How to Find Affordable Life Insurance 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.