Key Terms Associated with Life Insurance
Learn some Definitions Associated with Buying an Insurance Policy
Aug 20, 2009
When it comes to purchasing life insurance there are a lot of terms and definitions that one must understand when purchasing a policy. Understanding these terms will allow the consumer to buy the best policy for their family. Here are some of the more common life insurance terms with brief explanations of what they mean.
Term Life Insurance
Term life insurance refers to a protection that is extended from an insurance company to a policy holder. This policy provides an amount of monetary coverage over a set period of time should the person during that period. The monetary coverage is then paid to the policy holders beneficiaries. As an example a 35 year old male might purchase a policy that spans 30 years that provides $250,000. If they die during that time frame, the beneficiaries receive the $250,000.
Group Life Insurance
Group Life Insurance is usually offered through a place of employment to an employee. The insurance company sets rates based on the line of work and then the employees have the option of purchasing that coverage. Because the group life insurance is tied to the company, the policy would expire should the employee decide to leave the place of employment.
Life Insurance Quote
A life insurance quote is a monetary figure provided by the insurance company to a prospective client. The quote is usually broken down per month for a set period of time. The amount of the quote is based on a person’s age, amount of coverage they wish to purchase, family history and more.
Right to Examine the Policy
Many states have guidelines in place that allow a new client to review their insurance policy for a period of time after it is purchased. Should the new client decide that they do not wish to purchase the coverage, then they may cancel it while incurring no cost and receive a refund.
Universal Life Insurance
A universal life insurance policy, or whole life policy as it is sometimes called, refers a policy that covers an individual for their entire life. That is to say, there is not a term when such a policy ends. Upon the death of that person, the policy is then paid to their beneficiaries. Because the payout of this type of policy inevitable, it is more expensive than a term life insurance policy. It should be noted that because a universal life insurance policy has a cash value, money may be drawn against the policy for other investments or to purchase real estate.
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