Common Life Insurance Terminology
Before you go shopping for life insurance, you’ll want to be familiar with the terminology of the industry. Here are some common phrases to help you get started:
- Beneficiary: Someone other than the policy-holder– typically a spouse and/or children– who will receive the life insurance benefits.
- Convertible Term Life Insurance: A plan permitting the exchange of a term life insurance policy for a permanent policy at a certain time.
- Insurable Interest: A requirement specifying that, if you want to take out a life insurance policy on another person, you must have an interest in that person remaining alive or expect lost, either emotional or financial, from the death of that person.
- No-Load Policy: A specific variety of insurance policy that allows insurers to deal directly with the consumer without the need for an intermediary (e.g. an agent or broker) and resultant charges.
- Permanent Cash Value Life Insurance: A variety of life insurance in which a death benefit is combined with a cash value element that increases over time, and this policy ensures lifetime protection.
- Risk Factors: When calculating the premium of your life insurance policy, insurers take certain factors into consideration, such as: age, current state of health and preexisting conditions, family history, whether you smoke, the type and amount of life insurance you’re requesting, and so on.
- Term Life Insurance: A variety of life insurance providing for a specific period of time– typically one, ten, twenty, thirty years, or until the policy-holder reaches the age of sixty-five of seventy.
- Universal Life Insurance: A variety of permanent life insurance with a cash value depending on the policy-holder’s payments and the insurer’s returns.
- Variable Life Insurance: Another variety of permanent life insurance with a fluctuating cash value dependant on the policy-holder’s portfolio investments.