State Farm Life Insurance Review

State Farm is a trusted name in the insurance world. The company boasts some of the best financial ratings and has been one of the best whole life insurance companies for decades.

In the following State Farm review, we will discuss the various pros and cons associated with State Farm and explore the company’s life insurance products.

About State Farm

Illinois-based State Farm is one of the biggest and best-known players in the insurance business. At just shy of 100 years old and with over 80 million consumer and commercial clients, State Farm has unquestionable staying power and market share. And the company is competitive in nearly every segment of the insurance industry in which it participates.

State Farm markets its products through high-profile, national advertising campaigns and through a nationwide army of local agents.

Although State Farm is, at its core, a mutual insurance company, it has ventured into other financial services as well.

Along with insurance, State Farm—through affiliates and in conjunction with corporate partners—currently offers investment and retirement-planning services, banking, and even home mortgages.

State Farm Life Insurance Company issues term, whole, and universal life policies in all but three states—Massachusetts, Wisconsin, and New York.

Another affiliate, State Farm Life and Accident Assurance Company, sells in Wisconsin and New York.

As a large, well-established company, State Farm offers several policy options in each area, some of which can be further customized through a variety of optional riders.

However, State Farm does not currently offer a variable or indexed UL policy. So, purchasers looking for a permanent insurance policy with greater growth potential may need to look elsewhere.

Financial Ratings & Strength

State Farm is an immensely strong company financially. There are only so many companies out there that can afford Superbowl commercials every year, and State Farm is one of them (though usually for the vehicle and homeowners’ lines).

State Farm’s current financial ratings:

• A.M. Best rating: A++ (Superior)
• Fitch rating: Not Rated
• Moody’s rating: Aa1
• S&P Global rating: AA
• Comdex Ranking: 98

State Farm Life Insurance Co. maxes out A.M. Best’s rating scale and is near the top of the other major ratings services. The risk that State Farm will be unable to fulfill its policy obligations anytime in the foreseeable future is miniscule.

Considering the size of the company, State Farm also scores surprisingly well for its customer service. The company currently enjoys an A+ rating from the Better Business Bureau, and ranks #1 in J.D. Power’s 2024 U.S. Life Insurance Study for overall customer satisfaction.

The way State Farm’s model works, policyholders are usually communicating with the company through local agents—rather than directly to the gargantuan corporate bureaucracy.

The only complaint about State Farm Life Insurance that you consistently run into is that the premiums are on the high side. But, of course, premium pricing is a pretty important topic.

Products Overview

Products Offered by State Farm:

• Vehicle Insurance
• Homeowners’ Insurance
• Renters’ Insurance
• Small Business Insurance
• Life Insurance
• Commercial Liability Insurance
• Medicare Supplement Insurance
• Disability Insurance
• Pet Insurance
• Annuities
• Investments and Retirement Planning

State Farm Life Insurance Policies

Term Life Insurance

Select Term:

Select Term is State Farm’s most straightforward policy. Coverage levels start at $100,000, and 10, 20, and 30-year term lengths are available.

New applicants can be anywhere from 18 to 75 years old, though the 20 and 30-year terms are only available for new insureds up to age 65 and 45, respectively.

Select Term comes with a contractual right to annual renewal through an insured’s 95th birthday.

Premiums are fixed during a policy’s initial term and then increase at each renewal, though subject to a maximum premium charge stated in each policy.

In most states, Select Term policies include a conversion option allowing policyholders to convert to whole life, with no additional underwriting, as long as the option is exercised by a date specified in the policy.

Return of Premium (ROP) Life Insurance (term):

State Farm’s ROP return of premium life insurance policy provides level term coverage for either 20 or 30 years in coverage amounts starting at $100,000.

If the policy has not been triggered by the end of the term, State Farm refunds all premiums paid for the policy. Coverage can also be renewed annually through age 95.

New applicants must be between ages 18 and 65 (lower for tobacco users), and the 30-year version is only available for new insureds up to 45.

Similar to whole life, ROP Life Insurance policies accrue cash value that can be used for policy loans.

Instant Answer Term Insurance:

Instant Answer is State Farm’s simplified-issue level term policy. The application process doesn’t require a medical examination, just a health-history questionnaire.

