Life insurance in California

Protection for your family and your business, with options compared across multiple carriers.

Coverage

What it can cover

Term life

Coverage for a set number of years at a fixed premium.

Permanent life

Lifelong coverage that may build cash value.

Business uses

Key person coverage and funding buy-sell agreements.

Family protection

Replace income and cover debts for the people who depend on you.

In depth

Life insurance insurance in California: what to know

On this page

Term vs. permanent life insurance

Term life covers you for a set period, such as 10, 20 or 30 years. If you die during the term, your beneficiaries receive the death benefit. If you outlive it, the coverage ends, though some policies can be renewed or converted to permanent coverage, usually at a higher premium. Term usually costs the least for the most coverage, and it generally has no cash value.

Permanent life is meant to last your whole life, as long as premiums are paid. It usually builds cash value you may be able to borrow against or withdraw, which can reduce the death benefit. The main types are:

  • Whole life: fixed premiums and a guaranteed cash value schedule, depending on the policy.
  • Universal life: more flexible premiums and death benefits. Cash value growth depends on interest rates or an index, and policies can lapse if underfunded.
  • Variable life: cash value invested in market sub-accounts, with more potential growth and more risk.

Many families use term for income protection during working years and consider permanent coverage for longer-term needs like estate planning or business continuation.

How much coverage to consider

There’s no single formula that fits everyone. Instead, think through what your family would need if your income stopped:

  • How many years of income would your family need replaced, and until when?
  • What debts would need to be paid off, such as a mortgage, car loans or business loans you’ve personally guaranteed?
  • What future costs matter to you, such as college for your children?
  • What other coverage or savings already exist, including group life through work?
  • Does the business depend on you, and would it need money to continue or to buy out your share?

Your answers change over time. A new baby, a new home or a growing business are all good reasons to review your coverage.

Life insurance for business owners

Life insurance can protect your business, not only your family.

Key person coverage

If the business depends heavily on one person, such as the owner who sells the work or the lead estimator, the business can own a policy on that person’s life and be the beneficiary. The death benefit can help cover lost revenue, recruiting and training a replacement or paying business debts.

Buy-sell funding

A buy-sell agreement sets out what happens to an owner’s share of the business if they die. Life insurance is a common way to fund it, so the surviving owners can buy the share and the family receives its value. The agreement itself should be drafted with your attorney and accountant.

Notice and consent rules

When a business owns a policy on an employee’s life, federal tax rules generally require written notice to the employee and the employee’s written consent before the policy is issued. Missing this step can make part of the death benefit taxable to the business. Work with your tax professional on any employer-owned policy.

For broader protection for your company, see our business insurance options.

Individual vs. group life

Group life through work is a valuable benefit, but it usually ends or must be converted when you leave the job, and the amount may be modest. An individual policy stays with you regardless of where you work. Many people carry both. If you’re an employer, our page on group life and disability explains options for your team.

How applying works

Most applications include health and lifestyle questions, and some require a medical exam or records. The carrier decides whether to offer coverage and at what price. Coverage isn’t in force until the carrier approves the application and the policy terms are met. We compare options from multiple carriers and explain each one before you decide.

Bundle

Bundle with your business coverage

Keep your home, auto and life insurance with the same broker who handles your business. One contact, one renewal calendar, and carriers that may offer bundle discounts.

FAQ

Life insurance questions

How much life insurance do I need?

It depends on your income, debts and the people who rely on you. We’ll help you think it through.

Yes. Key person coverage and buy-sell funding can help a business continue if an owner or key employee passes away.

Life insurance proceeds paid because of the insured’s death are generally not taxable income to the beneficiary under IRS rules, though interest and certain other situations can change that. Ask your tax professional about your situation.

Many term policies include a conversion option that lets you switch to permanent coverage without new health questions, within a set time frame. Terms vary, so check the conversion deadline in your policy.

Usually the business owns the policy, pays the premium and is the beneficiary. Federal notice and consent rules generally apply. Your attorney and tax professional should be part of the decision.

You may still qualify, though the premium may be higher or the carrier may offer a different type of policy. Different carriers view health conditions differently, which is one reason comparing options from multiple carriers helps.

Review it after major life or business changes, such as marriage, a new child, buying a home, taking on business debt or adding a business partner. Also check that your beneficiaries are still correct.

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