Have you ever gotten yourself an expensive gadget like a new phone, computer, or entertainment system only to realize you barely understand how it works? Imagine having the same problem with your life insurance policy. You’ve signed your contracts and paid your dues, trusting your investment will work out. Unfortunately, when you end up needing to use it, you discover that you barely understand it at all. It becomes a lot more frustrating, doesn’t it?
Sadly, there are millions of people who find themselves in this exact situation. A lot of people interested in purchasing life insurance find that the Intricately-worded policies and confusing terminologies are too much to handle. On top of this, around half of the people who actually do have life insurance policies don’t exactly understand the policies they’ve purchased.
It’s very important to understand your policy, so here’s 11 essential life insurance terms to help you get there:
Policy owner The person who purchases the policy. The policy owner appoints the beneficiaries and may or may not be the insured person.
Insured person The individual whose life is being insured.
Beneficiary The death benefit intended recipient. More than one beneficiary can be declared per policy, and specific percentages of the total payout may be appointed to each beneficiary.
Death benefit The money paid to the beneficiary as per the terms of the life insurance policy.
Accelerated death benefit Also known as “living benefit”, it’s a part of the policy that enables beneficiaries to receive benefits early when the insured person is found to be terminally ill.
Underwriting Essentially the insurance company’s background check of you. This is when they determine how risky you are to insure, and how much they should insure you for.
Premium How much your insurance policy is. Premiums are usually displayed in monthly or annual rates instead of the total amount.
Rider Additional conditions or services that may be added to the life insurance policy at an extra cost.
Term life insurance A life insurance policy that only lasts for a fixed period of time.
Permanent life insurance A policy that lasts throughout the insured person’s life. This type of policy has several different subtypes, and often includes a cash value.
Cash value A component of the policy that increases as the policy matures. Loans may be taken against the policy’s cash value account and used any way the policy owner wishes.
Understanding your policy is the only way to ensure you have the one that’s right for you. Talk to us. At Roper Insurance Services, we take pride in making sure that our clients are well-protected at prices they can afford. To learn more about how we can help you, please contact our agency at (828) 697-6709 or Click Here to request a free quote.