Unlike other types of insurance, life insurance is completely optional. You might think it’s best to avoid another expense, but life insurance is meant to protect your family when you die. Life insurance helps fill your financial contribution when you pass, and coverage is relatively inexpensive.
Insurance policy offerings vary by state. If you’re a Lone Star State resident, read on to find the best life insurance in Texas.
Best Life Insurance in Texas:
Life Insurance in Texas: Fast Facts
Life expectancy is one of the major considerations in determining your risk factor and the likelihood of a life insurance claim. Here’s a snapshot of life expectancy looks like in Texas.
- Texas life expectancy for males: 76.1 years
- Texas life expectancy for females: 80.9 years
- Percentage of adult population with life insurance in 2019: 57%
- State rank for life expectancy: 30
How Does Life Insurance Work?
Life insurance requires you to pay a premium to keep your policy active. When you die, your beneficiaries will receive a lump sum. We’ve outlined a few basic insurance terms to know before you choose a policy.
A beneficiary is a person, group of people or entity that receives your life insurance payout when you die. The primary beneficiary is your first choice for benefits, and the contingent beneficiary will receive the payout if the primary cannot be found. Eligible beneficiaries include:
- A person (or 2 or more people)
- A designated charity
- The trustee of a trust you’ve created
- Your estate
When you name beneficiaries, submit full legal names and Social Security numbers to avoid confusion. Also determine how the money will be handled if 1 or more of your beneficiaries are not found. Keep your beneficiary choices current through life’s changes.
If you don’t designate a beneficiary, your estate will receive the insurance payout.
An insurance premium is an amount you pay monthly, semi-annually or annually for your policy. It’s tempting to go for the lowest premium possible, but lower premiums also translate to fewer benefits. Coverage usually begins with your initial premium payment. Your life insurance premium is determined by assessing your likelihood of death, so your age, health, preexisting conditions, career and more come into play.
The death benefit is the payout your beneficiary or beneficiaries receive when you die. This is typically a tax-free lump sum payment, but you can also choose to pay over time when you purchase the policy.
Beneficiaries must complete a death claim to receive a death benefit. Make sure your beneficiaries have important information, including your policy number, Social Security number, name and payment preferences. Unlike life insurance, death benefits from retirement accounts may be subject to tax.
3 Reasons to Buy Life Insurance
- Provide for dependents: Young children or spouses may be adversely affected by your death. A life insurance payout can replace your income, cover children’s college tuition or help pay off a mortgage. It’s especially important to get life insurance if benefits from an employer or the government will be reduced when you die.
- Eliminates final cost burden: If you have no inheritance to pass on, a life insurance lump sum can leave something after your death. If nothing else, your policy will pay for your funeral, burial costs and taxes.
- Personal savings: Some types of life insurance allow you to borrow or withdraw at a tax-deferred rate.
What You Can Expect to Pay
Life insurance premiums vary according to your assessed risk. Check out the chart with rates estimated for different profiles in Texas.
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Whole Life vs. Term Life
Do you prefer whole life or term life insurance? What’s the difference?
Also known as traditional or permanent life insurance, this coverage lasts your entire life. You’ll also get a savings account that can either be invested or accessed while you are still alive. Building this savings component means paying more than the scheduled premium amount.
Also known as pure life insurance, term life insurance covers you during a specified time period. Common terms are 10, 20 or 30 years. At its end, you can choose to renew, convert to permanent coverage or terminate. If you stick with term, your beneficiaries will receive the death benefit when you die, but you can’t take advantage of whole life’s savings element. You cannot use term life insurance for charitable giving or estate planning, and underwriting is covered by premiums, which are typically lower than whole life policies.
Best Life Insurance Companies in Texas
Let’s take a look at Benzinga’s top life insurance companies in Texas.
1. Best for Whole Life Insurance: American International Group
American International Group (AIG) is heralded for offering guaranteed issue whole life insurance.
Even if you’re between 50 – 85 years old, this policy covers you with no medical exam or other questions.
Policyholders are guaranteed up to $25,000 of life insurance with premiums that never increase.
2. Best for Term Life Insurance: State Farm
Known for its time-honored customer service, State Farm offers a range of term life insurance. Choose from 10, 20 or 30 years.
You can also convert any State Farm term life insurance policy to whole life if desired.
If you stick with term life, you have a guaranteed benefit amount and can keep your policy in force up to age 95. Policies begin at about $10 per month.
3. Best for Flexibility: American Automobile Association
AAA provides whole life and term insurance and dependable service at a budget-friendly price.
Some coverages allow you to finance your mortgage and rent, final expenses, emergency funds, debt payments and more.
Universal life insurance and annuities are also available. You can apply online with ExpressTerm or work with an AAA specialist to develop a customized plan.
4. Best for Customer Service: Ladder Insurance
Reviewers talk about Ladder’s easy application process — it’s concise and effective. They also appreciate Ladder’s customer service team and the online application process.
Customer service agents are described as friendly and thorough. What more could you want?
Get the Best Life Insurance in Texas
It’s important to know how you want to care for your loved ones after you’re gone. Life insurance can cover your funeral costs or even provide family years after you’re gone. Start planning now — get a quote from the best life insurance companies in Texas.
Frequently Asked Questions
1) Q: What are the advantages of term life insurance?
A term life policy allows you to purchase coverage at a guaranteed premium for a limited amount of time. This structure makes term life an affordable choice to protect your family if you have a financial commitment that won’t last forever, like a mortgage or the cost of raising kids. A 20-year term life insurance policy is the most popular life insurance policy purchased to protect loved ones if the unexpected happens. Get a quote here from top providers.
2) Q: What are the advantages of whole life insurance?
Whole life insurance, along with universal life insurance and some other variants, is designed to provide coverage for your entire life. This differs from a term policy that offers guaranteed premiums for a limited time. Permanent life insurance has a savings or investment element that helps the policy to build cash value, making it an asset that can be borrowed against or even sold if you no longer need the policy.
3) Q: How much life insurance do I need?
Many in the industry recommend that you carry 8-12 times your annual income in life insurance coverage. A more granular approach can be beneficial, however, and accounting for debt and ongoing financial commitments in more detail when choosing a coverage amount can better provide for your family than an arbitrary multiple of earnings. Get a customized quote for the best policy.
Source: Google Insurane