The Golden State has a complex set of life insurance laws – so you want to make sure your provider has your back.
Life insurance in California is specialized, and can be confusing. But in terms of health and life expectancy, residents have favorable stats on their side. This is what to consider when buying a life insurance policy in California.
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How much does life insurance cost in California?
When it comes to life insurance, one size doesn’t fit all. The rate you’re given reflects your age, gender, health and lifestyle. While we couldn’t find any publicly available information that suggests your state has an impact on your rates, some experts say providers raise their premiums in regions that are prone to natural disasters, such as hurricanes and tornadoes.
California is prone to flooding and earthquakes — so much so, that home insurance companies have to offer earthquake insurance, too. These environmental factors may influence life insurance rates.
What risk factors will life insurance providers consider if I live in California?
Insurers weigh up risks differently. But you can bet that the rate you’re offered will reflect the following risk factors:
- Age. Young, healthy people almost always score cheaper premiums. This bodes well for California. The state has the second highest life expectancy rate, with the average resident living until 78.6.
- Weight. Obese and overweight people are more likely to develop serious health conditions, such as diabetes and heart disease. As a result, insurers charge higher rates. California has the fourth lowest adult obesity rate in the nation at 25.1%.
- Tobacco use. Tobacco use is linked to a host of health issues, including heart disease and stroke. To protect themselves from an early payout, insurers raise the rates. In California, 11% of adults smoke. This is relatively low; nationally, the number is 17.1%.
- Occupation. People who walk into hazardous work environments every day can expect to pay more for life insurance. In California, loggers, pilots, truck drivers and construction workers are deemed to have the most dangerous jobs.
- Gender. Underwriters look at life expectancy to determine rates. On average, women outlive men by five years in the US, so they often pay cheaper premiums.
- Driving record. Insurers favor drivers with records that are free from DUIs and major traffic violations. They assess crash data, too. At 3,602, California had the second highest number of crash-related deaths in 2017, according to the National Highway Traffic Safety Administration (NHTSA).
- Lifestyle and hobbies. Depending on the provider, your hobbies may be classified as dangerous. Think scuba diving, skydiving, mountain climbing, dirt bike riding, bungee jumping and hunting.
What are California’s leading causes of death?
These are the leading causes of death in California, according to the Centers for Disease Prevention and Control (CDC):
- Heart disease — including coronary artery disease (CAD)
- Alzheimer’s Disease
- Chronic lower respiratory diseases — including emphysema, asthma and chronic bronchitis
- Accidents — including unintentional falls, motor vehicle accidents, and accidental poisoning or exposure to fire and smoke
- Flu and pneumonia
- Hypertension (high blood pressure)
- Chronic liver disease and cirrhosis
Does California have any life insurance laws I need to be aware of before applying?
Yes. The state has life insurance laws set by the California Insurance Code, and additional mandates from The California Department of Insurance.
These laws are targeted towards policyholders:
- The free look period.
When you purchase a life insurance policy, by law, you have at least 10 days to change your mind. If you decide to cancel the policy, you’ll receive a full refund of any premiums paid. Some insurers may extend the free look period to 30 days.
- Quick recognition and payment of claims.
In California, insurers are required to acknowledge all claims within 15 days, and pay out beneficiaries within 30 days of receiving a certified copy of the death certificate. If the provider takes more than 30 days to process the claim, they need to pay accrued interest on the payout. They may also be slapped with other fees and penalties.
- Life insurance policies are guaranteed.
All current life insurance policies are backed by the California Life and Health Insurance Guaranty Association. If your life insurance company goes under, the association will cover your policy up to $100,000 in lost cash value and $250,000 in death benefits.
- Policies are community property.
This applies to divorces. California is a community property state, which means that both parties have equal claim to all property acquired during a marriage. Although, term life policies are temporary, and typically remain with the policyholder. Permanent policies, however, accrue cash value and are usually divided equally between the spouses. There are some exceptions, and the judge makes a call based on the facts of the case.
With thousands of pages’ worth of laws, life insurance can be complex in California. Before signing off on a policy, compare providers, rates, riders and policy features to make sure you’re getting the most value from your coverage.