Life Insurance Terms to Know
Life insurance can seem mysterious to a lot of people. How does it work? What do these strange terms mean? While we’re not going to write an extensive article on exactly what each policy type is and what every term definition is, we will give you a quick top terms to understand. Here are a few:
Beneficiary: the recipient of a life insurance policy’s death benefit. Can be one person or several. It can also be an organization. Usually the main reason people buy coverage is to cover family when they’re gone. The beneficiary must file a claim in order to receive the benefit.
Term: the period of time a policy is in effect. For example, a policy can provide coverage of $500,000 for a 20-year term.
Premium: the payments you make to keep your policy active. Can be monthly or annually.
Whole Life Policy: a type of life insurance that provides a permanent death benefit and has a tax-deferred savings component.
Term Life Policy: a type of life insurance that is in effect for a set number of years from between 5-30. Basic policy in no additional components, such a cash value. Usually the best life insurance option for most people due to lower costs.
Cash Value Life Insurance: a type of life insurance that works like a savings or investment account. Cash value accumulates over time. Paid out after death of holder.
Claim: the necessary paper work done to receive life insurance payout. Typically involves proof of death, such a death certificate and proof of identity of beneficiary.
This list could go on and on but we’re going to stop it here. For more detailed information on how life insurance works or to get a quote, feel free to contact us anytime at the number below.