Jessica Fox Last Updated On: August 23, 2023

How to Find Affordable Life Insurance in California

California-living means sunshine, surf, and swell times. And while thinking about life insurance might put a cloud over the good times, it doesn’t have to. This is because affordable life insurance with the coverage you want is ready and waiting for you—and we’re going to show you how to get it.

Keep reading for exactly how to find the life insurance you need in Cali, including a deep dive into costs, policy types, California life insurance laws, and more. `

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Table of Contents

Life Insurance Options in California

The first step is understanding your options for life insurance, because not all life insurance is made equal. This will help you better understand what type of policy you’re looking for.  The main life insurance policy types include:

  • Term Life Insurance: This is life insurance that lasts a set term, anywhere from 5 to 30 years. If you outlive the term, your beneficiaries don’t receive anything. Your premiums stay the same throughout the term and the benefit is fixed.
    • At the end of the term, you often have the option to renew the term or convert the policy to a whole life insurance policy. Find out more here.
    • Term life insurance is one of the more affordable life insurance options, and it’s great for those looking to cover their income while their children are young or for the period they have a mortgage.
  • Whole Life Insurance: This is life insurance that lasts your whole life, meaning that no matter when you pass away, your beneficiaries are guaranteed a payout. These policies also come with a cash value component, so part of your premiums are invested and earn a minimum fixed rate of return. This cash value can be borrowed against during your lifetime for major purchases like a home or college education.
    • Premiums stay level, but are higher than term life insurance given the cash value component and the guaranteed death benefit.
    • Whole life insurance is great for those who want to create a forced savings vehicle for themselves and leave their loved ones a little nest egg.
  • Universal Life Insurance: Universal life insurance is a form of permanent life insurance that lasts your entire life. There are a few variations to universal life insurance, so it can be complex, but it often comes with flexible premiums and death benefits. It also has a cash value component.
    • Your cash value account can grow faster if it’s tied to actual market performance, rather than a fixed rate of return, but you could also lose money this way.
    • These policies are often more affordable than whole life insurance since there are fewer guarantees.
  • Variable Life Insurance: This is another form of permanent life insurance with a cash value component. The difference is, the policyholder has more control over which accounts to invest in and the overall performance of the investments.
    • These policies are best for those who are okay with a little risk and want to take an active role in their investments. 
  • Burial/Funeral Life Insurance: Also known as final expense insurance, these policies are designed to cover your end-of-life expenses, and not much more. They are often more affordable than traditional life insurance policies because of this. Premiums are level and the death benefit is fixed and guaranteed. The payout is often a small amount ($5,000 to $25,000), which can be used to cover a funeral, burial or cremation, or any outstanding medical bills/debt.
    • You don’t need a medical exam to get this policy type, so it’s a good option for those in poor health with no other life insurance options.
    • Funeral/burial insurance is also a great option for those who don’t need full life insurance but don’t want to saddle their loved ones with any final costs.
  • Guaranteed Issue Life Insurance: This is a last resort for life insurance. Guaranteed life insurance is for those who won’t pass a medical exam to qualify for life insurance, or don’t want to take one. You’re guaranteed a life insurance policy, but at a steep price.

There you have it: the main buckets of life insurance policies. You might find other, smaller options like mortgage insurance, which covers just the outstanding value of your mortgage if you pass away, or credit life insurance, which covers a specific debt.

We know that most people would want the best life insurance possible if money was no object. But unfortunately, most of the time it’s the most important factor. So next, we’ll explore the cost of life insurance in the state of California.

The Average Cost of Life Insurance in California

The cost you’ll play will depend on a number of factors, mainly the type of policy you choose. As you know, term life insurance is more affordable than whole life insurance. Burial or funeral insurance can often be lower premiums given the lower payout, but is often pricier for what you’re actually getting. 

That being said, we’ve crunched the numbers to get you an idea on average costs:

  • For $250,000 in coverage, women pay an average of $14.81 per month
  • Men pay an average of $16.86 for the same coverage 

Fun fact: women generally pay less on average because of their longer life expectancy. 

Other factors go into your life insurance quotes, including your age, gender, health, whether or not you smoke, your occupation (police officers and firefighters pay more, for example), your high risk hobbies (like hang gliding or scuba diving), and more. 

If you can keep yourself in good health, ditch the smoking, and maybe take up less risky hobbies, you’ll save yourself a pretty penny in life insurance.

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How to Find Affordable Life Insurance in California

No matter your health status or your job, there are ways to find affordable life insurance.

