Common Life Insurance Terms and Definitions
Life insurance can be complex, with many terms and definitions that may be unfamiliar. Understanding these key terms can help you make more informed decisions about your coverage.
Key Terms
Policyholder: The person who owns the life insurance policy.
Beneficiary: The person or entity designated to receive the death benefit.
Premium: The amount paid regularly to keep the policy active.
Death Benefit: The amount paid to beneficiaries upon the policyholder’s death. Also referred to as a tax-free payout.
Term Life Insurance: Coverage for a specific period, such as 10, 20, or 30 years.
Whole Life Insurance: Permanent coverage that includes a cash value component.
Universal Life Insurance: Permanent coverage with flexible premiums and adjustable death benefits.
Variable Life Insurance: Permanent coverage with a cash value that can be invested in various options.
Cash Value: A savings component in permanent life insurance policies that grows over time.
Rider: An add-on to a life insurance policy that provides additional coverage or benefits.
Conclusion
Understanding these common terms and definitions can help demystify life insurance and empower you to make informed decisions. If you need further clarification or personalized guidance, I’m here to help you navigate the complexities of life insurance and find the best policy for your needs.
