Does where you live affect your life insurance policy?

The state you live in won’t usually affect the cost of your policy, but your location does affect the rules and regulations that surround it.

Headshot of Policygenius editor Nupur GambhirRebecca Shoenthal author photo

By

Nupur Gambhir

Nupur Gambhir

Senior Editor & Licensed Life Insurance Expert

Nupur Gambhir is a licensed life, health, and disability insurance expert and a former senior editor at Policygenius. Her insurance expertise has been featured in Bloomberg News, Forbes Advisor, CNET, Fortune, Slate, Real Simple, Lifehacker, The Financial Gym, and the end-of-life planning service Cake.

&Rebecca Shoenthal

Rebecca Shoenthal

Editor & Licensed Life Insurance Expert

Rebecca Shoenthal is a licensed life, disability, and health insurance expert and a former editor at Policygenius. Her insights about life insurance and finance have appeared in The Wall Street Journal, Fox Business, The Balance, HerMoney, SBLI, and John Hancock.

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When you apply for life insurance, the life insurance company considers a number of factors that are out of your control — such as your family history, age, and gender — to determine what policies are available to you and how much you’ll pay.

Unlike homeowners and auto insurance, your location within the U.S. does not impact the premium you pay for life insurance.

But because the life insurance industry is regulated by state legislature, a policy in New York might work differently than a policy in Utah. Each state has its own rules about refunds for new life insurance policies, grace periods for late payments, and protections for policyholders and beneficiaries if a life insurance company goes bankrupt. State laws can also impact who qualifies to receive a life insurance death benefit.

Key takeaways

  • You won’t see higher or lower premiums due to geographic location within the U.S.

  • Life insurance companies are regulated by local legislative bodies; each state may have different rules for the free look period, late payments, and life insurance insolvency.

  • States may also have laws that restrict who you can name as your policy’s beneficiary.

  • Not every type of policy is available in every state.

Can your geographic location affect your life insurance premiums?

While life insurance companies take mortality risks such as your medical history or any dangerous hobbies into account when determining your life insurance premiums, they aren’t going to charge you more if you live in a state prone to natural disasters or other risks to mortality, such as above-average obesity rates.

Though your geographic location won’t earn you a lower health classification and higher premiums, each state has its own legislature that impacts your policy.

How local legislation impacts your policy

State legislation is the primary governing body for life insurance policies and protections for policyholders. When you’re going through the life insurance application, you should ask the insurance broker or agent you are working with about the following specifics that vary state by state:

  • Free look period: This is the period when policyholders can back out of their policy and receive a refund for their initial premium payment.

  • Late payment grace period: This is a window of time you have to make up a late premium payment before your policy is legally terminated.

  • State guaranty: These state organizations ensure continued coverage and a death benefit payout if your life insurance company is declared insolvent or bankrupt.

State associations work together through an organization called the National Organization of Life and Health Insurance Guaranty Associations (NOLHGA). The organization offers an online tool where you can find your state’s guaranty association. 

→ Learn more about your state’s insurance regulations

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Purchasing life insurance abroad

If you’re an American expat who lives abroad part-time or full-time, or otherwise cannot prove residency, your options for purchasing life insurance with U.S. company are limited.

Most insurance companies require you to complete the application and medical exam, as well as sign your final policy, in the U.S. But some insurers will cover you, especially if you split your time between the states and another country, or if you have a high global net worth.

Laws about travel

Unlawful travel will disqualify you from purchasing life insurance regardless of where you live. Interstate or foreign travel is classified as unlawful if you distribute proceeds from any illegal activity, commit a crime or act of violence, or promote any illegal activity, according to the International Travel Act of 1961. [1]  

But even lawful travel can impact your health classification and eligibility for a life insurance policy, whether it’s for business or leisure. Depending on the length, frequency, and destination of travel, it’s possible to get a lower classification — which leads to higher premiums — or be disqualified from purchasing a life insurance policy altogether.

