Are you looking for a list of the best life insurance companies that pay out November 2022?
Great! Then you have come to the right place.
In this article, we’ll show you a chart of the best life insurance companies that pay out as well as provide everything you need to know about the life insurance pay out process.
This will help you choose the best life insurance company and provide you peace of mind knowing they will be able to payout any future claims.
Table of contents
- The truth about life insurance and paying out claims
- Best life insurance companies that pay out 2022
- Life insurance exclusions and when a policy won’t pay out
- Additional information to know
- Life insurance company payout rate statistics infographic
- Choose a highly rated company
- Life insurance claims process
- How are life insurance proceeds paid out?
- How long does it take for a life insurance policy to pay out?
- Is life insurance taxable?
- Key Takeaways
The truth about life insurance and paying out claims
According to the American Council of Life Insurers (ACLI) there are 747 life insurance companies in the Unites States1 and the truth is each one will pay out a legitimate claim. Why? Two main reasons:
1. Life insurance policies are contracts. If you pass away, the insurance company has to pay out the money. (Legitimate claims, see more on exclusions below)
2. Life insurance is one of the most heavily regulated industries in the United States2
Life insurance companies paid more than $90 billion to beneficiaries in death claims in 2020 alone, according to ACLI. This was the largest amount ever paid out in a single year, which can be attributed in part to the COVID-19 pandemic. This was a 15% increase from the previous year which was largest year-over-year increase since the 1918 flu epidemic.
Total life insurance claims and benefits (which include life insurance death benefits, disability, annuity and other payments) totaled $747.4 billion in 2020.3
Best life insurance companies that pay out 2022
Below is a chart of the best life insurance companies that pay out 2022. It shows several of of the top life insurance companies in the country and the total amount of death claims and benefits they paid out in a single year.
|Insurance Company||Benefits Paid Out Per Year|
|New York Life||$12.4 billion|
|Northwestern Mutual||$11.7 billion|
|Western & Southern||$3.9 billion|
|Pacific Life Insurance Company||$3 billion|
|Protective Life Insurance Company||$2.7 billion|
|Primerica Life Insurance Company||$2.1 billion|
|Banner Life Insurance Company||$1 billion|
|North American Company||$480 million|
|American Family Life Insurance||$221 million|
|American Income Life Insurance Company (AIL)||$209 million|
As previously mentioned, every life insurance company in the United States (all 747) will pay out a valid claim. The largest life insurance companies in the country that have the most policy holders will experience a greater number of claims, as seen above in the chart. Conversely, smaller life insurance companies with less policy holders will have fewer claims, statistically.
*Transamerica paid their customers and their families $49 billion in insurance in 2020. This amount includes: retirement and annuity claims and benefits, including return of annuity premiums paid by the customer.
*The benefits paid out figure in the table above from: New York Life, Northwestern Mutual, Pacific Life and American Family includes death claims as well as dividend payments for whole, universal life policies and and other funds paid to policy holders. For example, NW Mutual paid out $6.2 billion in dividends in 2020.
*The benefits paid figure out figure in the table above from: Banner Life, Protective Life Primerica, AIL and North American Company represent solely death claims.
*Primerica’s total includes U.S. and Canada
Life insurance exclusions and when a policy won’t pay out
One of the most frequently asked questions people have when it comes to buying life insurance is:
What are the reasons why life insurance will not pay out?
The answer is simple since nearly life insurance policy has the same two standard exclusions:
Two-year contestability clause
- The two-year conestability period simply means if you were to pass away in the first two years of the life insurance policy, the insurance company has the right to investigate your application to make sure you were truthful in your answers. They want to make sure their wasn’t a material misstatement or material misrepresentation. In laymen’s terms, they want to make sure you were honest on your application.
Two-year suicide clause
- The two-year suicide clause is fairly self explanatory. This means if the insured commits suicide in the first two-years of the policy effective date, the policy will not pay out. Here is a definition from an actual policy, “If the Insured, whether sane or insane, dies as a result of a suicide within two years from the Issue Date or within two years from any reinstatement of this Policy and while this Policy is In Force, this Policy will automatically terminate. Our liability will then be limited to an amount equal to the return of premiums received under this Policy, less any acceleration of death benefit, if any, on the date of death.”
