Although the State of Israël did not yet exist during WW 2, its foundation was essentially laid down in the Balfour Declaration of Independence after WW 1 and in Palestine during the interwar years when the country was controlled by the British.
The fate of the Jewish people during the Holocaust greatly speeded things up and on May 15th, 1948, after a decision by the United Nations, the State of Israël was established. In commemoration of those who aided the Jewish people in any way, the Yad Vashem decoration belongs to the line of decorations of WW 2.