Some states have legislation in place that prohibits life insurance companies from using any planned lawful travel to determine your life insurance policy. These states are:

  • Florida

  • Georgia

Life insurance companies also look at your travel history as an indicator of future behavior. The following states have legislation in place that prohibits life insurance companies from using past lawful travel as a factor in your life insurance health classification or eligibility:

  • California

  • Connecticut

  • Colorado

  • Illinois

  • Maryland

  • Massachusetts

  • New York

  • Oklahoma

  • Washington

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Laws about beneficiaries

Where you live can affect who you list as your beneficiaries and how they can receive the death benefit. This is due to the age that is deemed a legal adult in certain states and community property laws.

Age of the majority

When you’re naming your life insurance beneficiaries, either primary or contingent, you may be considering naming your child as your life insurance beneficiary. Though you’re likely putting a life insurance policy in place for their protection, naming your children as your life insurance beneficiary isn’t always a good idea.

If your dependents aren’t yet at the age of the majority in your state, they can't legally receive the death benefit. The funds could get tied up in court and they might not get to access the death benefit when they really need it.

In most states, the age of the majority is 18. In Alabama and Nebraska, it's 19, and in Mississippi, it's 21.

What to do if your child isn’t the age of the majority

If you would like to leave your life insurance death benefit to your minor child as opposed to a spouse, you can put the death benefit into a trust. A trust allows you to dictate how any money is spent, when, and how much.

If you know that you’d like some of the death benefit to go towards a college education, you can designate some of the money to a 529 plan, legally known as a qualified tuition plan, which can be withdrawn from tax-free for higher education expenses.

State community property laws

Some states have community property laws in place, which deem all your assets and income as community property, meaning they're considered jointly owned with your spouse. Because life insurance is an income replacement, it’s also subject to community property laws.

There are nine community property states and three states that let married couples opt into community property. Puerto Rico and Guam also have community property laws. The rest of the states do not have community property and use common law instead. [2]

Community property states:

  • Arizona

  • California*

  • Idaho

  • Louisiana

  • Nevada*

  • New Mexico

  • Texas

  • Washington*

  • Wisconsin

*Community property law generally extends to people in a registered domestic partnership in these states.

Opt-in community property states:

  • Alaska

  • Tennessee

  • South Dakota

If you’re purchasing a life insurance policy and reside in a state with community property laws, you have to name your spouse as your life insurance beneficiary unless they sign a legal waiver that permits you to list someone else.

Before you purchase a life insurance policy, talk to your life insurance broker about local laws and regulations to make sure you fully understand how your policy works.

Frequently asked questions

Do life insurance rates vary by state?

No. Life insurance companies do not use your location to determine policy rates.

What factors affect the cost of life insurance?

Life insurance underwriters factor in your age, health profile, gender, family medical history, and hobbies to determine your health classification and rates. Your policy will cost more depending on the type of policy, amount of life insurance, and if you opt for any policy additions (riders).

Can you buy life insurance in a different state?

You can buy life insurance in any state you'd like, but the state where you apply for and sign your paperwork is where you will be insured.

References

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Policygenius uses external sources, including government data, industry studies, and reputable news organizations to supplement proprietary marketplace data and internal expertise. Learn more about how we use and vet external sources as part of our

editorial standards.
  1. Legal Information Institute

    . "

    18 U.S. Code § 1952 - Interstate and foreign travel or transportation in aid of racketeering enterprises

    ." Accessed December 06, 2021.

  2. IRS.gov

    . "

    Publication 555 (03/2020), Community Property

    ." Accessed January 31, 2022.

Authors

Senior Editor & Licensed Life Insurance Expert

Nupur Gambhir

Senior Editor & Licensed Life Insurance Expert

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Nupur Gambhir is a licensed life, health, and disability insurance expert and a former senior editor at Policygenius. Her insurance expertise has been featured in Bloomberg News, Forbes Advisor, CNET, Fortune, Slate, Real Simple, Lifehacker, The Financial Gym, and the end-of-life planning service Cake.

Editor & Licensed Life Insurance Expert

Rebecca Shoenthal

Editor & Licensed Life Insurance Expert

gray twitter icon linkgray linkedin icon link

Rebecca Shoenthal is a licensed life, disability, and health insurance expert and a former editor at Policygenius. Her insights about life insurance and finance have appeared in The Wall Street Journal, Fox Business, The Balance, HerMoney, SBLI, and John Hancock.

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