Protective Life offers some of the best term life insurance rates in the marketplace. But that is not the only thing the company does well. In the following Protective Life review, we will discuss the many benefits of the company and why it may or may not be the right fit for you.
Table of Contents:
- About Protective Life
- Protective Life Ratings
- Products Offered
- Life Insurance Policies
- Pros and Cons
Based in Birmingham, Alabama, Protective Life Insurance Company has been issuing life insurance policies since 1907. Throughout its more than 100-year history, Protective has balanced stability against consistent growth. Consolidation has been a continuing motif in the modern financial industry, but Protective has effected only 57 acquisitions since the company’s inception.
Protective Life was recently party to a few high-profile deals. In 2018, Protective purchased Liberty Mutual’s life insurance and annuity line—Liberty Life Assurance Company of Boston, which represented Protective’s 56th acquisition. And, in 2015, Protective was itself acquired by Dai-Ichi Life Insurance Company, Ltd., one of Japan’s largest insurers. While the web of mergers and acquisitions among insurers is dynamic, Protective continues to operate out of its Alabama headquarters.
Protective issues policies covering the full gamut of life insurance products—term, whole life, and universal life are all on the table. However, within those general categories, Protective offers fewer options than many large insurers. One noticeable omission is final expense insurance. Protective offers a solid whole life policy but does not currently have any permanent, guaranteed-acceptance policies available for seniors.
Protective markets itself as a low-cost alternative to some of the better-known life insurance carriers. On its website, Protective states that premiums for its term policies are “usually up to 48% less than the competition.” Of course, they are using a best-scenario for that statistic, but Protective’s rates are generally a selling point. Applicants with risk factors—like smokers and people with some health problems—often see steep price increases.
A.M. Best: A+
S&P Global: AA-
Comdex Ranking: 91
Protective Life earns excellent scores for financial strength and stability, ranking among the highest rated life insurance companies. Thus, the risk that Protective Life will be financially unable to fulfill its policy obligations at any point in the foreseeable future is very low.
With over $120 billion in assets and about $980 billion worth of in-force life insurance outstanding, Protective is a big life insurance carrier—just outside the U.S. top ten largest. The company counts service as one of its core values and, in 2019, made community gifts totaling 4.5 million, nearly 1% of its $463 million in net income for the year.
Protective is not accredited by the Better Business Bureau, but nonetheless holds a BBB rating of A+, suggesting the company is good about responding to consumer complaints (or, at least, complaints made to BBB). Although consumer reviews for the company on BBB’s site are sub-par, it scores better on other sites and receives fewer-than-average consumer complaints, as reported by the National Association of Insurance Commissioner.
- Term Life Insurance
- Whole Life Insurance
- Universal Life Insurance
- Fixed, Immediate, Indexed, and Variable Annuities
Protective Classic Choice Term Life
Available for new insureds from ages 18 through 75, Classic Choice is Protective’s featured term policy. Classic Choice comes with initial terms as short as 10 years and as long as 40 years—though longer terms are only available for relatively young applicants. Most companies won’t issue level term policies with a term over 30 years, so the length available from Protective is noteworthy.
Death benefit amounts available for Protective’s term policies start at $100,000 and go up to as high as $50 million. Like the terms, the maximum coverage amount offered by Protective is higher that what’s available from most other insurers.
Protective doesn’t offer a specific simplified-issue or “no exam life insurance” policy, but, for eligible applicants, the medical exam requirement can frequently be waived—which works out to essentially the same thing.
For new insureds up to age 45, the new insured’s health rating must be at least “standard.” And, up to age 60, applicants with a “preferred” or better rating may be eligible for the exam waiver.
When the exam requirement is waived, available coverage levels are reduced to $1 million (for 18-45) and to $500,000 (for 46-60).
Protective offers a conversion option with its term policies. If exercised, the option allows the policyholder to convert term coverage into a whole life policy.
Protective Life Insurance Income Provider Option
One way that Protective Life stays so affordable is by their income provider option. Most life insurance companies offer a one-time payout of the death benefit. But if your reason for purchasing a life insurance policy is to offer a steady source of income to your family, they don’t need $500,000 all at once.
Under the income provider option, beneficiaries get payments sort of like pay checks. For example, if you have a $300,000 policy, then the payment structure could be paid out as $50,000 for six years rather than a one-time payment of $300,000.
Benefits of the Income Provider Option
If your beneficiary isn’t the most fiscally responsible individual, then you can opt for the income provider option so that you are sure they won’t wind up squandering all the money in one go. This is great if your life insurance beneficiary is:
- A college student
- An addict of any kind (shopping, drugs, alcohol – recovered or current)
- Mentally challenged in any way
- In a relationship with someone you don’t necessarily trust
- Generally not good with money matters
With the income provider option, you can rest assured that they will receive a death benefit payment paid out over a period of years – you will know they are taken care of financially during those payment years.
