Getting a Grip on Life Insurance Terminology

Life insurance is one of those things you need, but probably not something you look forward to buying. Make half an effort and you can save money by getting the best product for your situation.

Life insurance is a fairly simple concept, but it can appear complex to the average person. The complexity comes from the terms used. If you can understand the language, you can make a better determination of what you need. So, let’s talk terms!

References to Adjustable Premiums should be examined closely in any policy. This allows the insurance company to change the premiums on a block of policies during the term of the contract.

An Assignment refers to the transfer of the ownership of an insurance policy from one person to another person. The actual document required to do this is also called the same thing.

When you buy an insurance policy, you will be asked to designate a Beneficiary. This is the person that you want to receive the funds that will be paid out from the policy on the death of the life insured.

What happens if the beneficiary listed in an insurance policy pre-deceases the owner of the policy? It can be a nightmare, so insurance companies require you to designate a Secondary Beneficiary. If the primary beneficiary is deceased, this person receives the funds.

An Adult Provision, often referred to as a Control Provision, appears in life insurance policies for a minor. The clause designates an adult to handle all elements of the policy until the minor reaches a specified age.

The Right of Conversion refers to an individual’s right to convert a policy held as part of a group into an individual policy if the person ceases to be part of the group.

There are life insurance polices designed for business obligations. A Credit Life Insurance is taken out on a business owner and used as collateral for some debt. The beneficiary is the creditor providing the loan to the business owner. If the owner dies, the benefits are used to pay off the debt.

A Waiver of Premium clause is something you should try to include in your policy. The waiver essentially says that if you become disabled, no further premium payments must be made. Coverage, however, continues.

The Whole Life Insurance Policy is one of the staples of the life insurance industry. The policy provides a death benefit, but also accumulates cash within as premiums are paid in over time. There are many different ways to pay the premiums, so make sure to ask.

The Variable Universal Life Insurance Policy is a more recent and popular product. Premiums and benefits are adjustable. Money is accumulated in the policy and can be invested. The flexibility makes the policy attractive.

Many people make the mistake of assuming their agent will suggest the best policy. Agents will try, but how intimately do they know you? Make sure you take an active role in the selection process to avoid getting stuck with something you don’t want.

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