Coverage is limited to $50,000 and is only available for new insureds from 16 to 45.

Policies remain effective until the insured reaches age 50, or for 10 years, whichever is longer.

5-Year Term:

State Farm now offers a 5-Year Term option with coverage amounts from $50,000 to $90,000. This policy is renewable in 5-year increments until age 85 (or age 80 in New York). It’s a good option for those who need shorter-term coverage or are looking for a more affordable entry point.

Whole Life Insurance

State Farm is one of the best whole life insurance companies out there. It offers participating insurance, paying dividends to policy owners.

Standard Whole Life Insurance:

State Farm’s dividend paying whole life insurance policy is fairly typical, available for new insureds from zero to 85.

As is normal with whole life policies, insurance premiums are fixed for life, and coverage is guaranteed to never lapse as long as premiums are paid, with coverage levels starting at $50,000.

As whole life insurance, policies accrue cash value that earns tax-deferred interest and are also eligible for life insurance dividends.

Cash value can be borrowed against or withdrawn, though withdrawals may be subject to surrender fees—particularly early in the life of a policy.

Limited Pay Life Insurance (whole life):

Limited pay life insurance is similar to State Farm’s regular whole life, except that it allows policyholders to obtain permanent whole life coverage that is fully paid-up in either 10, 15, or 20 years. So, the coverage stays in place for life, but the premium obligations cease at the end of the period. Minimum coverage amounts are $250,000 for the ten-year period, $100,000 for the 15-year period, or $50,000 for the ten-year period.

Single Premium Life Insurance (whole life):

State Farm’s single premium life insurance offering allows new insureds from shortly after birth through age 80 to obtain whole life coverage for one, lump-sum premium.

The minimum coverage level is $15,000.

Policies have cash value that grows tax-deferred and are eligible for dividends.

Because the policy is a “modified endowment contract” under IRS rules, distributions prior to the policyholder reaching age 59.5 are subject to tax penalties.

Final Expense (whole life):

State Farm’s Final Expense insurance policy is whole life insurance tailored for older applicants looking to obtain coverage earmarked for burial and funeral expenses.

Coverage starts at $10,000 minimum and is available for new insureds between ages 45 and 80 (50-75 in NY).

Premiums are scheduled to reach paid-up status when the insured reaches age 100.

Universal Life Insurance

Standard Universal Life Insurance:

State Farm’s Universal Life insurance option provides lifetime coverage to new applicants from age 0 to 85. Coverage levels generally start at $25,000, except that the minimum is $50,000 for applicants from ages 18 through 54.

Premium amounts are flexible, subject to a monthly minimum. Any excess premium above the minimum is applied toward the cash value account, which grows at interest rates that never decrease below a minimum rate.

State Farm doesn’t offer a variable or indexed UL option tying growth to investment or market performance.

The universal life death benefit can be set at a fixed amount or arranged to increase as cash value accumulates.

Survivorship Universal Life:

Similarly structured to ordinary Universal Life, the Survivorship life insurance version covers two insureds and only pays out upon both of their deaths.

Coverage amounts start at $250,000, and coverage is available for new applicants between ages 18 and 90.

Joint Universal Life:

Joint Universal Life also provides coverage to two insureds, who must be between ages 18 and 85. Coverage starts at $100,000, and policy proceeds pay out upon the death of the first insured.

Life Insurance Riders

Besides the standard living benefit riders, State Farm also offers the following insurance riders:

Children’s Term Rider:

Available with most policies, the Children’s Rider provides up to $20,000 in term coverage to each of the insured’s dependent children through age 25 (or until the insured reaches 65).

When the rider’s term expires, the coverage can be converted to whole life at up to five times the coverage level, with no underwriting required.

Select Term Rider:

If purchased, this rider provides supplemental term coverage for 10, 20, or 30 years for either the policy’s named insured or a designated additional insured.

The supplemental coverage can be converted to permanent coverage.

Waiver of Premium for Disability:

If, before the insured reaches age 60, the insured becomes totally disabled for a period lasting at least six months, premium obligations are waived until the insured is no longer totally disabled.

