See the special factors you should weigh when considering a life insurance plan in Texas.
Looking for life insurance in Texas? You aren’t alone. Texas has the second highest population in the country, and many of its 26 million residents are ready to purchase a new life insurance policy or update the one they have[i].
There are plenty of companies that sell a variety of life insurance policies in Texas. Finding the right one for you can take a little bit of work. But understanding life insurance in Texas will get you one Texas-sized step closer to securing your loved one’s financial future after your death.
Types of life insurance in Texas
Whether you’re looking for a long-term policy with a large death benefit or a short-term policy with just enough coverage to pay for your funeral, chances are you can find a life insurance policy in Texas that suits your needs.
The main types of life insurance policies offered in Texas are:
- Term life insurance
- Annual renewable term
- Level premium term
- Permanent life insurance
- Whole life
- Universal life
- Variable life
- Variable universal
You can learn more about the different types of life insurance policies in Texas to see which type of policy will best support your financial goals.
Bride, groom, or baby? All reasons to get life insurance in Texas
One of the most common reasons to start looking for a life insurance policy is because you recently got married or had a baby. Life insurance is a great way to protect the people in your life who depend on your income, like a spouse or child.
Every year in Texas, about 200,000 marriages occur in Texas and over 400,000 babies are born[ii]. That means every year, there are over half a million new reasons for residents to purchase life insurance in Texas or update their current policy.
Most Texas brides get married for the first time around 25 years old. For Texas grooms, the average age for a first marriage is 27, which is relatively young in comparison to other states. Since many people start thinking about life insurance after they get married, then people in Texas may get life insurance at a slightly lower age then the rest of the country. That is good news because it means you would qualify for a lower life insurance rate than similar people who wait until they are older to get married and apply for life insurance.
The cost of living and life insurance in Texas
Texas is the 10th least expensive state to live in. The average household income for a family in Texas is around $51,000, which is close to the national average[iii]. The census defines a “family” as any individuals in a household over the age of 15 who earn income. If there are people in your life that depend on your income, then you will probably want to carry enough life insurance to cover their expenses until your loved ones have enough time to find a way to support themselves without your income.
Examples of regular expenses that help determine the cost of living in Texas are:
- Health care
- Housing (rent or mortgage)
Since Texas has a lower cost of living than other states, you may need less life insurance coverage than someone who lives in a more expensive state. You should consider how much money your dependents will need to maintain the same lifestyle when determining how much life insurance coverage to get.
The cost of living in Texas is just one of the many things you should consider when trying to figure out the right amount of life insurance coverage. Usually, how much you pay for life insurance in Texas will depend on how much you want your death benefit to be and how long you want your policy to last.
Using life insurance in Texas to help pay for your funeral
The National Funeral Directors Association (NFDA) says that the average funeral in the United States costs around $7,000. A funeral in Texas could cost even more if you want to have flowers or a reception with food and drinks.
Below is a breakdown of basic funeral expenses[iv]:
- Service car for transportation $130
- Printed materials for memorial $150
- Any other preparation of body $225
- Transferring remains to funeral home $285
- Hearse $295
- Facilities and staff for viewing $400
- Facilities and staff for ceremony $495
- Embalming $695
- Service fee $1,975
- Casket $2,395
You may worry about how your loved ones will pay for all these expenses after your death. Life insurance policies are a great way to ease those concerns because your family and friends can use the death benefit from your life insurance policy to cover your funeral costs.
Got debt? Get life insurance in Texas
The average credit card debt for Americans is almost $7,000 but for Texas residents it is just under $6,000[v]. Other common types of debt are home mortgages, student loans, and car loans. And Texans carry less of those types of debts too. That could be because the cost of living in Texas is cheaper than most other states, which means more cash to pay for living expenses.
Remember, when you die your debt doesn’t just disappear. The proceeds from your life insurance policy can be used to pay off the debts you leave behind. You should consider carrying enough life insurance to pay off all forms of debt, including credit card, student loan, or car loan. Some life insurance plans even offer enough coverage to pay off your home mortgage.
Causes of death, average life expectancy, and life insurance in Texas
On average, over 150,000 people die in Texas each year. The top three causes of death in Texas are heart disease, cancer, and accidents, which can all cause sudden, unexpected death. Life insurance policies can offer you some peace of mind in knowing that if something unexpected should happen to you, your family would be taken care of financially.
Other common causes of death in Texas are:
- Cerebrovascular Diseases
- Chronic Lower Respiratory Diseases
- Alzheimer’s Disease
- Nephritis, Nephrotic Syndrome, Nephrosis
- Influenza and Pneumonia
The average life expectancy for people living in Texas is 78.5, which is the ranks right in the middle, 28th, when compared to other states[vi]. The Centers for Disease Control and Prevention (CDC) says that certain things impact why residents from one state may have a higher life expectancy than other states.
Some things in Texas that can help increase your life expectancy:
- Healthy and safe living environment
- Community focus on regular exercise, a balanced diet, and not smoking
- Quality doctors and hospitals
- Preventative health care, like vaccines and screenings
Life insurance companies consider all sorts of things when setting your life insurance rate, including factors like the average life expectancy and common causes of death in your state. You can learn about the steps for qualifying for life insurance to be prepared when it comes time to apply for life insurance in Texas.
