This year, JD Power added life insurance company satisfaction ratings to its annual 2014 U.S. Household Insurance Study, in addition to rating the major companies selling renters & homeowners insurance, including the “bundling” experience of buying property insurance from auto insurance companies, like Progressive & GEICO. I’m glad to see JD Power finally rate life insurance companies, but the wise life insurance consumer should read this review of these latest customer satisfaction ratings for many of the major life insurance companies in the USA, and resist the urge (and make the mistake) of thinking the highest rated companies will have the best rates, service, and life insurance policy for them. I use my insurance experience and knowledge of the life insurance market to critique these JD Power life insurance company ratings, and show you the smart way to use this information to make better life insurance decisions for you.
2014 JD Power Life Insurance Customer Satisfaction Ratings Review
The 2014 JD Power Life Insurance Customer Satisfaction Ratings, which are a part of the 2014 JD Power U.S. Household Insurance Study, are determined from 22,934 responses from customers who have one or more of the following insurance product lines: homeowners; renters; and individual life insurance. The study was conducted in June and July 2014. Customer satisfaction for the individual life insurance segment is rated by examining these four factors: price; policy offerings; interaction (which includes three subfactors — call center, website and local agent/financial advisor); and billing and payment. The JD Power rating scale ranges from the highest of five power circles (“among the best”) to the lowest of two power circles, which JD Power diplomatically labels as “the rest.”
If you read my reviews of JD Power ratings for auto and home insurance companies, you know when I analyze each company’s score from a study, some higher rated companies do not score much above lower rated companies to deserve a higher customer satisfaction rating called “better than most” or “among the best.” Also, sometimes there is a big difference in scores among companies with the same rating. With my reviews of the JD power ratings for auto & home insurance, I look at the scores to show you the companies really performing better than average, average, or worse than average, and the relationship of each company’s score to the scores of other companies.
For this JD Power life insurance study, I have different concerns. I don’t trust the higher ratings — life insurance companies rated four or five power circles — as any indication these companies are better (or have lower rates) than companies scoring around the study average, for people shopping for life insurance or trying to evaluate their life insurance company.
Why do I think this is the case? When it comes to life insurance, I don’t think most consumers know if they are getting a good price or better policy offerings, because most consumers are not familiar with the pricing and coverage options of many companies in the life insurance market. The study results may be helpful if you look at the ratings for the specific factors of company interaction and billing & payment, but no one should choose a life insurance policy on these factors alone.
Instead of relying on each company’s score and overall customer satisfaction rating, I’ll give you information about each company scoring around the study average or better, their performance in the more reliable factors of company interaction and billing & payment, and for which type of life insurance customers they may be a good choice.
For example, State Farm scored well above the study average, and received the highest five power circle rating for overall customer satisfaction — including the factor of pricing — but I know State Farm’s term life insurance rates are much higher than many other companies. If you are looking for a lower-cost permanent life insurance policy, other companies are likely to have much better policy offerings than State Farm.
Here’s another example: Guardian Life scored a little lower than the study average, and rated three power circles (about average) for overall satisfaction, but if you are looking for a good whole life insurance policy, Guardian may have the best for you. Coverage options on Guardian’s term life insurance may make it a better choice for high income earners.
Although I don’t trust the study results to show you the best companies for life insurance, consumers certainly know when they are dissatisfied, so the companies included in this customer survey scoring significantly lower than the survey average, I indicate as providing worse than average life insurance customer satisfaction, as measured by JD Power.
USAA JD Power Rating for Life Insurance Customer Satisfaction
USAA is a company known for high customer satisfaction, and it usually outscores other insurance companies in the JD Power auto & home insurance studies by a large amount each year. It’s the same for this 2014 JD Power life insurance study, where USAA scored much higher — by 75 points (7.5%) than the next highest scoring company. The second highest scoring company, State Farm, is also rated 5 power circles for overall life insurance customer satisfaction, scored 60 points (6%) above the study average, which shows you how much higher USAA life insurance customers rate their satisfaction, compared to how the customers of other life insurance companies rate their satisfaction.
