Key Terms
- Life Insurance covers the expenses that arise when somebody passes away.
- A good life insurance policy can cover your mortgage payments, your child’s education, and even therapy for your loved ones should you pass unexpectedly.
- Texas life insurance companies can help you find a policy to suit your needs and budget.
Texas is known as the Lone Star State and is located in the southern United States. It’s bordered by Oklahoma to the north, Arkansas and Louisiana to the east, and New Mexico to the west. With a population of 28.7 million people, it’s the 2nd-most populous state. The largest city in Texas is Houston which has a population of 2.3 million residents. The state capital is Austin which has a population of 993,649.
According to the Center for Disease Control and Prevention (CDC), the average life expectancy in Texas is approximately 76.5 years which is lower than the national average life expectancy, which is currently around 79.05 years in the United States. Over the past few years, the leading causes of death in Texas have been heart disease, cancer, and Covid-19. The homicide rate for Texans is around 7.6 homicides per 100,000 residents, which is close to the national average of 7.5.
According to the U.S. Bureau of Labor Statistics, in Texas, the 90th percentile income is currently $99,880. The median income in the state is approximately $39,030. Most financial advisors recommend purchasing a life insurance policy that covers your loved ones for between 10X and 20X your annual salary. In Texas, this works out to around $998,800 – $1,997,600 dollars for most people.
How life insurance works in Texas
If you have a family or other people who depend on your income, then life insurance is a good idea. Life insurance is similar to other types of insurance like health insurance where you pay a monthly premium. In simple terms, it protects your loved ones financially if you pass away. This is usually done by paying out a certain amount of money to your beneficiaries. In some cases, it can also provide an income, either for a set period or for life.
There are two main types of life insurance: term life insurance and whole life insurance. Term life insurance lasts for a set period of time and pays out a death benefit if you die within that term. It does not build up any additional cash value. Whole life insurance covers you for your whole life and pays out a death benefit whenever you die. A whole life policy also builds up cash value that you can borrow against, withdraw, or use as an investment.
When it comes to choosing a life insurance policy, there are a few things you should consider. First, you need to determine how much coverage you need. This will depend on your financial situation and your dependents. Next, you need to decide what type of policy is best for you. Most people choose term life insurance. Term life insurance is typically cheaper and easy to understand. Whole life insurance, also known as permanent life insurance, is more expensive and also more complicated. It mixes insurance and investing products when you’d probably be better off buying the cheaper policy and investing the difference.
No matter what type of life insurance product you choose, make sure you shop around and compare rates from different companies before buying, and always consult with a licensed insurance agent before you sign a contract or begin underwriting. An insurance agent will be able to answer any questions you may have, and they may also be able to get you a better rate then you could find online by yourself.
10 Biggest life insurance companies in Texas
Texas life insurance companies ranked by premiums written in the state.
| Rank | Company Name | Texas Premiums Written | Texas Market Share |
|---|---|---|---|
| 1 | New York Life | $1,017,280,928 | 7.10% |
| 2 | Northwestern Mutual | $810,141,664 | 5.65% |
| 3 | Metropolitan | $784,576,358 | 5.48% |
| 4 | Prudential | $651,828,827 | 4.55% |
| 5 | Lincoln National | $643,241,172 | 4.49% |
| 6 | Mass Mutual Life Ins | $541,952,175 | 3.78% |
| 7 | State Farm | $472,923,350 | 3.30% |
| 8 | Pacific Life | $468,338,261 | 3.27% |
| 9 | Minnesota Mutual | $451,369,021 | 3.15% |
| 10 | Aegon Us Holding | $382,986,921 | 2.67% |
How much life insurance do you need in Texas?
The 90th percentile salary in Texas is approximately $99,880. As mentioned, most financial advisors recommend that you purchase a life insurance policy that will cover your beneficiary for at least 10X – 20X your average annual income. In Texas that works out to around $998,800 – $1,997,600 for high earners. This amount will ensure that your loved ones can continue to pay their bills, settle your debts, and cover the cost of your final expenses.
You may also want to purchase additional life insurance to cover:
- Your mortgage (if you want your spouse and kids to be able to live in the home without worrying about mortgage payments)
- Children’s education costs (if you want your child’s education to be covered without any additional stress to your spouse)
- Bereavement therapy costs for your spouse and children (if you want them to spend time with a therapist after your unexpected death)
- Any other expenses that may be unique to your family or lifestyle
Texas life insurance laws
There are a few unique features with respect to Texas Life Insurance Laws via the Texas Department of Insurance (TDI) that have an impact on your specific policy if you are a resident of the state.
Here’s what you need to know when considering your life insurance quotes:
- Free examination period: Otherwise called the free look period, this is the time you get to analyze your policy before committing to it. You can use this time to examine the policy and decide whether you want to keep it. If dissatisfied, you can terminate the policy without facing penalties and get a full refund. The free look period in Texas is at least 10 days after enrollment.
- Grace period for missed payments: The Texas Insurance Code mandates all insurers to give policyholders at least one month following a due date to settle any pending payment without penalty. During this period, your policy will remain active and your provider cannot cancel it for missing the payment.
- Time allowable to settle a claim: Once the insurance carrier in Texas receives a claim, they will have 15 days to review and acknowledge the request. Once they receive all documents related to a policyholder’s death, they’ll have 15 days to approve or deny the claim. Once approved, the company must pay the claim to the beneficiary within five business days.
- Contestable period: In Texas, this is a two-year term during which a life insurance company may review the policyholder’s policy and refuse to pay claims if they find inaccuracies or misinterpretations.
When it comes to protecting your loved ones, there is no such thing as being too cautious. Life insurance coverage ensures that your family will be taken care of financially in the event of your death. It is one of the most important investments you can make, and it is one that everyone should have. There are many different types of life insurance policies available, so it’s important to do your research to find the one that best suits your needs and budget. When in doubt, a licensed insurance agent can help you select a policy that’s perfect for you.
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Joshua Holt is a licensed insurance agent (License #2785989) and founder of Biglaw Investor and Sidebar Insurance LLC, an insurance agency created by lawyers, for lawyers. His insurance expertise lies in the areas of life and disability insurance, particularly covering lawyers, doctors and other high-income professionals. Prior to Biglaw Investor, Josh practiced private equity mergers & acquisition law for one of the largest law firms in the country.