How smoking can influence what you pay for life insurance in Texas
In Texas, 20% of adults smoke cigarettes and almost 4% of adults use smokeless tobacco. Both these numbers are higher than the national average. Fifty percent of those adults made an attempt to quit smoking, which is below the national average.
So, more people are smoking in Texas and less people are quitting, which can cause tobacco related health issues for people in Texas and also lead to higher rates for smokers who purchase life insurance in Texas. If you smoke, you should learn more about why life insurance for smokers is more expensive, no matter where you live, and how to get the best rate possible for smokers.
Chronic conditions that impact your life insurance in Texas
Since chronic conditions like heart disease and cancer are also among the leading causes of death in Texas[vii], life insurance companies may charge more if you suffer from certain chronic conditions. They are taking on a greater risk to insure you if you have a serious chronic disease.
Some of the most common chronic diseases in Texas are:
- Heart disease
Some chronic conditions, like arthritis and asthma, can be easily managed with medicine and a healthy lifestyle. Those probably won’t increase your life insurance rate very much. But if you have a more serious chronic disease that negatively impacts your health and your life expectancy, then you will probably have to pay more for life insurance. Today, there are some companies that specialize in selling life insurance for people with special conditions,like a chronic disease, and offer affordable rates for levels of coverage that will give your family financial relief after your death.
Life insurance in Texas for senior citizens
Not everyone who is purchasing life insurance in Texas is 30-something with a baby on the way. People all over the country, including Texas, are living longer and finding new reasons to purchase life insurance policies later in life.
The number of adults over the age of 65 is on the rise in Texas. From 2000-2010, Texas saw a 28.3% increase among seniors who were aged 85 or older. In fact, seniors account for about 10% of the states total population.
Some Texans may consider purchasing life insurance for senior citizens to replace a policy that expired or to supplement their current policy. Whatever the reason, there are plenty of affordable policies to chose from that can help senior citizens make the most of their golden years while still supporting their long-term financial goals.
Your rights when you purchase life insurance in Texas
When you purchase life insurance in Texas, the law provides certain protections to make sure the life insurance company offers a fair policy and fulfills its promises to you and your beneficiary. There are also certain laws that protect the life insurance companies from someone committing fraud and lying on a life insurance application. Below is a brief description of some important regulations that impact life insurance in Texas.
Prompt payment of death benefit
A Texas life insurance company must pay the death benefit within two months of receiving proof of your death and verifying the beneficiary for your policy. The life insurance company also has to pay interest on the death benefit from the day they receive the proof of death to the day they accept the claim and offer to pay the death benefit.
Grace period for premium payments
A grace period is a certain period of time you can go without paying your premium but still keeping your life insurance policy. Most life insurance policies in Texas have a 31-day grace period after your premium’s due date. Usually, if you die during your grace period, your beneficiary would still receive the death benefit, minus the premium payment you missed.
If you want to reinstate a lapsed policy, which means a policy that was cancelled because you missed too many premium payments, a Texas life insurance company may make you pay the premiums you missed with interest. You also may have to answer some health questions or take another medical exam before your policy is reinstated. You probably have a limit, around five-years, after which your policy cannot be reinstated and you would have to apply for a new policy.
You have the right for a free-look period, usually 10 to 20 days, when you can cancel your policy and get a full refund of the premiums you have paid. This will give you some extra time to carefully review your policy to make sure it works for you and fits into your long-term financial goals.
Two years to contest a life insurance policy
Your life insurance company can review your policy during the first two years and contest your claim if they prove you provided false information on your application. For example, if you put down the wrong age or didn’t include information about a previous health condition, the life insurance company can refuse to pay the death benefit in the first two years. That means your beneficiary would only receive back any premiums you paid on the policy, not the full amount of your policy’s death benefit. After your policy has been in effect for two years, the life insurance company can’t contest the claim, unless you stop paying your premiums.
Tips for purchasing life insurance in Texas
- Verify the company is licensed to sell life insurance in Texas.
- Review quotes from more than one life insurance company so you get the best rate for the best policy.
- Research the company that is selling you life insurance to ensure the company is financially stable and has a good track record for paying claims.
- Periodically review your life insurance policy to make sure it provides the right amount of coverage.
Life Insurance Resources for Texas Residents
Texas Department of Insurance:
This government organization helps to create and maintain laws that protect Texas residents who purchase life insurance as well as the life insurance companies that sell to them.
The Texas Life and Health Insurance Guaranty Association:
This group was created in 1973 to protect Texas residents who purchased life insurance policies from a company that the court has ordered to liquidate. Life insurance companies in Texas can join this association to protection its policyholders in case the company goes bankrupt. The association will help its member’s policyholders by paying claims and possibly help with transitioning your policy to another life insurance company.
Resources:[i] http://quickfacts.census.gov/qfd/states/48000.html [ii] https://www.census.gov/compendia/statab/2012/tables/12s0132.pdf [iii] http://quickfacts.census.gov/qfd/states/48000.html [iv] http://nfda.org/about-funeral-service-/trends-and-statistics.html#fcosts [v] http://www.debt.org/faqs/americans-in-debt/consumer-texas [vi] http://kff.org/other/state-indicator/life-expectancy [vii] http://www.longlivetexans.com/index.php/more-info/texas-chronic-disease-programs