Additional information to know
When it comes to life insurance and paying out claims, it’s good to to be aware of some additional items that can sometimes can cause a life insurance policy not to pay out:
Life insurance premiums are not maintained
- If a life insurance premium is not paid by the due date the policy will lapse for non-payment. Most insurers do have a grace period as stated in the policy, typically 30 days, however, it’s very important to make your premium payments on-time and keep your payment information with the life insurance company current to prevent a policy lapse.
Guaranteed issue life insurance (two-year waiting period)
- Guaranteed issue life insurance (final expense) is available to everyone between the ages of 45-85 years old and coverage ranges from $2k up to $25k. Since there are not any health qualifying questions and everyone is approved, regardless of health, there is a two-year (sometimes a three year) waiting period for death resulting from natural causes. This means if the insured dies from a natural cause in the first two (or three) years of the policy, the death claim will not be paid out and the premiums paid are typically returned to the beneficiary. Death resulting from accidents are covered right away.
- An AD&D policy (accidental death and dismemberment) is insurance that only covers deaths that result from an accident. It will not cover death that results from natural causes, such as heart disease, cancer, an illness, etc. Some of the most common types of accidental death include auto accidents, slip and fall, homicides, drowning, etc. An AD&D policy also typically states that it will not pay out if the insured was doing anything illegal or reckless at the time of death. Also, flying as a pilot is typically excluded on this type of policy.
Life insurance company payout rate statistics infographic
As you can see, Banner Life Insurance Company paid out over $1 billion in life insurance claims in 2020 alone with 99.9% of all claims filed were paid.
Since Banner Life does not offer whole life insurance, as they specialize in term life insurance, the $1 billion amount in claims paid is life insurance is very impressive. The total benefits paid from some of the other top life insurance companies such as New York Life and Northwestern Mutual include dividend payments, which makes their total benefits paid out number much higher.
Choose a highly rated company
Choosing a highly rated life insurer will provide you added peace of mind knowing the company is financially strong. A general rule of thumb is to choose a life insurance that has received an A (Excellent) rating grade or better rating from A.M. Best.
Life insurance claims process
The life insurance claims process is very straightforward, unlike other types of insurance such as auto, home, renters, flood, etc. where the process can be arduous and sometimes includes negotiating with a claims adjuster. A life insurance policy simply pays out the specified death benefit in the policy.
The claims process has four steps:
- Notify the life insurance company
- File a claim and provide documentation
- Claim is reviewed by the insurance company
- Payment is made to the beneficiaries
How are life insurance proceeds paid out?
The majority of life insurance companies provide the beneficiary several life insurance claim payment options, once it is approved. They typically include:
- Lump sum payment: The insurance company sends your beneficiaries the entire death benefit in a one-time payment either by check or direct deposit.
- Installment payments: Your beneficiaries can choose to receive monthly installments over a set period of time. There are several options (settlement options) such as: specified income payment schedule, an annuity or a retained asset account.
How long does it take for a life insurance policy to pay out?
A life insurance claim is often be paid within 30 days of the death of the insured. It can be much quicker than that or take longer, just depending on if the policy is being contested and how quickly the beneficiary files the claim and provides the necessary documentation, including the death certificate. Also, some states have regulations that require additional some processing time.
Most life insurance companies are very quick in expediting death claims. No life insurance company wants a reputation of not paying out claims in timely manner.
Is life insurance taxable?
Generally, the beneficiary of your life insurance policy will not be required to pay income tax when they receive the death benefit.
However, there are a few exceptions. If you are a high-net worth individual, you could be subject to the 2022 federal estate tax, which is $12.06 million per individual or $24.12 for a married couple for deaths that occur in 2022, then life insurance proceeds could be subject taxes. Also, any interest received on a life insurance policy is taxable according to the IRS.
