There are a lot of articles out there about the best life insurance companies. We were curious about the other end of the spectrum: What are the worst life insurance companies? Obviously, we’d all like to avoid those. Whether it’s because of consumer complaints, reluctance of paying claims, or customer service, these are the worst life insurance companies in America.
- The Worst Life Insurance Companies According to the AAJ
- The Worst Life Insurance Companies According to J.D. Power
>>MORE: The Best Life Insurance Companies – We stack-rank 40+ reputable life insurance companies on several dimensions (products offered; financial strength; customer satisfaction; consumer complaint; and digital experience). We regularly update the rankings.
The Worst Life Insurance Companies According to the AAJ
According the American Association for Justice, (AAJ) these are the worst life insurance companies in America. Some of them aren’t primarily life insurance companies but do offer life insurance. Keep in mind law firms may be trying to lead customers into lawsuits, as this enhances their bottom line. (Click on the link to read our full review of these companies)
- Allstate
- AIG
- State Farm
Allstate: To be fair, Allstate tops the list mostly because of their reluctance to honor homeowner’s insurance claims. The NAIC ratio for Group life insurance was 0.0 and the ratio for individual life insurance was .70. Both of these indicate Allstate isn’t as bad for life insurance as it seems to be for homeowners or auto insurance. But if you’re interested in bundling policies, you need to be aware of how Allstate provides other insurance.
The BBB lists 237 mostly one-star reviews for Allstate, although these are mostly auto and home insurance related. But this is good information if you’re interested in bundling policies.
>>MORE: Understanding How Dividend Paying Whole Life Insurance Works
AIG: AIG’s financial strategy is to take in more money in premiums than it pays in claims. You might think this is every insurance company’s strategy, but most of them rely on profits made by investing policyholders’ premiums.
Because of this, AIG tries very hard to deny claims. However, the NAIC ratio for individual life insurance is 0.0.
J.D. Power, on the other hand, ranks it on the bottom of its list of 24 life insurance companies, with lower-than-average scores almost across the board (they rated average on statements, which is how useful clients find statements and the number of methods available to pay the premiums).
There are 18 current customer complaints on the BBB, 194 in the last three years. Unlike Allstate, some of them do concern life insurance policies.
>>MORE: Understanding Indexed Universal Life Insurance (IUL) – Why Is It Good for Retirement Savings?
State Farm: State Farm is the second-highest rated insurance company on J.D. Power’s life insurance study, with higher than average scores in almost every category. So, how did they wind up on this list?
According to AAJ, State Farm denied hundreds of claims after hurricane Katrina, which they insisted were due to “flooding” but only if policy holders didn’t have flood insurance. Again, if you are interested in bundling your home, auto, and life insurance policies, it’s good to know how the other arms of a company stack up.
>>MORE: Guide to the Best Whole Life Insurance Companies
>>MORE: Why is Indexed Universal Life Insurance (IUL) a Good Idea for Retirement Savings?
The Worst Life Insurance Companies According to J.D. Power
J.D. Power’s 2019 U.S. Life Insurance Study ranks 24 life insurance companies, from best (Northwestern Mutual) to the worst. Here is what they rank them on:
- Overall satisfaction
- Product offerings
- Price
- Statements
- Interaction
- Communication
- Application and Orientation
The 5 life insurance companies that scored the lowest are:
- AIG
- Midland National Life
- Brighthouse Financial
- AXA Financial
- Transamerica
>>MORE: The 10 Largest Life Insurance Companies
>>MORE: Indexed Universal Life Insurance (IUL) vs. Whole Life Insurance: Which is Better?
We’ve already discussed AIG, so here are the other bottom four. Click on the link to read our full review of these companies.
Midland National Life:
Midland ranked 23rd out of 24 insurance companies. They scored worse than average in every category except interaction (3/5) and communication (3/5).
There are 28 complaints about them on BBB’s website. Many of them concern communication and delays in processing cancellations.
>>MORE: Whole Life Insurance Quotes: How to Get and Compare Multiple Quotes?
Brighthouse Financial:
Brighthouse Financial earns lower than average scores from J.D. Power on everything except Communication. Brighthouse Financial is part of MetLife, as the arm of the company focused on individual life insurance. They have no reviews, but 39 closed complaints over the last three years (BBB). Most of them are about a problem with a policy. Some people might have been unaware of certain terms of their policy’s—make sure you read your policy and know what you are getting.
