Key Life Insurance Terms Unveiled

Navigating the world of life insurance can be daunting, especially when faced with a sea of unfamiliar terms and jargon. That’s why we wanted to produce a life insurance jargon buster to demystify the language of financial security. By understanding these essential terms, you can confidently make informed decisions to protect your loved ones and secure your future.

• Premium: The premium is the regular payment you make to the insurance company to maintain your life insurance policy. Think of it as the cost of covering your life.

• Death Benefit: The death benefit is the sum of money that the insurance company pays to your beneficiaries upon your passing. It ensures that your loved ones are financially protected after you're gone.

• Policyholder: The policyholder is the individual who owns the life insurance policy and pays the premiums. It could be you or someone else, depending on the policy.

• Beneficiary: A beneficiary is the person or entity designated to receive the death benefit when the policyholder passes away. You can name one or multiple beneficiaries.

• Term Life Insurance: Term life insurance provides cover for a specific period, such as 10, 15, 20 years etc. It offers a death benefit if the policyholder dies during the term but doesn't build cash value.

• Whole Life Insurance: Whole life insurance is a permanent policy that covers you for your entire life. It will pay a lump sum out on death.

• Underwriting: Underwriting is the process that insurance companies use to assess your risk profile. It involves evaluating your health, lifestyle, and other factors to determine your insurability and premium rates.

• Term of Policy: The term of the policy is the length of time that the life insurance cover remains in force. It can be for a specific number of years or for your entire lifetime, depending on the policy type.