Unfortunately, eligibility for USAA life insurance is restricted to the US Military & honorably discharged veterans, including their immediate families. If you are eligible for USAA, and you are seeking term life insurance, USAA may be a good choice for you, but you would be wise to check with other companies, including an independent insurance agency representing many companies, and specializing in term life insurance, to make sure USAA is offering you competitive rates with the coverage options and length of term best suited to your needs. If you are seeking permanent life insurance or have health conditions, other companies may have better options for you than USAA.
State Farm JD Power Rating for Life Insurance Customer Satisfaction
State Farm is the second highest scoring company for life insurance customer satisfaction in this study, and received the highest rating of five power circles for overall satisfaction and all factors. However, if you are looking for term life insurance, State Farm does not have competitive rates, and charges a lot more than many other life insurance companies. You can click this link to see my review of State Farm term life insurance rates, for specific examples of State Farm’s higher term life insurance rates compared to other companies.
Because State Farm received a high score and top rating in this study, which I think best indicates the problems I have with this life insurance study, I’m going to elaborate more about State Farm than other insurance companies in this study, but please keep in mind, the issues I see with State Farm life insurance applies to all insurance companies selling direct from the company, or represented by captive agents unable to represent competing companies, particularly companies better-known for auto or home insurance, like State Farm, Allstate, American Family, Farmers, and Nationwide.
There are three reasons why State Farm may not be a good choice for your life insurance:
1. Much higher life insurance rates than other life insurance companies.
2. Unwillingness to insure you if you have certain health conditions or if you are taking certain medications. Insurance companies known mainly for their auto or home insurance are very interested in selling life insurance, but only to customers in the best of health. Insurance companies that are primarily life insurance companies are more willing to insure people with a variety of health conditions. For example, taking an anti-depressant like Prozac may see your life insurance application rejected by your auto insurance company, or your agent may say you are not eligible for life insurance because of it. However, if you contact an experienced independent life insurance agent or agency knowing the market, they are likely to not only be able to find life insurance companies willing to insure you, but should be able to find the company with the best health rating (and lowest rate) for you.
3. A lack of life insurance expertise and other company options. State Farm agents want to sell life insurance, may get good training on State Farm life insurance products, and may hold life insurance professional designations, like LUTCF or CLU, but since their primary business is auto and home insurance, and they represent only State Farm or a few other insurance companies partnering with State Farm for certain products, State Farm agents do not have the true expertise and knowledge to help consumers know important life insurance options available in the broader market.
For example, a State Farm agent may explain your options as buying State Farm term life insurance or State Farm whole life or universal life insurance. But your State Farm agent is not likely to know what other companies offer, and how State Farm products compare to them. If you contact an independent insurance agent experienced with different life insurance products, they’ll know which companies are best for you depending on your health and needs, be it purchasing the most permanent coverage for the best rate, the best term to age 65 policy at the lowest rates, or the policy that accumulates the most cash value you can withdraw at the least expense. Do you want a twenty-year term life insurance policy that returns your premiums if you are still alive after 20 years? Your State Farm agent may not have one, be aware of the product or other companies offering it, or have the knowledge or unbiased opinion to advise you if such a policy is right for you.
State Farm sells a lot of life insurance because of its well-known brand name and by its existing relationship with its many auto & home insurance customers, so it does not have to compete with other companies by offering low rates, the best products, or insuring people with any questionable health, medication, or lifestyle issues.
However, there are situations where State Farm life insurance may be a good choice for you:
1. If you are looking for term life insurance, and you live in a state where State Farm discounts your auto insurance rates if you buy term life insurance, the discount on the auto insurance may offset the higher term life insurance rates. However, you may already be getting this multiple line discount if you have State Farm homeowners or health insurance. Have your agent quote you exactly how much you will save each year with this discount, so you can compare the State Farm life insurance rates & discount savings with the cost of the life insurance with other insurance companies.
2. If you have comparison shopped with other companies and agents, including at least one experienced independent life insurance agent, and you have decided State Farm is the best choice for you.
