Do I Need Life Insurance in California?
To figure out if you need life insurance, ask yourself another set of questions:
- What happens if you die without life insurance?
- What happens to the people you are leaving behind?
- Will they need financial help after you are gone?
- Who is paying to take care of your funeral and final expenses?
- Where will they get the money to pay for it?
- What happens to property and money you leave behind?
- What happens to your debt after you die?
If the death benefit of life insurance is not the sole reason why you are considering buying life insurance, you may need life insurance that offers you convenient living benefits and tax-advantaged retirement savings possibilities.
Why is Life Insurance Important?
Most commonly, you need life insurance in California if:
- You have a significant other and/or children - and you need to make sure that they are financially secure and able to pay the bills if you suddenly die (survivor life insurance),
- You have a financial obligation - and the lender requires life insurance as collateral, to make sure that the loan gets repaid in case of your death (creditor life insurance).
- You have a business with key employees and/or business partners, where the death of an individual can affect the whole group - the death benefit can help the company recover and hire replacements, and/or use it to fund the buyout of the company’s shares from the family of the deceased partner (business life insurance).
Alternatively, you may need life insurance in California if you are interested in:
- Retirement planning: various type of permanent cash value insurance offers cash value accounts which can grow tax-deferred, to be used with further tax advantages during the retirement years
- Leaving a legacy: You can leave money to charities, a person, or a cause.
Speak with a licensed California life insurance agent to learn how to calculate life insurance needs and select which type can solve those needs at the lowest cost.
The need of life insurance in California is described in the following sections:
Should I Get Life Insurance in My 20s?
Young adult life insurance: While you are young, you can get life insurance for the lowest cost. As you age, the price will continue going up by several percent every year. The longer you wait the more you will pay in monthly premiums for the same amount of life insurance coverage:
- If you want life insurance which you can use as a financial tool throughout your life, locking in the lowest rate at a young age is the best way to do it.
- If you want to protect your loved ones in case of your untimely death, buying life insurance young buys you more death benefit for less money.
Discuss the best life insurance for young adults with a licensed CA life insurance agent. The agent can go over your needs and help you pick the best option.
Do I Need Life Insurance or Insurance For Long Term Care?
Long term care life insurance: Life insurance pays out the death benefit to your beneficiaries after you die. The received money is tax-free and the beneficiaries may use it for whatever they see fit. In contrast, Long Term Care (LTC) insurance helps pay for the cost of long term care facilities. The average cost of nursing homes in California is $250 a day, with an average stay of half of the visitors lasting 1-5 years long ($91,250 - $456,250). This was in 2011 dollars, and since then the prices kept going up.
Life insurance in California can help pay for long term care if the policy has an optional Long-Term Care rider added. LTC life insurance rider is one of the optional living benefits of life insurance, which allows the insured to tap into a portion of the death benefit to pay for long term care, if the need arises. While this rider adds to the life insurance policy costs, it is still usually less expensive than buying a stand-alone Long Term Care insurance.
Make sure to purchase long term care life insurance coverage before your turn 65 or you will pay much higher rates. Discuss your long term care insurance options with a state-licensed agent who works with both life and health insurance in California.
