty insurance provider in America. Their product lineup is up to 100 right now and they process around 38,000 claims on a daily basis. They have more than 30 operation centers, 58,000 employees, and 19,000 contractor agents. Also worth noting is their number 36 ranking in Fortune 500 list of companies.
State Farm Financial Strength
A.M. Best: A++
S&P Global Ratings: AA
2018 J.D Power Rankings:
- Life Insurance: Among the best
- Property Insurance Claims: Better than most
- Home Insurance: About Average
- Auto insurance claims satisfaction: About Average
- Insurance Shopping: About Average
State Farm Life Insurance Products
While the company is known mostly for their auto and home insurance, they have some pretty strong offerings in the life insurance category as well.
State Farm Term Life Insurance
A person looking for the most affordable life insurance should look no further than term life. Most offer fixed premiums which means how much you pay for protection won’t change as long as the policy is in effect.
Term is considered a great choice if you’re in one or more of the following situations:
- You’re the main breadwinner in the family and need coverage during your working years
- You’re a stay-at-home parent who needs coverage during your child’s early years
- You’re a homeowner and need coverage that matches the years of your mortgage
- You’re a single parent who wants to make sure your child has financial support during the early years
State Farm’s most basic life insurance offering comes in 3 types:
Select Term Life Insurance
Choose from 10, 20, 30-year duration with policies starting at $100,000 coverage. Like most term insurance, it can be converted into permanent life once the initial coverage ends. Note that premiums will change as well after the original policy length completes.
- Children’s Term Rider – Allows you to provide temporary insurance for your children starting at 16 years old up to 55 (depending on the term length). Coverage starts at $5,000 and maxes out at $20,000.
- Select Term Rider (10, 20, 30 Year) – For policyholders who wish to get protection up to age 95. Premiums will be level for 10, 20, or 30 years and will likely increase after the initial term length. This is available for both the policyholder and for an added person.
- Waiver of Premium for Disability – Helps policyholders not lose their coverage during times when income may be limited due to disability. Terms and conditions apply but essentially this rider will waive future policy premiums if the insured remains disabled (if they become disabled before reaching 60 years old and the disability lasts for 6 straight months).
Choose Select Term if you need:
- No-frills term life protection for the lowest possible cost.
- Cover short term needs or debts
Return of Premium Term Life Insurance
State Farm will return all the premiums you paid if you outlive the term length that you choose (20 or 30-year options). Coverage begins at $100,000 and level premiums will no longer apply once past the initial term duration.
What’s impressive about it is that it builds cash value, a feature typically only present in permanent life insurance. This means you can borrow against it and use it for emergency purposes, should the need arise.
- Children’s Term Rider
- Waiver of Premium for Disability
Choose Return of Premium Life Insurance if you need:
- Term coverage for 20 or 30 years but with the added benefit of a cash value
- Want to leverage your insurance for retirement saving purposes
Instant Answer Term Insurance
Essentially State Farm’s version of no-medical exam insurance. Coverage tops out at $50,000 (eligible ages: 16-45) and you can apply by speaking with one of their agents. State Farm claims the whole application process takes mere minutes to finish although the issuance of policy will depend on the answers to the questions and evidence of insurability.
Choose Instant Answer Term Insurance if you need:
- Life insurance coverage (max of $50k) without the hassles of traditional underwriting
- Quickly get life insurance for the benefit of your loved ones
State Farm Whole Life Insurance
Whole life insurance is for people who want coverage for the person’s entire lifetime. It’s actually a sub-type of permanent life insurance and can be classified further into 3 categories: Traditional, Single-premium, and Interest-sensitive whole life insurance.
Aside from having lifetime protection, whole life touts the cash value feature, which is the “savings” portion of your premiums. It can grow in value depending on the terms and conditions of the policy (either guaranteed or depending on market performance) and can be utilized for personal use (take a loan against your policy or withdraw a portion from it).
Another good thing about whole life is that you won’t be required to take a medical exam again even if your health worsens during the course of the policy.
Most whole life insurance policies allow the option to surrender the policy, allowing you to get back the cash portion of your premiums.
Like their term life insurance offerings, State Farm’s whole life lineup comes in 3 types:
Limited Pay Life
“The coverage lasts, but the premiums don’t”, claims the company’s website. What’s unique about it is that it allows the policyholder to complete payment of premiums for a set amount of time only (10, 15, 20 years).
After which the coverage will remain in force for the rest of the customer’s life. Since it’s whole life, you can enjoy the benefits of cash value and have the potential to grow a portion of your money and claim it later when you need it.
- Payor Insurance – For people who purchased a policy for their child, this allows premiums to be waived (for a specified length of time) when you become disabled (terms and conditions apply). It will remain waived either until the rider expires or if the person who purchased the policy recovers from the disability (whichever happens first).