Here are some of our best tips to save:

  • Shop Around: Every insurance provider calculates quotes differently and weighs each factor differently. By shopping around, you can get quotes from different providers and you’ll be able to pick the most affordable option with the best coverage. 
  • Buy Young: The fact is that your life expectancy is highest when you’re young and healthy, so this is the best time to lock in low rates for the rest of your life or a long term. If you can, make sure to secure health insurance as early as you can. 
  • Opt for a Medical Exam: If you’re healthy, there’s nothing to hide and a medical exam will save you money. If you don’t take one, insurers see you as more of a risk and charge you more in premiums. 
  • Choose the Right Coverage: More coverage is great, but if you’ve figured out that your loved ones would need $250,000 if you passed away unexpectedly, then there’s no point in stretching your finances to get to $500,000 in coverage. You should also consider whether you really need permanent life insurance or if the more affordable term policies suffice. 
  • Ask for Discounts: By paying upfront each year or for switching to paperless billing, you might be able to get a discount. 
  • Improve Your Health: It’s a hard pill to swallow, but poor health is one of the main reasons you’ll pay more in life insurance. By working to get healthier, like eating well, exercising, cutting out tobacco, and sleeping well, you can shave hundreds of dollars per year off your life insurance costs. 

Life insurance isn’t cheap, but the security of having your loved ones taken care of should something happen to you is worth the cost for most people. But everyone deserves that peace of mind, which is why these tips to find affordable life insurance in California can help you save and find the right policy for your budget. 

Go ahead and get access to free quotes here to find affordable life insurance fast.

Which Life Insurance Policy Is Best for You?

Now that you have a better understanding of the life insurance options available to you and the average cost, it’s time to choose a policy. Everyone’s situation is different and their life insurance needs will vary, but here’s some rough guidelines to consider:

  • Term life insurance is great for those who are looking to cover their loved ones during a specific time, such as when their children are youngest or when they are still paying off their mortgage. It’s also great for those who need affordable coverage.
  • Whole life insurance is best for those who want to guarantee that their loved ones will get a little nest egg, no matter when they pass away. It’s also great for people that want a forced savings vehicle through the cash value account.
    • If you’re young and healthy, locking in low rates for a whole life policy isn’t a bad idea.
  • If you’re in poor health and can’t get any other form of life insurance, burial/funeral insurance is an option to ensure your loved ones aren’t stuck with your final expenses. It’s also simply a good option to ensure any loose ends are tied up before you pass.
  • If you’re good with numbers and investments, you might enjoy the flexibility of universal or variable life insurance. Note, you have to be okay with a little risk.
  • Guaranteed issue life insurance is a last resort for those who want life insurance but can’t qualify for it medically. If you have money to burn on these high premiums, you might be better off investing it for your loved ones.

Your life insurance needs will be different from those of your friends, family, and colleagues and that’s okay. Choose the policy that fits with your budget and what your end goal of life insurance is (eg. leave money to your kids or ensure the mortgage is paid off) and you’ll be set.

Keep in mind, life insurance is one part of a well rounded retirement plan. If you’re starting to think about your golden years, grab our free retirement planning handbook to ensure you’re as prepared as you can be.

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Life Insurance Laws in California

Life insurance is important. So important, in fact, that California has a few key laws around it to help protect you. Here are some of the laws you’ll want to be aware of when taking out life insurance in California:
  • Free Look: For up to ten days, you can change your mind on a life insurance policy without paying a penalty. 
  • Grace Period: This gives you 30 days to settle any outstanding payments without having your policy canceled by your provider.
  • Contestability Period: If someone passes away within two years of taking out a life insurance policy, the insurance provider has the right to investigate the claim. If they find any inconsistencies or mistruths in the policy application, they can reduce or deny payout. This is why it’s so important to be truthful on your application.
  • Allowable Timelines to Settle a Claim: If there’s no contestability period, providers are required to settle a claim within 30 days of the submission of the death document.
Knowing your rights as a consumer is important, especially in something as serious as life insurance. Your loved ones deserve to be protected, and you deserve peace of mind.

Is Life Insurance Taxable in California?

Life insurance payouts are not considered taxable income in California, which means your loved ones won’t lose a large chunk of it to the state. However, there are certain situations where federal tax may need to be paid on death benefits. 

One such situation is if the policy was taken out by someone other than the deceased person and the money goes to a beneficiary; the amount over top of the premiums paid may be taxed. 

In general, payouts of lump sums are taxed for the portion that exceeds premiums paid. Payments in installments are taxed only on the interest portion paid out.

Find the Best Life Insurance in California

All that’s left is to find the best policy for you. Remember to shop around and compare quotes to ensure you’re getting the most bang for your buck. It might take a little extra time, but the peace of mind and financial savings are worth it. 

Start by getting access to free quotes here and you’ll be well on your way to the best life insurance policy for you and your loved ones.

We’ve got you covered.

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