Life Insurance Glossary- Terms that You Should Understand
Life Insurance Glossary- Terms that You Should Understand
When it comes to getting the right life insurance, it can be hard to do when you feel like you're reading a foreign language. Fortunately, you can find everything that you need to know if you are willing to take a little time to look around. Life insurance is not easy to understand, but taking the time to learn a few basic terms can make a world of difference in your success with purchasing a policy that works for you.
Face value- This is how much the life insurance will pay out as the death benefit.
Cash value- In whole/permanent life policies, this is the amount of cash that the policy has for investing or withdrawal purposes. It differs from the face value of the death benefit and may be more or less depending on the policy.
Guaranteed acceptance- This is the type of insurance that you can get coverage for no matter what your state of health is. There are usually major exclusions and restrictions and it is often expensive.
Lapse- This is what happens if you do not pay your insurance premium, and it basically means that the policy is cancelled.
Level term- Refers to life insurance that has a fixed amount for the death benefit and premium throughout the policy life.
Settlement- People who need cash can use their whole life or convertible life policy to get a large sum of money from a company, known as a life insurance settlement, for a fee.
Term life- A life insurance policy that is put into place for a specific period of time.
Whole life- A policy that is in effect from the date of purchase until the insured dies.
Universal life- This insurance marries the best elements from term and whole life insurance into a more flexible policy that you have more control over.
These are the most popular terms that people see when it comes to dealing with life insurance. You can learn so much by taking the time to do a little research and it will be much easier for you to buy the insurance coverage that you need. Never settle for less than the best or for something that you don't understand because finding the resources to learn about life insurance and get the best coverage is really simple. Being an informed consumer is critical in the process of shopping for life insurance.
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