>>MORE: The Best Life Insurance Companies – We stack rank 40+ reputable life insurance companies on several dimensions (products offered; financial strength; customer satisfaction; consumer complaint; and digital experience)
AXA Financial:
Formerly called Equitable, AXA Financial ranks 22nd out of 24. The only thing they seem to do well, or at least average, is communicate charges. Everything else is lower than average.
On the BBB website, there are 20 mostly one-star reviews, and 48 complaints. Some are customers who were upset about fees and the ease of cancelling a policy. On the plus side, their rates are competitive, although policies are not as flexible as some other insurance company’s policies.
>>MORE: The Best 5 Companies for Guaranteed Universal Life Insurance (GUL)
Transamerica:
Transamerica scores lower than average in every category except price in J.D. Power’s study. They rank 21st out of 24 companies.
This doesn’t seem so bad, but on the BBB website, there are 65 reviews with an average rating of one and a half stars, and 376 complaints in the last three years. Some reviews cite the difficulty in canceling, and many of them complain about poor communication. “Worst company ever” and “Zero help” were some of the comments.
>>MORE: The Best 6 Companies for Indexed Universal Life Insurance
Life insurance is an useful product. You need it to provide financial protection for your family in an unfortunate event. You can also use it as a part of your retirement saving plan. Depending on your main goals, you will find a specific life insurance product more suitable to your situation. For example:
- if you just need financial protection for your family in the next 20-40 years only as you are still working, a term life insurance is sufficient.
- if you want to leave some money to your heirs as part of your wealth transfer strategy or estate planning, you might find guaranteed universal life insurance or GUL or whole life insurance more suitable.
- if you want to use a life insurance policy as a part of your retirement saving plan, indexed universal life insurance or IUL or variable universal life insurance or VUL can be better choices.
Best Guaranteed Universal Life Insurance (GUL) Companies
As whole life has become more and more expensive, consumers are finding a much better deal with guaranteed universal life insurance or GUL product. GUL provides permanent coverage at a much lower cost compared to whole life policy, usually less than half.
More and more companies are competing to continuously improve their GUL product. Here are the top 5 companies that we recommend for GUL: American National Signature Guaranteed Universal Life Insurance, Prudential PruLife Universal Protector, Nationwide No-Lapse Guarantee UL II, Principal Universal Life Protector V, and AIG Secure Lifetime GUL3.
Compare their premiums and other product features in our comprehensive analysis of these best 5 GUL products.
>>MORE: GUL vs. Whole Life: Which is Better?
Best Whole Life Insurance Companies
There are hundreds of life insurance companies in the market, many of which offer whole life insurance policies. They can be mutual insurance companies, stock insurance company, or insurance companies focusing on final and burial expenses. These companies are different in their operating philosophies and their products are also different.
Here are our recommendations of the best whole life insurance companies for your consideration. For mutual companies, we include Northwestern Mutual, Penn Mutual, Mass Mutual, New York Life, Guardian Life, Ohio National Life, OneAmerican Financial.
For stock insurance companies, we include State Farm and Nationwide.
For companies focusing on whole life final expense policies, we include Mutual of Omaha, AIG, Gerber, Assurity, and Transamerica.
>>MORE: Whole Life Insurance Calculator: Everything You Need To Know
Best Indexed Universal Life Insurance (IUL) Companies
IUL has become more and more popular for retirement savings purposes thanks to its key benefit: earning high interests when the market does well, yet being protected from loss when the market decline. More and more companies offer competitive IUL products with different features and riders. We recommend the best 6 IUL companies for your selection: AIG, Symetra, Securian Financial, Penn Mutual, Lincoln Financial, and Accordia.
We also perform a comprehensive analysis of these 6 IUL products to highlight their differences, strengths, and weaknesses to help with your selection.
>>MORE: IUL vs. VUL: Which is Better for Retirement Savings?
Last Thoughts
The U.S. insurance industry takes in over a trillion dollars a year. It’s not because they’re hurting financially that these companies are reluctant to pay claims. When you buy a life insurance policy, you want to know that your heirs will be provided for and not have to deal with unnecessary bureaucracy from insurance companies. On the other hand, a common theme with customer complaints is people who thought they were getting something, only to find out they were not. Read your policy carefully and ask as many questions as you want. If you aren’t receiving good service before the sale, chances are you won’t receive it after the policy goes into effect.
>>MORE: A Guide to the Worst Long-Term Care Insurance Companies