Becoming familiar with the following life insurance terms will make it much easier to purchase a policy. When you know these terms, you will have the best chance of getting exactly what you want.
Beneficiary: A person who is not the policy holder who is eligible to receive benefits, or is currently receiving them.
Cash surrender value: This amount goes to the policy holder when they surrender a cash value insurance policy. When this happens, the life insurance policy is terminated.
Convertible term life insurance: Allows you to exchange term life insurance for a more permanent option in the future.
Free look period: In some states this allows you to cancel a life insurance policy without penalty.
No-load policy: A policy that is sold direct to consumers from the insurer. This cuts out commission to a broker.
Permanent life insurance: This type of policy offers lifetime protection by combining a cash value with death benefits. These accrue over time.
Risk factors: When calculating a life insurance policy premium, risk factors are taken into consideration by the insurer. The higher the risk, the more money you will pay. Risk factors include things such as age and health among others.
Term life insurance: This type of life insurance provides coverage for a predetermined amount of time.
Universal life insurance: This is a permanent life insurance policy that varies based on the investment return of the insurer, as well as the payments by the holder.
Variable life insurance: The cash value of this type of policy fluctuates due to the return on investment that the policy holder receives.
Whole life insurance: This is considered a type of permanent life insurance. You will be covered for your life with this policy, but there are provisions to consider.
