During the past 50 years, the aim to reduce the eddy current losses in magnetic cores to a minimum led to the formulation of new materials starting from electrically insulated iron powders, today called Soft Magnetic Composites (SMC). Nowadays, this promising branch of materials is still held back by the mandatory tradeoff between energetic, electrical, magnetic, and mechanical performances. In most cases, the research activity focuses on the deposition of an insulating/binding layer, being one of the critical points in optimizing the final composite. This insulation usually is achieved by either inorganic or organic layer constituents. The main difference is the temperature limit since most inorganic materials typically withstand higher treatment temperatures. As a result, the literature shows many materials and process approaches, each one designed to meet a specific application. The present work summarizes the recent advances in state of the art, analyzing the relationship among material compositions and magnetic and mechanical properties. Each coating shows its own processing sets, which vary from simple mechanical mixing to advanced chemical methods to metallurgical treatments. From state of the art, Aluminum coatings are characterized by higher current losses and low mechanical properties. In contrast, higher mechanical properties are obtained by adopting Silicon coatings. The phosphates coatings show the best-balanced overall properties. Each coating type was thoroughly investigated and then compared with the literature background highlighting. The present paper thus represents a critical overview of the topic that could serve as a starting point for the design and development of new and high-performing coating solutions for SMCs. However, global research activity continuously refines the recipes, introducing new layer materials. The following steps and advances will determine whetherthese materials breakthrough in the market.