Life insurance in Texas can be a tricky subject. That is because when people are younger, they rarely think about dying. Therefore, they don’t place much importance or emphasis on the special insurance that will pay out to their family or other beneficiaries after they die.
But the sad truth is that life insurance is an absolute necessity. Everyone plans to live to a ripe old age. However, things like the COVID-19 pandemic serve as a powerful reminder that you never knew when someone might unexpectedly pass away.
Death comes to us all, even those of us who live in the great state of Texas. Fortunately, you can prepare for it with a life insurance plan that will protect your spouse and children. But to properly protect them, you need to know exactly how life insurance works.
Life Insurance in Texas Explained
We’re going to help you learn about your options for getting life insurance in Texas. First, though, we need to answer a basic question: what, exactly, is life insurance?
Life insurance, like your car insurance, is a contract between you and your insurance carrier. While there are different plans and policies, it generally works like this: you pay a monthly insurance premium. When you die, your named beneficiaries (such as a spouse, children, or others) will receive a death benefit in the form of money.
The amount of the benefit largely depends on the type of plan you have. Some in Texas prefer a minimal life insurance policy that simply helps to cover their funeral expenses. Others prefer a more robust policy that will help them cover the financial needs of their family if they should unexpectedly pass away.
How Do Life Insurance Benefits Work?
If you’ve never had life insurance or never looked that closely at what life insurance is, some of the mechanics may be a bit confusing. But we’re going to focus on the big question people tend to have: How do life insurance benefits work?
The primary benefit comes in the form of the “death benefit.” This is what gets paid to your beneficiaries upon your death. But you can modify your Texas life insurance plan to adjust some of the benefits.
For example, some insurance carriers let you add an accidental death rider. This would effectively pay an extra death benefit if you should die in an accident. And those with long-term illnesses or terminal diseases can get an accelerated death benefit option to help pay for some of their longer-term medical expenses.
So the basics of life insurance benefits are simple: If you die, your policy pays out. But how it pays and how much it pays depends on the policy, the plan, and the provider. It’s also worth noting that, like health insurance, life insurance provides serious peace of mind.
Types of Life Insurance Coverage
We typically refer to life insurance as a singular thing. But there are different types of life insurance coverage, and it’s important to choose the kind that is best for you and your needs.
While there are many kinds of life insurance options in Texas, everything boils down to two kinds of coverage: term life insurance and permanent life insurance.
Term life insurance is limited by the term you select. For example, if you get 10 years of coverage, then your death benefit will pay out if you die within that term.
This is a bit like having roadside assistance…nobody ever hopes their car breaks down just like nobody hopes to die within a given term, but it’s good to have protection. But you will need to renew your life insurance if you want a new term after it expires, and renewing means passing a new health examination and most likely paying a higher premium for the new policy.
The other type of life insurance is permanent life insurance. As the name implies, such life insurance does not expire. But it does come with a higher premium than term life insurance, and the death benefit is usually smaller for permanent life insurance. However, you’ll have the peace of mind that comes from knowing you will always be covered, and your premium will be “locked-in” and never change, even if your health worsens over time.
Benefits and Drawbacks to Each Type of Life Insurance In Texas
At this point, you probably have a simple question: “what kind of life insurance coverage do I need?” But the truth is that answering that simple question is pretty complex!
That’s mostly because each type of life insurance in Texas has its own benefits and drawbacks. For example, term life insurance is usually more affordable and offers a bigger death benefit. But it is limited to the term you have chosen, and buying a new term of coverage after the old one expires requires qualifying for life insurance again and facing a hike (sometimes a big hike) in premiums.
With permanent life insurance, the major benefit is that it never expires, and that means you never have to worry about qualifying for coverage or facing an increase in your premium. But as we detailed before, the death benefit is smaller, and the premium for permanent life insurance tends to be higher.
Finally, permanent life insurance builds cash value over time, and you can borrow from that as a loan. In this way, permanent life insurance is a way to supplement your retirement plans as you get older.
Life Insurance Prices by Age
Some prefer permanent life insurance because the premiums do not go up. Others prefer to get term life insurance for long periods of time (usually up to 30 years) to effectively “lock in” a good rate while they are relatively young and healthy.
These strategies are important because life insurance only gets more expensive as you get older. Below, we have the average price of life insurance by age that non-smokers pay at different stages of their lives.
Getting Additional Insurance In Texas
Life insurance is only one kind of protection. When you’re driving around the Lone Star state, you also need the right affordable car insurance to keep you and your family safe.
A little research will make it easier than ever to find the best policy. You can simply request a quote online. . Or come into one of our local offices and chat with us. Or if you’re very busy, just pick up the phone and give us a call at 800-401-6870.