California Term Life Insurance
Death is a subject that many people tend to avoid, but to be blunt, it is inevitable. No one wants to have to worry about financial burdens on top of the stress and grief of losing a loved one. This is why life insurance is so important. There are several different types of life insurance available in California that an individual can purchase, but the most cost efficient and convenient is California term life insurance.
Term life insurance in California is basically a life insurance product that is valid for a specific amount of time. If the insured dies during this time, then the beneficiary will receive the death benefit tax free.
The amount of insurance required is different for each individual, as everyone has different needs and priorities. It can be used to pay final funeral expenses, pay off a mortgage, post-secondary schooling expenses, as well as ongoing dependant needs.
Term life insurance is beneficial as monthly premiums are a fixed amount and are lower than premiums for permanent insurance. Policy holders can also renew the policy at the end of the term or convert it to a permanent insurance product. Policy holders can choose from a regular term insurance or purchase a joint policy. The difference is, a joint policy will cover two people. In a joint-first-to-die policy, if one person dies, the remaining insured will receive the death benefit. In a joint-last-to-die policy, after both insured people die, the beneficiary will receive the death benefit.
Individuals can choose from two different term insurance policies.
Annual Term – This policy is in effect for only one year. If the insured dies during that year, the beneficiary collects the death benefit. This policy must be renewed every year, which can pose a problem, as they must offer proof of insurability each time they renew. Proof of insurability is proven by having a medical examination done to see if the insured has a medical condition that may affect their coverage. If the insured develops a medical condition during this time, they may have to pay a higher premium or may not be permitted to renew. This obstacle can be overcome by adding on a rider called guaranteed insurability. This permits the insured person to renew their policy without having to provide proof of insurability.
Level Term – This policy is typically valid for a longer period of time, which may be 10, 15, 20, or 30 years. The premium is usually higher the longer the term is valid for. This is because as we age, there is a higher risk of illness and death.
Term insurance is beneficial for those on a budget who want to have life insurance coverage at a lower premium. Small business owners will prefer this product as they often face debts and high start up costs. People who have a mortgage or other large, but temporary debts will opt for term life insurance as well.
There are several different riders that an individual can add on to their term insurance policy. Some of the most popular riders include:
Child Term Rider – This allows you to insure your child(ren) from an early age. The benefit to this, is that once they reach adulthood, you are guaranteeing their insurability. If y our child was to develop a chronic medical condition, such as diabetes or hearth problems, and they do not have insurance, they may be denies once they grow older. But, if they already have insurance before they develop this condition, they will be covered.
Disability Waiver – If you are completely disabled during the term of your insurance policy, this rider will waive your premiums. You will still have life insurance, but you will not have to pay the monthly amounts.
Many people don’t realize the full benefits of having a term life insurance policy. It isn’t as cut and dried as paying a lump sum upon the event of death. There are many more advantages that we don’ even think of. Purchasing a term life insurance policy will provide surviving family members and dependants with an easier transition and future.
