State Farm Life Insurance Company Review

State Farm Insurance Company began business in 1922 in response to mass production automobiles. They became the number one auto insurer within the U.S. in 1942 and have remained that industry leader to this day. Now a mutual company, owned by policyholders, State Farm has accumulated eighty one million insurance policies in force throughout North America. Many of us are familiar with their agent offices, ‘like a good neighbor… State Farm is there’ and quite literally found almost everywhere.

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Financial Ratings

State Farm ranks very high among rated insurance companies. AM Best has given them an ‘A++’, the highest possible rating due to superior financial condition and operation performance. Fitch has rated them with an ‘AA+’ or superior rating based on their independent research. Standard & Poor’s gives them an ‘AA’ or very good rating for their ability to pay claims.

Term Life Insurance Options

State Farm offers a number of level premium terms and in many states even up to age eighty five or ninety five. Level premium terms are offered in five, ten, twenty, and thirty year periods. Select Term policies are able to be converted to permanent insurance. This series of term policies are the traditional term insurance option for simple death benefit protection and lower budgets.

State farm also makes available ‘Mortgage Life’ insurance in terms of fifteen and thirty years. Though this type of coverage may sound attractive and be appropriate in some cases, keep in mind that simply covering a mortgage debt will not replace lost income, future savings, and other important financial concerns. Additionally, the company offers two options for ‘Return of Premium’ term life insurance. This type of coverage is available in level premium terms of twenty or thirty years.

Still Offering Whole Life

State Farm does still offer a few versions of traditional whole life insurance policy. The insurance is permanent and is designed to mature to face value at age one hundred. There are four options for premium schedules with their whole life policies. Policy owners can choose a lifetime of lower and level premiums, a single premium, to make fifteen years of equal premium payments, or choose to make premium payments until age sixty five.

The paid up at sixty five version is a good choice for whole life policy owners. This premium structure is designed for the owner to make premium payments slightly higher than lifetime payments and have the payments conclude around retirement. While working income exists, premiums are kept up.

Universal Life Insurance from State Farm

State Farm does offer one very flexible universal life insurance policy. They currently offer flexibility with both premium payments and the death benefit. This is excellent; as the policy owner’s needs for protection or financial situation changes they can adjust premiums or insurance coverage accordingly.

The universal life policy also offers two choices for the death benefit. The first option will pay beneficiaries the face value of the policy. The second option offers the face value plus the account cash value, creating a potentially larger death benefit.

Variable Universal Life Insurance

Currently State Farm does offer a variable universal life insurance policy which is very similar to the UL but allows for variable investments. The policy has a ten year surrender period, during which time there will be charges for certain withdrawals or policy lapse.

Though the policy is not an ‘indexed equity’ type of policy, most of the funds offered within the available investment choices are index funds. There are a few choices of proprietary managed funds, however they are sector funds and may not be appropriate for the full allocation of a suitable portfolio.

In all, the investment options available within this policy are very limited. This makes the policy less attractive for investors demanding more experienced and reputable money managers. Those satisfied with a portfolio primarily composed of index funds will find the policy satisfactory.

Optional Coverage and Riders

State Farm does offer a number of optional riders to customize certain policies. The universal policies are most versatile and have the most riders available to policy owners. Family coverage riders are available in most states with many of State Farm’s policies. This protection adds coverage for a spouse or children, though they may be required to provide evidence of insurability.

State Farm also carries riders for covering premiums in the event of disability as well as guaranteed insurability riders. These will protect policy owners from unforeseen disability or illness, preserving their family protection during difficult periods of time.

Summary for State Farm Life Insurance

The company is very financially strong, being rated among industry leaders. That said, the poor investment choices within the variable life policy and lack of any index universal policy hurts them overall. The Select Term policies, Return of Premium policies, and the Universal Life policy are outstanding options for insurance shoppers. State Farm has a very highly rated portfolio of fixed securities, which fuel the fixed rate accounts of their whole life and universal life policy cash accounts.

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