3. You are buying term life insurance, you know you will qualify for State Farm life insurance, getting a lower rate is not important to you, and you want all your insurance policies with your State farm agent.
State Farm Life Insurance Company has a stronger AM Best financial rating than many other life insurance companies, and its customers rate it as providing above average life insurance customer satisfaction, but you may miss out on lower rates or a better insurance product, if you don’t check with other life insurance companies or agents, and rely only on State Farm’s JD Power rating in this study.
Northwestern Mutual JD Power Rating for Life Insurance Customer Satisfaction
Northwestern Mutual also received the top rating for overall life insurance customer satisfaction, and in the factors of pricing and company interaction. The factors of Billing & Payment and Policy Offerings received the second highest rating of four power circles. Northwestern Mutual score 8 points lower than State Farm on the 1,000 point scale, making it close to providing the same level of customer satisfaction.
However, Northwestern Mutual focuses on selling whole life insurance, and often does not have low rates for term life insurance compared to other companies, in spite of its top rating for the factor of pricing in the JD Power study. If you are looking for term life insurance, and do not care about conversion options to permanent life insurance, you may want to avoid Northwestern Mutual.
Northwestern Mutual is a captive company, meaning agents other than Northwestern Mutual agents cannot sell the company’s policies. Northwestern Mutual has a very good whole life insurance policy, but anyone interested in this type of policy needs to do their own research, and comparison shop with different agents with expertise in types of permanent life insurance, like Whole Life & Universal Life insurance policies.
Pacific Life JD Power Rating for Life Insurance Customer Satisfaction
Pacific Life scored 23 points less on the 1,000 point scale than Northwestern Mutual for life insurance customer satisfaction in the study, but 29 points higher than the industry average.
Pacific Life is best known for its permanent life insurance, which are various universal life products, usually offered in the context of broader financial & investment advice, and are sold through financial planning firms, securities broker-dealers, wirehouses, banks, and other financial institutions. Pacific Life claims on its website to have selling agreements with over 850 such firms located nationwide.
Pacific Life can have competitive term life insurance rates depending on your age, sex, and health, but is not likely to have the lowest rates for you. People shopping for a good term life insurance company should contact agents and agencies specializing in term life insurance, not broader financial planning or investment firms.
However, if you are considering buying a Pacific Life policy, the company received the highest rating of five power circles for company interaction and four power circles for its billing & payment which, coupled with its above average score, are better than average ratings.
Allstate & Nationwide JD Power Ratings for Life Insurance Customer Satisfaction
Allstate & Nationwide scored two points from each other on the 1,000 point scale, making them similar in life insurance customer satisfaction. Allstate scored 22 points above the life insurance average and Nationwide scored 20 points above the life insurance average. Both companies rated four power circles (better than most) among all factors, except Nationwide rated three power circles (about average) for company interaction. However, your choice of a Nationwide agent can greatly improve your experience of company interaction, if you choose an agent good at communicating and providing customer service.
Allstate & Nationwide have the same drawbacks with their life insurance as State Farm, but Nationwide life insurance can also be purchased through independent agents and financial advisors, giving you the advantages of working with someone able to represent many life insurance companies. However, Nationwide is not a major competitor in providing term life insurance at the best price.
As with State Farm agents, Allstate & Nationwide agents (even though Allstate has life insurance specialists) are not good sources for advice and finding the best life insurance for you, even if you are only seeking term life insurance. However, if after comparison shopping with other agents or agencies specializing in life insurance, you decide buying life insurance through Allstate or Nationwide is best for you, their scores in this study indicate you should expect above average customer satisfaction.
Mutual of Omaha JD Power Ratings for Life Insurance Customer Satisfaction
Mutual of Omaha scored one point on the 1,000 point scale below Nationwide, making it similar in life insurance customer satisfaction to Allstate & Nationwide. Mutual of Omaha scored 19 points above the life insurance average, and rated four power circles (better than most) among the factors of billing & payment and company interaction.
Mutual of Omaha has its own agents, but its products are also available from independent insurance agents. If you are interested in Mutual of Omaha, contact an independent insurance agent or agency representing Mutual of Omaha — among other companies — and see if the company is right for your life insurance needs.