- Guaranteed Insurability Option – Allows you to buy an additional policy on specific dates. This will not require a medical exam and is given standard rates. You should activate the waiver of premium disability rider first though before you can get this feature.
- Waiver of Premium for Disability
Choose Limited Pay Life if you need:
- Lifetime insurance coverage (starts at $50k) without the need to pay while the policy is in effect
- Ability to complete all premium payments so you don’t have to worry about it during your later years
Single Premium Life
If you have the money, you can choose to pay your life insurance premiums in one go—and enjoy lifetime coverage. This can be a very useful option for people who have access to a significant amount of money (windfall money, accumulated savings, bonus, etc.,) and wish to use it for insurance purposes.
The guaranteed cash value means your money will grow at a fixed rate tax-deferred. It also has the potential to earn dividends depending on the performance of investments.
Choose Single Premium Life if you need:
- Lifetime insurance coverage (starts at $15k) payable in one instance
- Worry-free life insurance protection since you don’t have to pay for your premiums once the policy is in force.
For people who wish to unburden their loved ones with final expenses like burial and funeral costs. State Farm’s Final Expense insurance pays a fixed death benefit of $10,000 to the beneficiaries (they decide how to use it, not necessarily for burial expenses).
People aged 50-80 years old can qualify (50-75 in NY). Premiums remain level, earn cash value from growth and dividends, and coverage lasts as long as premiums are paid.
Choose Final Expense Insurance if you need:
- To help prepare for expenses like burial and funeral costs
Universal Life Insurance
The main benefit of Universal life insurance lies in its flexibility: both in payments and in the actual death benefit that you’ll receive. And like other permanent life insurance, it gives you access to your cash value which you can use for personal needs.
Two things to note though when you consider getting universal life:
- The speed at which your cash value (investment portion) will grow will depend mainly on the performance of the index market you’re invested in
- There’s a chance your premiums may change as you age
Survivorship Universal Life Insurance
This serves as a cheaper alternative for couples who wish to have life insurance protection but don’t want or have the capacity to pay for two separate policies. It will cover them both but the death benefit can only be claimed if both of them pass away. Through this, they can ensure they can leave a death benefit for their loved ones without having to shoulder premium payments from two policies.
- Estate Preservation Rider – Allows you to add an additional death benefit during the first 4 years of the policy for tax-planning purposes.
- Level Term Rider – Allows you to add additional coverage until you reach 95 years old. Can be converted to whole life prior to age 75.
- Waiver of Monthly Deduction for Death or Disability – Premiums will be waived in the event of death or disability (for one of the two insured persons).
Choose Survivorship Universal Life Insurance if you need:
- Coverage for two people but only need to pay for a single policy only (will be released when both passes away)
- Guaranteed death benefit to the beneficiaries when they pass away
Joint Universal Life Insurance
This features the same benefit of Survivorship Life insurance but improves upon it by its ability to pay the death benefit upon the passing of the first policyholder. Economically-wise, it’s a great option since you can get double coverage while technically paying for only one policy.
Since its universal life, policyholders get to enjoy flexible premium payments (they get to decide how much to pay) and death benefit (customize amount). The cash value, of course, allows usage of premium payments should the policyholder need it.
- Children’s Term Rider
- Level Term Rider
- Waiver of Monthly Deduction for Death or Disability
- Guaranteed Insurability Option
Choose Joint Universal Life Insurance if you need:
- Coverage for two people but only need to pay for a single policy only (will be released when the first policyholder passes away)
- Enjoy the benefits and features of universal life insurance but with savings for couples
State Farm Life Insurance Pros and Cons
|Affordable term life insurance plans||Any changes on your policies can’t be completed online (should either be through an agent or in-person, or via mail)|
|Auto-insurance discount offers to life insurance policyholders||No Variable Life Insurance option|
|Strong financial ratings (No. 1 in JD Power)||Currently not offered in Massachusetts|
|Offers a good selection of life insurance products|
|Website is easy to navigate and provides plenty of info on their products. Quotes are available online|
State Farm Life Insurance: Is it for you?
Strong financial ratings (they top JD Power’s list) and a good selection of life insurance policies make State Farm a good choice for anyone looking to get life insurance. And since they also offer auto, home, and all other types of insurance, you can easily bundle your life insurance needs with these other products, making the management of your insurance policies easier under one provider.
However, I would recommend getting life insurance quotes from a few different providers to compare to State Farm since they can come in on the high side at times.
If you need help in deciding how much and what type of life insurance is best for you or have some general questions about life insurance, we highly recommend you speak with our representatives. They’ll be more than happy to assist and even give you a free quote on your life insurance.