California Individual Disability Insurance

Buying Life Insurance can help reduce the financial burden on your loved ones in the event of your death. Planning for life’s uncertainties is crucial and by having a Life Insurance Policy, you give your family the chance to restore lost income, pay off your current debts, cover burial expenses, pay off your mortgage, protect your business, and maintain a comfortable standard of living.

Life Insurance Policies are very unique and specific to your needs, so it is important to understand the differences between each:

What is Term Life Insurance?

A Term Life Insurance Policy is a low-cost option for providing maximum coverage for a specific period of time such as 10, 20, or 30 years. Other policy life periods are also available.

Term Life Insurance is generally more affordable and the premiums (payments) will not increase during the policy period (term). At the end of the term period, the insurance coverage terminates.

What is Whole Life Insurance?

Whole Life Insurance provides permanent protection from the date of the policy issue to the date of the insured’s death or maturity at age 100. The policy remains active as long as the premiums are paid. Also, premiums are set on the date of policy issue and stays the same for the life of the policy.

Unlike Term Insurance, Whole Life Insurance combines insurance protection with an accumulated cash value savings account which builds up over time. This cash value account is beneficial for many reasons such as helping you pay for your child’s education, paying off your mortgage, or even surrendering the cash value amount if you ever decide to cancel your policy.

What is Universal Life Insurance?

Universal Life Insurance, also known as Adjustable Life Insurance, is a permanent policy which offers great flexibility. Policy-Holders can increase or reduce their death benefits while also being able to determine the frequency of premium payments (paying your premiums in any amount at any time).

Why do I need Life Insurance?

Contrary to what many people may think, owning a Life Insurance policy can bring many benefits to you and your loved ones. Listed below are reasons to consider purchasing a policy:

  • To replace income when you pass away and to make sure that your dependents are provided for, especially if you are the primary income producer.
  • To allow your family to pay off any outstanding debts or expenses such as a mortgage, credit cards, and car loans, etc.
  • To pay for funeral expenses.

  • If you have a high-risk occupation, owning a policy will give you a peace of mind.
  • If you are self-employed.

What is the difference between Term and Permanent Insurance?

The easiest way to think of Term Insurance is as a lease and Permanent Insurance as a purchase. When buying Term Insurance you are buying yourself a fixed period of time to be insured with a beginning and an end. When buying Permanent Insurance such as Whole Life of Universal Life you are purchasing it for life at a fixed price.

What is the average cost of Life Insurance in California?

There are many factors that go into determining the cost of a Life Insurance Policy. Some of these factors include but are not limited to age, gender, health, and whether you are a nicotine/marijuana user. Another factor that needs consideration is what type of policy you choose. Picking between Term and Permanent Insurance will give you a wide array of price ranges. Purchasing a policy when you are younger is recommended because the risk of health related issues grows as you age which will also increase the premium you should expect to pay each month. To give you an idea of how much a Life Insurance Policy would cost for you, we have provided a Life Insurance calculator below. This calculator provides prices given by multiple companies that range depending on the factors we listed above.

What should I look for when buying a Life Insurance Policy?

When looking into buying Life Insurance, there are a couple of components to consider which are listed below:

  • When buying Life Insurance, it is important to compare companies and rates. Depending on your individual situation, certain providers may give better options and provide terms that are meaningful to you.
  • Ask about Life Insurance Riders. A rider is an add-on that you could attach to a policy which provides additional coverage.
    Ex: An accelerated death benefit rider may be added to a policy which would allow the policyholder to receive a portion of the death benefit if he/she becomes terminally ill.

  • Speak to a trusted agent that can guide you along the process of buying a policy because many times it can feel overwhelming. An agent who has your best interests in mind can help you and leave you happy with your decision.

How does purchasing a Life Insurance Policy work?

The way that Life Insurance works can be explained in a few simple steps.
When purchasing a policy, you need to keep in mind who you would like to name as your beneficiary. Once again, a beneficiary is a person/s or entity that you put down in a policy to receive your death benefit once you pass away. When you purchase a policy from an Insurance company, there will be a set premium that you will need to pay either annually, semi-annually, or monthly. It is important to understand that even if one payment is missed, your policy may be cancelled. If you pass away, your beneficiary will receive the death benefit. If you have multiple beneficiaries, the sum will be split among them.

Will it be expensive to renew a term insurance policy?

When your Term-Insurance Policy expires, there are a couple of things that could happen. The way that Term Insurance is designed, it is meant to be purchased at fixed periods which range from 10-30 years. When this policy expires and you are 20-30 years older, there is a larger change that you may have a preexisting condition. If this occurs, premiums will become higher and there is a chance you may not be approved for this specific plan. In this case, it is important to consider purchasing a Permanent Policy.

How much life coverage do I really need?

When purchasing a Life Insurance Policy, it is important to consider a policy that is at least 5-10 times greater than your current income. In the case that you pass away, purchasing a policy with this formula will allow your family to have a greater period of time to get back up on their feet.

What does cash-value mean?

Cash Value Life Insurance relates to any Permanent policy that not only has a death benefit but also has a Cash Value which is a combination of interest rate guarantees plus dividends. A cash value is an account which acts like an investment in which your money grows with interest. This account can essentially be used if you decide to borrow money or “give up” the policy, in which the cash-value account will be yours to keep.

Should I get a Whole-Life Insurance Policy for my child?

Listed below are a few reasons you might consider in purchasing a Whole-Life Insurance Policy for your child:

  • As you get older, the price you pay for a Whole-Life Policy increases drastically. Buying this plan when your child is young will help keep their premium the same throughout their whole life.
  • If your child has a health concern, there is a chance that they will be denied if they decide to purchase a policy later in their lifetime. Buying a policy for your child when they are young will ensure financial certainty in-case they develop a condition later on in their lifetime.
  • You can help your child create a sort of “savings” for their future through the cash-value accumulation account. Every month when making a payment, money is set aside into this account which can be used later in life if you need to borrow against the account.

Will my benefits be taxable?

The benefits your beneficiary will receive will not be taxable.

What is a beneficiary?

A beneficiary is a person or entity that you put down in a Life Insurance policy to receive your death benefit.

California Individual Life Insurance 101

What is Term Life Insurance?
What is Whole Life Insurance?
What is Universal Life Insurance?