Selecting life insurance can be difficult. Even beyond the typical struggles that many people face with estate planning and other related matters, the numerous terms and policy options for life insurance can make the buying process very difficult.
But despite that difficulty, life insurance can be very important. In fact, 86% of respondents to a study agreed that the vast majority of people should have at least some amount of life insurance coverage.
In order to better help you navigate the life insurance purchasing process, we’ve put together this glossary of terms that you should be familiar with.
Death Benefit: The death benefit is the money that your beneficiaries receive upon your death. When you’re purchasing life insurance, you can select the amount of your death benefit coverage. Alternate terms include Face Amount, Policy Value, and Payout.
Term Insurance: The word “term” refers to the duration of your policy or how long it is in effect. Term Life Insurance policies have a set date at which they terminate, so it is important that you pay attention to the length of your term.
Premium: Think of it as the amount you pay at to keep your benefits in force; something that you need to pay on a regular basis. The frequency of premium payments can vary (monthly, quarterly, etc.).
Beneficiary: Your beneficiary is the person who will receive your death benefits after you pass. Some options for choosing your beneficiary may include choosing one person to receive your benefits or you may split your benefits among a number of people. Alternatively, you can choose an organization, trust, or charity to receive your benefits.
Risk Class: When it comes to life insurance plans, applicants are often sorted in terms risk. Factors that are considered include age, sex, height, weight, family history, personal medical history, and tobacco use. The risk class you’re in can have a direct impact on how much you’re required to pay for your insurance. Maintaining a healthy lifestyle can improve your risk class.
Purchasing life insurance can be confusing: there’s a myriad of considerations and terms that you’re expected to contend with. For further information contact Bankers Fidelity with any questions you may have about life insurance. Our team of professional, independent agents can help get you the right policy for your needs.
Sources:
BestLifeRates.org, “2016 Life Insurance Statistics and Facts”
Form B 0249 08
