Common Life Insurance Terms Explained
When it comes to life insurance, industry jargon can be difficult to understand for those who aren’t in the business. These explanations of common life insurance terms will help consumers choose the right policy for their families.
Types of Life Insurance
All life insurance policies make a payment to another person in the event of the insured person’s death. Whole life and term life coverage are the two main types of life insurance policies.
Whole life coverage covers the insured person’s entire lifespan assuming that premiums are paid and current. The rate of the premium remains the same. Term life policies have a specific ending date and last only for the established turn. If the person who is insured dies during the policy term, the beneficiary will receive the policy payout.
Some life insurance policies have a rider. This is an extra policy that falls under your main policy to cover your spouse or child, for example.
Persons in the Policy
The life insurance policy paperwork will refer to “the insured.” This is the person who is covered by the insurance policy. If the insured dies, the policy amount will be paid to the beneficiary. Consumers must understand the difference between the primary and contingent beneficiary. The primary receives the proceeds of the policy upon the insured’s death. If the primary beneficiary has died, the contingent beneficiary receives the payout.
A person purchasing a life insurance policy will work with an agent. This person specializes in life insurance and helps each individual find the best coverage for his or her needs.
Two main financial terms associated with life insurance policies are the face amount and the premium amount. The premium amount is the required payment to keep the policy valid and active. The face amount is the payout that the beneficiary receives when the insured is deceased. The term policy refers to the actual legal document. All terms and conditions of the life insurance agreement are detailed in the individual’s policy.
For a life insurance quote, get in touch with RG Insurance Agency. Complete our online form or call 956-702-2705 to speak with an agent today.