It is very important that you know how to buy an appropriate life insurance policy. Before obtaining life insurance you should compare companies, prices, and policy types, as well as analyze the duration and amount of coverage.
In 80% of cases, life insurance expires before Californians can claim it, and 57% of people stop paying on their policy after 10 years, losing their retirement savings.
At InsuranceHubPortal we want to help you understand how life insurance in CA works, what you need to take out a policy, and how to buy cheap life insurance. Read on for recommendations from insurance experts.
Recommendations for purchasing a life insurance policy
Compare different life insurance companies
When comparing rates, select the same type of policy, the same amount of coverage or duration, and the same personal information to compare prices vs. benefits. Remember that each insurer has its own policies and rates, so compare at least three different companies, and don’t rush to make a decision based only on the agent’s perspective.
An interesting fact is that investment life insurance and annuities are too complex for consumers to make wise decisions for themselves. If you are interested in purchasing this type of policy, seek advice from a trusted accountant or financial agent.
Analyze the type of life insurance policy and its expiration
Before buying from an agent, ask how many years your life insurance policy will expire and calculate if you will be able to pay the monthly payments until that date. Examine whether a permanent life insurance policy that generates savings for future loans and does not expire is best for you, or a temporary one in case you suffer from an illness or are elderly.
Choose a life policy that covers all your expenses
Add up your current debts and those you could incur in the future, such as the purchase of a house. Then multiply your annual income by the number of years you want to cover your beneficiaries. Finally, subtract the savings and assets you have to cover those expenses and the resulting balance will be the value you need to hire.
You can use an online calculator to calculate how much coverage you need.
Think about the future
If you want to invest and take out term life insurance, you will not be able to make loans in the future or save for your retirement. Therefore, you will have to look for other alternatives, such as depositing the money in a retirement plan sponsored by your company or in a brokerage account.
Requirements for life insurance
To take out life insurance in California, most insurers will require:
- Medical history
- Driving history
- Medical exams (some companies do not require it)
- Age
- Policy type
- Coverage amount
- Payment on a monthly or annual basis
- Social security number or ITIN (depending on the insurer)
California’s existence life insurance coverage rules
The California Department of Insurance regulates coverage organizations inside the state. These are the rules according to the California Insurance Code for changing policies:
- Agents must provide you with the original or a copy of all printed materials and cannot make inaccurate comparisons.
- If you are 65+ or older, retailers can’t suggest that you buy a needless alternative policy.
- Insurers must provide you with a buyer’s guide to accepting payment of your rate.
- Individual life insurance coverage rules should have a cancellation length of among 10 and 30 days.
- In California, the law states that 80% of the policy is guaranteed; however, this may vary as there is a maximum limit on the amount that can be provided. (If your insurance company becomes insolvent, you can turn to the California Life & Health Insurance Guarantee Association.)
How much is life insurance coverage worth?
Life insurance in the United States can cost an average of $26 per month according to Quotacy. This is taking as a reference someone who is 40 years old and buys a 20-year term life policy with coverage of $500,000, which is the usually best-selling life insurance policy.
In California, people spend approximately $1,084 annually on their life insurance according to data from S&P Global Market Intelligence and Claritas. However, you should know that the exact price of your policy may vary depending on the insurer, the type of life insurance you choose, and the additional clauses.
Keep in mind, that a $10,000 rider for a child can cost you between $50 and $75 according to Quotacy.
Term life insurance policy price by age
| Age | Average annual rate of women | The average annual rate of women |
| 30 | $223 | $188 |
| 40 | $334 | $283 |
| 50 | $821 | $644 |
| 60 | $2,361 | $1,660 |
| 70 | $9,297 | $8,204 |
*These annual life insurance rates are based on a $500,000 term life insurance policy with a 20-year term for a preferred client.
Permanent life insurance policy price by age
| Age | Average annual rate for men | The average annual rate for men |
| 30 | $4,652 | $4,015 |
| 40 | $7,028 | $5,937 |
| 50 | $11,163 | $9,443 |
| 60 | $19,150 | $15,943 |
| 70 | $33,325 | $28,093 |
*These annual life insurance rates are based on a $500,000 policy for super-preferred applicants.
How to get cheap life insurance in California?
To obtain a cheap life insurance policy, the recommendation is to purchase your coverage when you are young and healthy; since insurers base their rates on life expectancy. But this is not a complete guarantee of paying for a cheap policy, since it also depends on the type of policy and amount of coverage you choose.
One of the best options to buy cheap life insurance is to opt for companies that offer competitive prices. Do your research and choose from some of the companies with the cheapest rates. Some of them are Guardian Life or State Farm.
These are our recommendations for buying a cheap life insurance policy:
Choose term life insurance
This type of policy is usually cheaper than permanent life insurance because the prices are not intended to accumulate cash value. And although this insurance costs less than permanent life insurance, if you are 40 years old it may not be the best option.
Reduces death compensation
You can reduce the death expense coverage amount of your universal life insurance to pay less. This applies if you have savings to cover these expenses in the future.
Look for discounts
Insurers often offer a small discount if you pay in full upfront or bundle multiple policies.
Waiver of additional clauses
Although these policies offer you more protection, they may not be worth the investment unless you really need it.
Factors that life insurance companies evaluate
Insurers calculate your prices based on the type of risk you represent. They usually classify you as a customer using terms such as super preferred, preferred, and standard, with super preferred being the healthiest category.
These are some of the factors that influence the price of your life insurance:
Age
Young people pay less for life insurance, since as they age, it is more likely that the insurer will have to pay for the policy. So as you get older, your rates will increase more.
Sex
Women tend to pay less than men because they have a longer life expectancy (80 years for women and 74 years for men, according to data from the Centers for Disease Control and Prevention).
Have the habit of smoking
Life insurance is more expensive for people who smoke, since they are at greater risk of developing respiratory diseases, among other dysfunctions.
Health status and background
Your family history, current height, and weight are very important when life insurance companies set your rates. In addition, any pre-existing illness you have such as hypertension or obesity will make your rates more expensive.
Your lifestyle and driving history
Finally, your driving history and what you do can also influence the price. Committing serious crimes such as driving under the influence of alcohol can cause you to be considered a high-risk person. Likewise, if you have a dangerous job like being a pilot, your costs will be more expensive.