If qualifying disability occurs between age 60 and 65, the waiver lasts for the longer of three years or until the insured reaches age 65.

Guaranteed Insurability:

The guaranteed insurability rider gives the policyholder the contractual right to purchase supplemental coverage of up to $100,000 with no additional underwriting.

Options must be exercised at specific option ages or important life events (e.g., get married, have children). Only available for new applicants through age 37.

Flexible Care Benefit Rider:

Available with Universal Life for new applicants from 20 to 75, the rider allows acceleration of benefits and waives minimum premiums if an insured requires qualified long-term care.

The maximum amount that can be accelerated per month is 2% of the policy’s death benefit, and the rider only kicks in after a 90-day elimination period.

Payor Insurance Rider:

This rider, available for child policies, ensures that premiums are covered if the premium payer (typically a parent or guardian) becomes disabled or dies before the child reaches adulthood.

Accidental Death Rider:

Provides an additional death benefit if the insured’s death is the result of an accident, as defined in the policy.

Annuity Products

State Farm offers several fixed annuity products designed for retirement planning and guaranteed income:

Future Income Plus (Deferred Annuity):

• Lump-sum premium ($25,000 minimum)
• Tax-deferred growth
• Option to annuitize later
• Guaranteed minimum interest rate (at least 1%)

Guaranteed Income (Immediate Annuity):

• Lump-sum premium ($25,000 minimum)
• Immediate income payments start within one year
• Payments can be for life or a set period

Guaranteed Income Later (Deferred Income Annuity):

• Lump-sum premium ($10,000 minimum)
• Higher payouts for delaying income start (13 months to 30 years)
• Designed for those planning ahead for retirement income

All annuities offer guaranteed minimum interest rates and flexible payout options, with income available monthly, quarterly, semi-annually, or annually.

Digital Experience & Innovations

State Farm has made significant investments in digital capabilities to enhance the customer experience:

Digital Account Management:

Customers can manage policies, make payments, and submit claims online or via the State Farm mobile app. The digital tools allow for convenient access to policy information and customer support.

Wellness & Estate Planning Tools:

State Farm offers digital wellness and estate planning tools through partnerships with companies like Sureify, Wellthy, and FreeWill. These tools help customers plan for their future and protect their assets.

Mobile App:

The State Farm mobile app provides easy access to policy information, claims, and customer service. It allows customers to manage their policies on the go and submit claims quickly.

Contact Information

State Farm Life Insurance Review Conclusion

State Farm continues to be a powerhouse in the insurance industry, demonstrating exceptional financial strength with an A++ rating from A.M. Best and a robust net worth of $145.2 billion. The company’s performance in 2024 was particularly impressive, with a $5.3 billion net income (a significant turnaround from the previous year) and a record $122 billion in new life insurance policy volume.

What sets State Farm apart is its combination of financial stability, product diversity, and customer service excellence. The company ranked #1 in J.D. Power’s 2024 U.S. Life Insurance Study for overall customer satisfaction, a testament to its customer-focused approach and the effectiveness of its local agent network.

State Farm’s life insurance portfolio includes a wide range of term, whole, and universal life options to meet various needs and budgets. From the straightforward Select Term to the more specialized Single Premium Whole Life and Survivorship Universal Life, the company offers products for virtually every stage of life and financial goal.

The availability of numerous riders allows for policy customization, enabling policyholders to tailor coverage to their specific situations. Additionally, the company’s $817 million in dividends paid to life policyholders in 2024 enhances the value proposition for participating policy owners.

State Farm has also embraced digital innovation, offering modern online account management, a mobile app, and digital wellness and estate planning tools. These technological enhancements complement the personalized service provided by the company’s extensive network of local agents.

The primary drawback consistently mentioned about State Farm Life Insurance is that premiums tend to be on the high side compared to some competitors. However, the combination of financial strength, customer service, product options, and dividend performance may justify the higher cost for many consumers seeking a trusted, well-established insurer.

In conclusion, State Farm represents a conservative, reliable choice for life insurance, particularly for those who value financial stability, personalized service through local agents, and a diverse product lineup with customization options. While not the lowest-cost provider, State Farm’s overall value proposition makes it a compelling option for individuals and families seeking comprehensive life insurance protection.