Life Insurance in Colorado
Life insurance is an important financial tool that can provide stability and financial protection for your loved ones. It's important to understand the differences between life insurance policies in Colorado, and to consider starting a policy young to take advantage of affordable premiums and protect what means most to you.
Why is Life Insurance Important in Colorado State?
The importance of starting a life insurance policy may seem trivial when you’re young, but there are strong positives you may not be aware of that encourage considering a life insurance policy early on:
- Affordable premiums: The younger and healthier you are when you purchase a life insurance policy, the lower your premiums will likely be. Starting a policy in your 30s or 40s can help ensure that you get the best possible rates.
- Stress-Relief: Knowing that your loved ones will be taken care of if something happens to you can reduce stress and anxiety, a common issue among middle-aged adults.
- Retirement planning: Some life insurance policies can also serve as retirement planning tools. Permanent life insurance policies can accumulate cash value over time, which can be accessed tax-free in retirement.
How Life Insurance Differs in Arvada, CO vs. Other States
If you are an adult between the ages of 35 and 40, you may not have given much thought to life insurance. However, in the event of the unexpected, or the entirely expected, life insurance can be both a powerful tool financially and a way to ensure protection for your loved ones. In Colorado, life insurance policies differ from those in other states, and it's important to understand how they differ.
- Insurable interest: Colorado has a unique law regarding insurable interest. In most states, the person taking out the life insurance policy must have an insurable interest in the insured person (i.e. they must have a financial or familial relationship). In Colorado, however, any person can take out a policy on any other person, as long as they have the person's consent.
- Marijuana use: Colorado is one of the few states where marijuana use is legal. However, this can affect life insurance policies. Some insurers may charge higher premiums or deny coverage altogether to individuals who use marijuana.
- Beneficiary designation: In Colorado, if a person designates their spouse as the beneficiary of their life insurance policy and subsequently gets divorced, the designation is automatically revoked. In most other states, the designation remains in effect unless the policyholder changes it.
- Estate tax: Colorado is one of a few states that imposes an estate tax. This means that if the insured person's estate is worth more than a certain amount, the beneficiaries may have to pay a tax on the death benefit they receive.