4 Life Insurance Terminologies You Need To Know
July 13, 2017
Reading all the terminologies within a life insurance policy can easily become confusing. Make sure that you understand the details of your policy before signing up by knowing the following terms:
Accelerated death benefit
This policy feature allows you to receive some of the life insurance payout early if you are terminally ill. Some insurers now call this a “living benefit.” It’s usually a free feature, so make sure your policy has it. Source: NerdWallet
Term life insurance
A type of policy that only gives you coverage for a limited period of time, generally from five to 30 years. The premiums are usually more affordable than permanent premiums, and remain fixed during the set term. The trade-off is that the premiums increase after the set term, potentially making the policy more expensive to renew.
Most term policies also allow you to convert to a permanent policy without having to undergo another medical examination. For a specified period of time, a “conversion option” enables you to purchase new coverage for a new set premium.
Whole life insurance
A type of permanent life insurance policy that gives you coverage throughout your lifetime. These policies have the potential to accumulate what’s known as a “cash value” feature that you can use for different purposes, such as helping pay for college, supplementing retirement income or for emergencies. (1) The premium remains fixed during your lifetime. Source: Forbes
Decreasing term assurance
Over the course of the insurance term, the guaranteed sum assured steadily decreases. This type of insurance is traditionally used to cover the declining balance of outstanding repayments on a mortgage loan.
Most lenders will insist that some form of life assurance is in place to protect their lending in the event of the borrower’s death. Source: Confused
Confused with other terminologies? We can definitely help you out. Contact us!
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These articles are not intended to dispense legal advice and should not be taken as such. You are advised to obtain legal counsel if required to address areas of concern this article may have raised. The goal of these articles has been to draw your attention to an aspect of your business which may currently be neglected.