New York Life, MassMutual, Guardian, Principal Financial, John Hancock JD Power Ratings for Life Insurance Customer Satisfaction
These companies all scored close to the life insurance study average and rated about average (three power circles) for overall life insurance customer satisfaction. However, unless you are seeking permanent life insurance or you’re a high net worth individual or family, the agents representing these companies (and Northwestern Mutual discussed above) are not for you. However, some of these companies have industry-leading Whole Life insurance policies, in spite of their “about average” ratings by JD Power.
Life Insurance Companies with lower than Average Customer Satisfaction
These life insurance companies scored below the study average, although they all rated “about average” at three power circles for overall life insurance customer satisfaction. However, some of these companies have very competitive term life insurance rates, and can be purchased through independent insurance agents:
Genworth Financial Group
AIG (American General)
Protective Life Group
Let’s look at the lowest scoring and worst rated life insurance companies.
Life Insurance Companies with the Worst Customer Satisfaction
You may want to avoid these companies or be careful about choosing them, because of their low life insurance customer satisfaction scores, making them the worst rated life insurance companies in this study:
AXA Financial Group
Lincoln Financial Group
Now I’ve covered all the life insurance companies included in the 2014 JD Power study, read the summary below for advice on how to shop to find the best life insurance company for you, and how to make room in your budget to afford the coverage you need.
2014 JD Power Customer Satisfaction Ratings for U.S. Life Insurance Companies Review Summary
With auto insurance, it makes sense to read my JD Power ratings reviews then go to the websites of the top-scoring companies, like Amica and State Farm, for price quotes, or go to the Progressive or GEICO websites to see if they have low rates for you. You can’t get the auto insurance rates Progressive quotes on its website anywhere else than Progressive. Many of the largest auto insurance companies in the USA are not available from independent insurance agents.
But with life insurance, few companies are not available through independent insurance agents. Prudential, Mutual of Omaha, and Metlife have their own agents, but these companies are also available through independent insurance agents. Prudential can be a good life insurance company for diabetics with good control over their medical condition, but rather than contacting a Prudential agent, it’s smarter to contact an experienced life insurance agency or agent representing Prudential, among other companies.
Instead of contacting Northwestern Mutual for life insurance information because of its JD Power rating, contact an experienced independent life insurance agency or agent to assess your situation, determine your life insurance needs, and shop the market for you. If you are like many people, the most appropriate choice likely for you is competitively priced term life insurance, or a permanent life insurance policy purchased for the death benefit. Contacting Northwestern Mutual because its a “good” life insurance company, and sitting through a sales pitch for a Whole life insurance policy to build cash value for retirement, or finance a child’s college education, can be an expensive mistake.
You want to choose a good insurance company, but you need the help of experienced agents representing many companies to know the companies meeting your needs, having competitive rates, and are willing to insure you. Then, you can use this review to help you decide on the best companies you know are good options for you.
Once you’ve received advice from a few independent life insurance agents, it’s okay to contact companies insuring your home or autos about life insurance, if you’d prefer to have all your insurance with the same agent, to see what companies like State Farm, Allstate, and Nationwide can do for you.
In order to better afford the additional expense of buying the life insurance you need, keep in mind you can save a lot of money by shopping your auto & home insurance. Many people pay too much for their insurance because they never shop for better rates, or if they do shop, they don’t check the rates of enough companies. Some companies charge twice as much as others for the same coverage. But no single company has low rates for everyone. You have to shop with all the leading companies, to find the company with the best coverage and best price for you. The ad below will take you to links to get online quotes from leading Home, Auto, Health, & Life insurance companies in your area. Choose the type of insurance, put in your zip, and start shopping now!
See auto & home insurance reviews for over 40 companies, rating each company’s pricing, claims handling & customer service, at smartshopyourcarinsurance.com.
What do you think of the life insurance companies in this review and their JD Power ratings? Comment or ask me questions on my facebook page. Follow me on Twitter for important insurance consumer news & new blog entries at CarInsWatch.