The California lifestyle and cost of living are important factors when considering life insurance. See how much you really need.
The high cost of living in California makes finding affordable life insurance a priority for many residents who are looking for the best way to provide long-term financial security for their loved ones. Fortunately, there are hundreds of companies that are licensed to sell life insurance in California. So, there are a lot of life insurance policies for you to choose from and a lot of competition in the market to ensure that you get the best rate for the best coverage.
Types of life insurance in California
In California, you can pretty much find any type of life insurance policy to satisfy your financial goals. There are over 400 different companies that sell a variety of life insurance policies in California.
Common types of life insurance policies sold in California are:
- Term life insurance
- Annual renewable term
- Level premium term
- Permanent life insurance
- Whole life
- Universal life
- Variable life
- Variable universal
Which policy is best for you and how much you will have to pay for life insurance will depend on many different factors, like how much coverage you want. For more information on the differences between each policy, visit Types of Life Insurance Policies. For help determining how much life insurance coverage you need, visit The Right Amount of Life Insurance Coverage.
Married and in the market for life insurance in California
On average, there are just over 200,000 marriages each year in California. The average age of women for their first marriage is 27, which is the 11th highest age in comparison to other states. The average age of men for their first marriage is 29, which ranks 9th highest in the United States.
California also leads the United States in number of births each year. In 2009, it was reported that over 500,000 babies were born to residents of California. That is a lot of new reasons to purchase or update a life insurance policy.
Most people wait until they are married with children before they start thinking about life insurance. Since people in California tend to get married a bit later in life, they may also delay in getting life insurance. However, this could lead to higher life insurance rates for people in California. In general, the younger you are when you purchase life insurance, the lower the rate you will pay. If you purchase life insurance before you get married, you can always increase your coverage later to provide more financial security for dependents.
The cost of living in California
Living in a state with great weather, easy access to beaches or the mountains, and a variety of jobs comes with a high price tag. Overall, the cost of living in California is the 7th highest in the United States. The cost of living varies from city to city within California. The most expensive areas are San Francisco, Orange County, and San Jose.
The median family income in California is just over $61,000. The census defines a “family” as any individuals in a household over the age of 15 who earn income. There are 14 states with a higher median income, but there are only 6 states that are more expensive to live in. This means that most Californians have less money to spend after paying for required monthly expenses like housing, utilities, and groceries.
The high cost of living in California can certainly make it seem difficult to find money in your budget to pay for things like life insurance. But, the high cost of living actually makes it even more important for California residents to find affordable life insurance. Their loved ones will rely on the proceeds from a life insurance policy to maintain a similar lifestyle and continue living in California.
The cost of dying in California
In the United States, the average funeral costs around $7000. This covers things like embalming, use of a funeral home, the hearse, and the casket. This does not include other things you may want to have at your funeral. Flowers, food, and facility rentals will probably cost more in California than other states. Some funerals in California can cost over $10,000.
If you do not leave behind enough savings to cover your funeral expenses, then California law requires that a spouse or your next of kin pay for your funeral expenses. Life insurance proceeds can be extremely helpful because they are paid immediately and can be used right away to cover your funeral expenses. Then, your family will not have to scramble to find the thousands of dollars necessary to give you a proper funeral.
How life insurance helps California residents with debt
With such a high cost of living, it is probably no surprise that residents of California carry the third highest debt in the United States. The average amount of credit card debt for a resident of California is just over $7,000. Other common types of debt that Californians carry are home mortgages, student loans and car loans.
Carrying a lot of debt is one of the most important reasons to purchase life insurance. Just because you pass away does not mean that your debt will disappear. The proceeds from your life insurance policy can be extremely helpful for the people in your life that will be held responsible for paying off the debts that you leave behind. Residents of California should make sure they at least carry enough life insurance to cover their debts.
Causes of death in California
California is home to over 36 million people. With a large and diverse population, there are a variety of different causes of death that end of the lives of over 200,000 California residents each year.
The most common causes of disease related deaths in California are:
- Heart disease
- Alzheimer’s disease
- Influenza and pneumonia
- Kidney disease
Other common causes of death in California are:
- Accidents (falls, car, etc.)
- Alcohol-induced causes
- Drug-induced causes
California has the highest population of any state in the United States. So, it makes sense that California would have the highest number of deaths in many of the above categories. However, California residents also have a higher life expectancy when compared to other states. And that is good news for you and for your life insurance rate.
Life expectancy in California
How long you are expected to live, or your life expectancy, is a very important factor in determining your life insurance rate. Some things life insurance companies consider when calculating your life expectancy are your health, your career, and your habits.
The state you live in can also impact your life expectancy. In California, the average life expectancy is 80 years old, which is one of the highest life expectancies rates in the United States. According to the Centers for Disease Control and Prevention (CDC), certain things impact why residents from one state may have a higher life expectancy than other states.
Some things found in California that can help increase your life expectancy:
- A safe and healthy living environment
- Positive behaviors in community, like regular exercise, a balanced diet, and not smoking
- Access to quality health care (doctors and hospitals)
- Focus on preventative health care, like vaccines and screenings
It is good news for your life insurance rate that the life expectancy in California is higher than most states. That means California residents may pay slightly less than a similar person from a state with a lower life expectancy. However, there are several other factors a life insurance company may consider when setting your life insurance rate. For more information, visit Steps for Qualifying for Life Insurance.