Many people spend time and money (legal costs) to set up a trust to do this very thing. Instead, just get the income provider option offered by Protective Life!
Whole Life Insurance
Protective’s standard whole life policy is available for new insured’s as old as 85 and in coverage amounts as high as $5 million. Policies offer the benefits ordinarily associated with whole life: level premiums, lifetime guaranteed coverage, cash-value accumulation, and fixed-interest policy growth.
Protective’s Child Life Insurance lets parents / guardians and grandparents obtain low-priced coverage for minor children that can either double as a savings account for the child or lock in lifetime whole life insurance at very low rates.
Final Expense (whole life): Protective is not currently offering a guaranteed-acceptance final expense policy. Standard whole life is available for older applicants who are medically eligible.
Universal Life Insurance
Protective offers a few different options for prospective insureds interested in universal life coverage.
- Protective Universal Life (builds cash value)
- Protective Custom Choice UL (customization options)
- Protective Indexed Choice UL (chance your death benefit amount while you own it)
- Protecting Variable Universal Life (tax-deferred cash value; tax-free death benefit)
- Protective Survivor Universal Life (great for two people)
Variable Universal Life and Indexed Universal Life provide guaranteed lifetime coverage and function like most UL policies. In both cases, premium payments are split between underwriting costs and cash value.
Premium payment amounts are variable, subject to a minimum monthly charge, and accrued cash value can be applied toward premium obligations.
Both the variable and indexed UL policies provide up to $5 million in coverage and are available for new insureds up to age 85. Both policies have substantial growth potential and some risk—depending on investment performance and the amount of premiums paid by the policyholder beyond the monthly minimum. The key difference between the two is how cash-value growth is measured.
Variable policies measure cash value growth according to performance of various investment options made available by Protective and selected by the policyholder.
Indexed policies allow policyholders to split cash value between a fixed account (which grows at a fixed rate) and an indexed account (which grows based on the performance of a specific equity index). Growth rates are capped, so returns may not be quite as high as market returns. But they are also subject to floors, limiting losses in down years.
Custom Choice UL
Protective Life’s other UL option, costs less than most other permanent policies and is not intended for policyholders who want to emphasize cash value growth.
Though Custom Choice is technically a universal life policy, it does not necessarily provide lifetime coverage. Instead, the policyholder selects an initial length from 10 to 30 years (similar to a term policy).
During the initial period, premiums and coverage amounts are locked. After the period ends, premiums remain flat but coverage gradually decreases. Once coverage is reduced to $10,000, the premiums needed to maintain the coverage begin increasing.
During the first 20 years after a policy is issued, the policyholder can elect to convert the policy to another permanent policy, with no further underwriting required.
Protective also has a couple other permanent coverage options that are more specialized for customers in specific situations.
Survivorship policies and Single-Premium Variable policies, for instance, are both useful in estate planning for passing wealth to succeeding generations in a tax-efficient manner.
Terminal Illness Rider: This rider allows acceleration of up to 60% of a policy’s death benefit if the insured is diagnosed with less than 12 months to live.
Children’s Term Rider: Available with most policies, protective’s Children’s Rider provides term coverage up to $20,000 for all of the insured’s dependent children up to 18 years old.
Accidental Death Rider: This rider provides supplemental coverage—up to 100% of the policy’s cash value—if the insured’s death results from a qualifying accident. The supplemental coverage ceases when the insured reaches age 65.
Waiver of Premium for Disability: If the insured becomes disabled for at least six months prior to reaching age 60, the, premium obligations are reduced or waived while the insured remains disabled.
Is West Coast Life Insurance the same as Protective Life?
Protective Life and West Coast Life are the same but different companies. Protective Life owns West Coast Life, but they are two different life insurance companies.
Is Costco Life Insurance the same as Protective Life?
Costco doesn’t underwrite its own policies; instead, Costco has partnered with Protective Life to offer affordable life insurance. Costco Whole Sale via Protective Life does not offer the income provider rider.
Protective Life offers some unique customization options, such as the income provider option and Custom Choice UL.
In addition, Protective Life is often in the top three carriers for the best term life insurance rates available.
One of the few drawbacks to Protective Life is the company may have tighter underwriting criteria for certain health and lifestyle conditions. As a result, they may provide you with a lower quote initially than a competitor, but you will get a lower health ratings, and higher premium, upon approval.
The best option to choose when shopping for life insurance is to get a few different quotes from the top life insurance companies, that way you can see what other options are available.
It may turn out Protective Life is the best choice, but it may also be that another company has more favorable underwriting specific to you and your unique health and lifestyle.
So, what are you waiting for? Give our team a call today and experience the IBUSA difference.