Before you purchase life insurance, you need to understand the different terms. Understanding the different life insurance terms will help you find the right type of insurance for your needs and help you understand the differences in pricing. Here's a look at the basic key terms that you need to understand right now.
Term Life Insurance
Term insurance is for a specific period (known as a term). You can set that when you purchase the insurance, whether it is for 15 years, 20 years or even 30 years. One of the biggest questions for people looking at term insurance is over how long to take it for. Some will decide on the length of time left on the mortgage or the time left for children to grow up and leave the house.
The premiums are paid for the term. No matter when you die, you will get the payout. Once the term is over, your insurance comes to an end, and you'll need to get another term coverage.
Permanent Life Insurance
Permanent coverage will last for the rest of your life. The payments are usually higher than for term cover, but there are no time periods that you need to worry about. With some coverage, you can also take money out of the policy for financial needs, such as mortgage deposits and studying.
Some of the permanent life insurance options will include investments, usually into the company that sold you the policy. You can end up leaving more than you paid into the account, but you could also end up losing money. The policy options can be whole, universal, variable or variable universal coverage.
Whole Life Insurance
Whole coverage will cover you for your lifetime. The balance will be created by the payments that you make, and has one of the highest premiums among all other types. You can take money out during the policy term.
Universal Life Insurance
Universal life insurance is a versatile type of coverage, offering you the ability to set terms or cover the rest of your life. There is also a cash value, and you can take the money out during your term. You can change the amount that you pay into your policy, but this will affect the amount that you get out.
The Beneficiary
You will see the term beneficiary when taking out any life insurance. A beneficiary is a person who will benefit financially after your death. You will need to name the person(s) who will receive the payout, whether it is your spouse, children or other friends/family members. The insurance company will only pay out to these people named. You can change the name at any time when the company states the beneficiary is revocable. If the beneficiary is irrevocable, you will not be able to change the name until the end of the term.
Taking out life insurance is an important step for anyone. By understanding the key terms, you will be able to make the best choice for your specific needs. Contact a business, such as the Easy Insurance Group, for more information.
Share20 July 2016
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