Smoking in California and how it can affect your life insurance rate
Whether or not you smoke can have a huge impact on how much you have to pay for life insurance. Sometimes, smokers are charged up to four times more for the same amount of life insurance coverage as a similar person that does not smoke.
Fortunately, in California, statistics show that much fewer people smoke in California than other states. According to the CDC, in 2011, 13.7% of Californians smoked, which was the second lowest amount for all 50 states. Only 1.4% used smokeless tobacco, which is the lowest percentage for any state.
If you quit and remain tobacco free for at least one year, you may be able to qualify for a lower rate. The CDC reported that over 60% of adults in California tried to quit in 2011. The more people that quit, the less second hand smoke there will be in California’s air, which could lead to a healthier California, a longer life expectancy, and a lower life insurance rate. For more detailed information on how smoking can impact your life insurance rate, visit Life Insurance for Smokers.
Chronic conditions in California and how they can affect your life insurance rate
If you suffer from a chronic condition, then you may have to pay more for life insurance. California has over 14 million people that are dealing with one or more chronic conditions. Common chronic conditions that affect Californians are hypertension, heart disease, chronic obstructive pulmonary disease (COPD), and diabetes.
Other chronic conditions that may increase your life insurance:
- Sleep apnea
- Kidney disease
- High cholesterol
- Weight problems (being seriously overweight or underweight)
Some chronic conditions can be easily managed with medicine and a healthy lifestyle. Those usually do not increase your life insurance rate. However, more serious conditions that can affect your life expectancy will most likely cause an increase in your life insurance rate. For more information on other conditions that can impact your rate, visit Life Insurance for People with Special Conditions.
Life insurance for senior citizens in California
For a senior citizen, living on a fixed income, it can be challenging to keep up with the high cost of living in California, not to mention find room in the budget for life insurance. But, there are many reasons a senior citizen in California may be looking for life insurance, like supporting the surviving spouse or helping family pay for burial expenses. California wants to ensure its Senior Citizens get the information they need to find the right life insurance policy.
The California Department of Insurance offers the following tips for senior citizens that live in California and are looking for life insurance:
- Never feel pressured to purchase a policy
- Do not sign anything that you do not understand
- Answer the application questions carefully and honestly
- Compare rates from different companies
- Keep a copy of your policy in a safe place
For more detailed information on purchasing life insurance later in life, visit Life Insurance for Seniors Citizens.
California Insurance Code
In California, there are rules and regulations to help protect California residents and the life insurance companies that sell to them. It is called the California Insurance Code. Below are some of the regulations that the California Insurance Code enforces and how they can affect you.
Free look period:
You have a certain time period that you can return your life insurance policy for a full refund of premiums you have paid to date. In California, the free look period begins 10 days after the policy is delivered and ends 30 days after your policy is delivered.
California law mandates that if you miss a premium payment you are given a grace period of 30 days to pay get your account up to date before a life insurance company can cancel your policy.
Convertible group life insurance policy:
A group life insurance policy is one that you get from your employer that usually ends when you leave the job. In California, the law requires that you be given the option to convert your group life insurance policy into a permanent life insurance policy when the group policy ends. Your permanent life insurance policy will be more expensive than your group life insurance policy, but it will probably offer a higher death benefit.
Look back period:
The life insurance company is also protected under the California Insurance Code. The company has two years to review your application and see if there are any false statements. For example, if you provided an incorrect age. If your life insurance company finds out that you submitted false information on your application, they may increase your premium or cancel your policy altogether.
Tips for California residents looking for life insurance
- Verify that the company selling you a life insurance policy is licensed in California.
- Shop around and compare rates from different life insurance companies that sell to residents of California.
- Check out the company’s ratings to make sure you are choosing a financially strong company with a good track record.
- Make the most of the beautiful weather and live a healthy, active lifestyle so you can qualify for the lowest life insurance rate possible.
California life insurance resources
California Department of Insurance:
A government organization that helps make sure both California consumers and the life insurance industry are protected by law.
California Life & Health Insurance Guarantee Association:
An organization in California that provides continuing coverage and protection if your life insurance company is unable to pay the debts it owes and is ordered by the courts to liquidate. The association helps to transition your policy if your current life insurance company is a member and goes out of business
Resources: https://www.census.gov/compendia/statab/2012/tables/12s0132.pdf  http://www.cdc.gov/nchs/data/nvsr/nvsr58/nvsr58_25.htm  http://quickfacts.census.gov/qfd/states/06000.html  http://nfda.org/about-funeral-service-/trends-and-statistics.html#fcosts  http://www.debt.org/faqs/americans-in-debt/consumer-california/  http://www.cdc.gov/nchs/data/nvsr/nvsr61/nvsr61_04.pdf  http://kff.org/other/state-indicator/life-expectancy/  http://www.cdc.gov/tobacco/data_statistics/state_data/state_highlights/2012/pdfs/states/california.pdf  http://www.chcf.org/~/media/MEDIA%20LIBRARY%20Files/PDF/C/PDF%20ChronicDiseaseFactsFigures06.pdf