When searching for a life insurance policy, everyone wants to select an insurer they can feel confident will be able fulfill their promise and pay out any potential future claim in order to protect their loved ones. That is why we wrote this article, the best life insurance companies that pay out 2022. Not only to provide a list of the top life insurance companies and the amount of claims and benefits they have paid out, but also to educate on the life insurance pay out process.
As you can see in the Best life insurance companies that pay out chart above, life insurance companies in the United States pay out an astonishing amount of claims and benefits each year. Last year, life insurance companies in the United States paid out over $90 billion to beneficiaries in death claims.
The most important step you can take to ensure that your life insurance policy will payout is to answer all the questions on the life insurance application honestly. If you do this, choose a highly rated insurer that with an A Excellent rating or better from A.M. Best and pay your premiums on-time you can have peace of mind knowing you policy will payout if a claim is filed.
1. Life insurance polices are contracts that have to payout all valid claims. The life insurance industry in the United States is highly regulated to ensure every legitimate life insurance policy claim is paid.
2. The largest life insurance companies with the most policy holders will will pay out the greatest number of claims and benefits. Likewise, smaller U.S. life insurance companies will still pay out all valid claims, it will just be a smaller amount statistically, as they are insuring less people.
3. Life insurance polices a have two-year contestability clause, which means the insurer is allowed to review the application answers to make sure there was no material misrepresentation made on the application in the first two-year of the policy. This is why it’s imperative to be truthful on the life insurance application to ensure the policy will payout. Also, suicide is not covered in the first two years.
4. Pay life insurance premiums on-time to avoid the policy from lapsing (many companies have a grace period). If you are on auto-pay, make sure you update your payment information if there are any changes to your card or checking account numbers.
5. Life insurance polices are contracts. It’s important to read your policy closely to understand what it does and doesn’t cover. Life insurance policies have a free look period to give your time to review and ask any questions.
6. Make sure your beneficiary is aware of the life insurance the policy information, as they have to initiate and file a claim if anything were to happen.
Who are the best term life insurance companies that pay out?
Two of largest term life insurance companies in the country are Banner Life Insurance Company and Primerica Life Insurance Company. Primerica’s data just came in for last year and they paid out $2.1 billion in death claims in 2021. While we don’t have the data from last year for Banner Life yet, in 2020 Banner paid out over $1 billion in life insurance death claims. As noted above, every life insurance company in the United States that sells term insurance will pay out a legitimate claim, as required by the policy and law.
Who are the best whole life insurance companies that pay out?
New York Life paid out $12.4 billion and Northwestern Mutual which paid out $11.7 billion in total claims and benefits in 2020. However, every life insurance company in the United States that sells whole insurance will pay out a legitimate claim, as required by the policy and law.
Who are the best medical no-exam life insurance companies that pay out?
Every life insurance company in the U.S. that offers a no-exam life insurance policy will payout a valid claim to the beneficiary. As with every life insurance application it’s essential to answer every question on the application with complete honestly to avoid any issues with the two-year conestability clause that all life insurance policies have.
What is a good financial rating for a life insurance company?
A rule of thumb to use when choosing a life insurance company is to make sure the insurer has an (‘A’ Excellent) or better financial rating from A.M. Best.
- 10 vs 15 vs 20 vs 25 vs 30 Year Term Life Insurance Policy
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- Pacific Life Insurance Review
- Banner Life Insurance Review
- AIG Life Insurance Review
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- ACLI. ACLI 2021 Life Insurance Fact Book, “https://www.acli.com/posting/rp20-010.”
- Federal Reserve Bank of Boston. Public Policy and Life Insurance, “https://www.bostonfed.org/-/media/Documents/conference/35/conf35f.pdf?la=en.”
- Insurance Information Institute. 2021 Insurance Fact Book, “https://www.iii.org/publications/2021-insurance-fact-book/life-annuity-financial-data/payouts.”
- Thrivent. Claims Image, “https://www.thrivent.com/claims.”
Pay out amounts for each company can be accessed by clicking on their link.
*This article is for informational purposes only and not a substitute for tax or legal advice. Please read your specific policy, ask your agent and or insurance company for the specific details of your policy.