California Life Insurance
If you live in California, life insurance is something that you need to consider carefully before you buy. Most people in CA don’t have enough life insurance, so if you want to protect your family and your assets, you need to have this valuable protection in place. No matter where you live in California, you should consider whether you have adequate life insurance in place. If not, now is the time to arrange for additional coverage.
California Life Insurance: Why Buy Coverage?
Here are some reasons why you should consider buying a CA life insurance policy:
- To pay for funeral, burial, or cremation expenses.
- To replace a wage earner’s income for a number of years.
- To pay for care formerly provided by a stay at home parent.
- To pay off an existing mortgage or other debts.
- To cover the cost of estate taxes and other expenses involved with settling your estate
California Life Insurance: Types of Coverage Available
California residents can choose between two different types of life insurance: Term Insurance and Cash-Value Insurance.
Term Insurance provides coverage for a set time. They do pay benefits if you die during the term you choose when you buy the policy, but this type of insurance doesn’t accumulate any cash value.
In a situation where you are working with a limited budget and you only want to arrange for coverage for a limited time, then term insurance may be the right choice for you. Keep in mind that as you get older, the cost of buying term insurance will increase. If you are interested in buying this type of coverage, you are better off making the decision when you are younger.
Cash -Value Insurance is a more expensive option than term life insurance. Along with providing life insurance coverage, it also accumulates a cash value over time. The cash value portion of the policy can be used as collateral to take out a loan from the insurance company. (The interest rate you will be charged will be set by your insurer.) If you die before the loan is repaid, the amount you borrowed will be deducted from the death benefit the insurance company will pay out.
California Life Insurance: Types Of Cash-Value Coverage Available
If you are interested in cash-value life insurance, you have a number of coverage options, including:
- Whole Life Insurance
- Universal Life Insurance
- Variable Life Insurance/Variable Universal Life Insurance
Whole Life Insurance is also referred to as ordinary life, straight life, or traditional permanent insurance. When you choose this type of coverage, you benefit from level premiums and death benefits. Your premiums will grow at a minimum rate of interest set by the insurance company.
Universal Life Insurance gives the purchaser a lot of flexibility. It can be structured in a similar way to term insurance, if desired. When you make your premium payments, they are placed into a fund. The company’s expenses and your actual cost of insurance are deducted from the premium payments, and the balance is allowed to grow at a rate of interest set by the insurance company.
Variable Life Insurance is a bit different from whole life insurance and universal life insurance. Policyholders can choose to invest their premiums in one or several types of investment accounts, including:
- Money-Market Accounts
- Stocks
- Bonds
- Mortgage Funds
The amount of money the policy will pay out if you die will vary, depending on how well your investment choices perform. The company will pay out a minimum amount; check the policy to find out how much it will be for the coverage you are interested in. Variable life insurance is a riskier way to go, but it also offers the potential of higher returns.
When you are looking for the flexibility that universal life insurance provides along with the same investment account features of variable life insurance, then you should ask your insurance company or your agent about Variable Universal Life Insurance.
No matter what type of policy you are considering, do take the time to educate yourself about how the different policies work and what types of benefits they will pay out when you die. That way, you will find the right type of coverage for your needs, at a price you can afford.
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