What protections does California write into a life insurance policy?
Three that matter, and each one is printed in the policy or required by the Insurance Code. Every individual life policy delivered in California must state on its cover how long you have to return it for cancellation, and that period cannot be shorter than ten days. If the policy is issued to someone 60 or older, the period cannot be shorter than thirty. And an individual life policy becomes incontestable once it has been in force for two years during the insured's lifetime, apart from unpaid premiums.
The senior free look is the one worth knowing about, because it is three times the ordinary minimum and almost nobody mentions it. If a policy or annuity is delivered to a Californian aged 60 or older, the notice on the front of the policy has to give at least thirty days to send it back, and the law has required that of every such policy delivered in this state since July 2004. The two year incontestability clause cuts the other way and is worth understanding honestly: for two years an insurer can still contest a claim over something answered wrong on the application, which is exactly why the application is worth taking slowly with someone sitting next to you. After two years, that door closes.
How Much Life Insurance Do You Need?Who looks out for you in California once the policy is in your hands?
The California Department of Insurance, which licenses every agent and company doing business here, publishes a public lookup so you can check a licence before you buy, and takes complaints about agents and insurers alike. California also puts a duty on the agent rather than on you: anyone who intends to meet a person aged 65 or older at home to discuss life insurance or an annuity has to deliver a written notice first.
That in home notice rule is unusually specific, and it is a good test of whether the person in front of you knows the rules of their own trade. The notice has to arrive no less than 24 hours and no more than 14 days before the first meeting in the senior's home. It has to be a stand alone document with nothing attached, printed in 16 point bold type, and it carries the agent's full name exactly as it appears on the California licence, the licence number, and the mailing address. If an agent proposes to come to your parents' living room tomorrow with no such notice, that tells you something before any product is discussed. Before you buy from anyone, including us, put the licence number through the Department's lookup. Ours are published on our company facts page precisely so you can.
Term vs Whole Life InsuranceTerm or permanent coverage for a California household?
For most working households, term insurance sized to the mortgage and to the years the children depend on the income is the right first purchase, and in California the mortgage is usually the largest of those numbers by a wide margin. Permanent coverage is for the need that does not end, final expenses and something certain to leave behind. The useful question is not which product is better but which job you are buying, because a household can need both at different sizes.
Think in jobs rather than products. Term does a job with an end date, the twenty or thirty years when a mortgage and children lean on one or two incomes, and a policy you own yourself rather than one tied to an employer survives a change of job. Permanent does a job with no end date. What California adds to that calculation is cost of housing: when the mortgage is the dominant debt, the term amount and the term length are usually set by the loan rather than by a rule of thumb, and a thirty year term on a thirty year mortgage is a defensible starting point. We will show you both side by side, with real numbers from several companies, and if the answer is a plain term policy and nothing else, that is what we will say.