State Farm is a life insurance company with a familiar name, solid reputation and several good permanent life insurance options. It may not, however, always have the lowest prices.
State Farm is the nation’s eighth-largest life insurance company. It is a well-known brand name thanks to an aggressive advertising campaign that reminds us that, “Like a good neighbor, State Farm is there.” It offers Whole Life, Universal Life and Final Expenses policies in the permanent insurance category. Those policies can be paid with a single premium, regular premiums payable over 10, 15 or 20 years, or up to age 100. Accumulated cash in policies can be withdrawn or taken as a loan. Policy loans do accrue interest, and any outstanding loans and interest will reduce the death benefit value of the policy at payout.
|Varies based on age and other factors|
Ease of enrollment
Ways you can enroll
|Online, phone or through a local agent|
What types of insurance?
|Whole, universal and final expense policies|
How soon is the policy in effect?
|As soon as the policy is approved, and premium is paid|
Ease of access
|Agents are available weekdays during business hours|
What is the maximum coverage available?
|Not stated for all policies|
What isn’t covered?
|Suicide exclusion not specified|
A.M. Best’s Financial Strength Rate (FSR)
Medical exam required
Is a medical exam required?
The younger and healthier you are when you buy a life insurance policy, the better. You will receive a better rate class, which will lower your premiums. Life insurance is one financial purchase that will (hopefully) remain active for the rest of your days, so excellent customer service is critical as we age. State Farm has proven its reputation for excellent service by taking the top ranking with the J.D. Power Ratings of Life Insurance Customer Satisfaction survey for the past four years. The company’s structure helps: it works through more than 18,000 agents positioned throughout the United States, so you can deal face-to-face with a person at an independently owned office near you. The options of online and phone connection remain available to you as well; whatever works best.
State Farm takes a very conservative view when underwriting its policies, with restrictive underwriting guidelines for factors as basic as blood pressure and cholesterol levels. This can be problematic if you have left your buying until when you have pre-existing conditions. Of course, existing permanent policies will not be affected by an advancing health condition, which is one of the primary reasons for buying one in the first place. As your health declines, if you need to access some of the funds that have accrued in your whole life insurance policy, you can withdraw or borrow against that cash value, something that will help lower the stress at an already stressful time. It will, however, be deducted from the value eventually paid to your beneficiaries. There are also some riders that facilitate access to funds in case of disability or critical illness.
State Farm spends almost $1 billion a year on advertising – “Like a Good Neighbor” – and these costs must be absorbed somewhere. (Prices are not the lowest.) The ad spend makes the company look larger than it is in the life insurance sector since most of its customers purchase home and auto insurance. However, its ‘good neighbor’ reputation is supported by having over 18,000 independent contractors as exclusive State Farm agents available nationwide to manage your whole life, universal life or final expense insurance policy.
State Farm is financially sound, as is required of all insurers by the onerous regulations at the federal and state levels. It also maintains a stellar reputation with high customer satisfaction rankings. If you find a policy that meets your needs, and if excellent service is more important than having the lowest possible cost, State Farm may well be the permanent life insurance provider for you.
Frequently Asked Questions:
Does your whole life coverage include some kind of ‘accelerated death benefit?’ Yes. For example, according to State Farm, with a Flexible Care Benefit rider (not available in MA, NY or WI), when you become eligible to receive benefits because of a chronic illness, you can access a portion of your policy's death benefit every month. These accelerated benefits can be used at your discretion. Monthly benefit payments will lower the policy's death benefit and other policy values. Cost of insurance, monthly charges for any riders and monthly expense charges for the policy may also be waived while rider requirements are met.
When does my coverage begin? Coverage begins only when the company approves your application for insurance, and the premium is paid.
What one thing sets this insurer apart from others? State Farm stands out because of the combination of top-ranked customer satisfaction and the network of easily accessible local agents for all those who prefer face-to-face interactions.
Overview: State Farm offers several permanent life policies which build cash value that can be withdrawn or borrowed against through loans. Any tax implications of withdrawals under different circumstances should be reviewed carefully. Final death benefits will be reduced by the value of total withdrawals or unpaid loans and interest. Most policies also allow policyholders to participate in State Farm’s profits through annual dividends, although dividend payments are not guaranteed: the payout formula makes payments less likely with some policies than others.
Whole Life: A State Farm whole life policy builds cash value that grows tax-deferred and can be accessed during your lifetime. These policies offer level premiums and life insurance protection for the duration of your life provided premiums are paid as needed to keep the policy in force. In addition to traditional Whole Life, State Farm offers Limited Pay 10, 15 and 20; Single Premium Life; and Final Expense insurances.
Universal Life: A State Farm universal life policy allows you to adjust your premium payments up or down, subject to policy minimums. The policy’s cash value grows at a guaranteed interest rate, which might be less than actual interest rates. The death benefit can either be the policy’s face value (called ‘level’) or can have the growing account value added to the death benefit (called ‘increasing’). Survivorship Universal life insurance covers two designated people and pays the benefit only after both have died. Since the cost is less than for two individual permanent policies, it is an appealing way to leave your heirs a larger nest egg or leave a legacy to a favorite cause. Minimum coverage is $250,000.
Optional Accessories or Add-on Services: State Farm’s available add-ons, or riders, to permanent life policies include Waiver of Monthly Deduction for Disability, Waiver of Premium, Guaranteed Insurability Option and Flexible Care Benefit.
Contract Details: View individual policies for details.
Accreditations: State Farm Insurance is not accredited by the Better Business Bureau. However, it holds a B+ rating on the BBB’s website despite having to issue $13.3 million in refunds to overcharged Californians following a May 2017 California Insurance Commissioner’s order. It carries A.M. Best’s highest rating of A++ for financial strength and has a Comdex ranking of 98 out of 100 (average rating from the four major rating agencies).
Company Details: State Farm was founded in 1922 by George J. Mecherle, a retired farmer, and initially specialized in auto insurance coverage for farmers. His vision from the start was to operate fairly and ‘do the right thing’ for his customers. The company has shown its ongoing commitment to doing so through active community and disaster support, over 90 years of claims experience and consistent financial strength.
In 2017, State Farm ranked 33rd in the Fortune 500. Total revenue, which includes premium revenue, earned investment income and realized capital gains (losses) was $78.3 billion for 2017. Whole life insurance policies are available from State Farm Life Insurance Company and State Farm Life and Accident Assurance Company (residents of NY and WI only). May not be available in MA.
State Farm Insurance
One State Farm Plaza
Bloomington, IL 61710