At the point where you have people depending on your wealth and property, then it is imperative that you sign up for a life insurance policy. There are thousands of reliable insurance companies that provide insurance services and when you’re ready to sign up, you should find the insurance firm that offers suitable perks and prompt claim service when necessary. Before you sign up for a life insurance policy, you need to have an accurate knowledge of your financial capacity including money in the bank, valuation of available assets, etc.
In this light, you can visit myfin.us for a whole financial motivation & information before you embark on your life insurance journey. Let’s start from the beginning. Life insurance is a deal between the insurer and the policyholder. A life insurance policy guarantees that the insurer will pay a sum of money to specified beneficiaries upon the death of the insured in exchange for the premiums paid by the policyholder during the life. Many of us are interested: how much does it cost – to buy life insurance. Let’s make it clear.
For example, if you have kids of 2 and 4 years old, you would want enough insurance to cover your own responsibilities (financial as well) until your kids are aged and able to take care of themselves. You might research the price of hiring a nanny or a housekeeper or to use paid child care and a cleaner for your home, then perhaps add some money for kids’ further education. All of these are crucial factors for price detection of life insurance, so take care that you added all necessary information to get the highest premiums possible.
Currently, in the insurance industry, there are different terminologies used in terms of communication and application of the rules stated in any insurance policy including a life insurance policy. As an individual or business, you must understand basic terms used in defining concepts and rules while you sign up for general insurance. Having the right knowledge on key terms associated with a life insurance policy can help you make a healthy choice and compare between available coverages. If you have zero knowledge of life insurance policy and the basic terms used, don’t panic, you can read this post from start to finish to acquire knowledge. It’s not difficult to understand as we have carefully simplified their definition, and explain relevant life insurance terms in detail.
Premium
This is an essential key term that any individual who intends to sign up for insurance must know. Premium is a set amount you pay to the insurance company to ensure your life insurance policy is continuously covered. In simple words, consider a premium as the wage or salary you pay the insurance firm. Basically, the key term premium is described as payment, and in the case where the agreed amount isn’t paid, the life insurance policy might discontinue.
Insurer
You do not enter into an insurance agreement on your own, it’s highly impossible. Hence, you need to subscribe to an insurance policy provided by an insurer. Simply put, the key term insurer is the recognized name for an insurance company. Therefore, when you enter into a life insurance agreement, the company that provides you with the policy is called the insurer. This is one of the essential key terms you should know and understand before you sign up for a life insurance policy.
Insured
If the insurance company is known as the insurer, then the individual who wants to subscribe to an insurance policy is referred to as the insured. The individual whose name appears on the life insurance policy document is the insured, therefore, the insured is the owner of the insurance policy. For instance, if Larry purchases an insurance policy from Enterprise Insurance company, it means Larry is the insured.
Sum Assured
This is the life-blood of any life insurance policy, therefore without a sum assured, the subject insurance policy is invalid. Sum assured is the total amount of money an insurance company (insurer) promises to pay the insured’s beneficiary upon death. The sum insured is fulfilled based on the provision it was stated in the insurance policy from the early stage.
Paid-up Value
In the situation where the insurer discontinues paying the premium after paying the initial start-up premium for about three consecutive years, then the insurer (insurance company) is left with the choice to pay a reduced amount of the agreed premium. A major factor or term associated with this paid-up value is the sum assured listed above. Here, the sum assured paid is rightly reduced, and the reduction depends on the date the insured stopped payment.
Claim
This term is self-explanatory, however, let us define it in connection with life insurance. A claim is a process where the beneficiary of the insured lodge a claim to receive the benefit after the insured’s death. The claim is usually lodged in the insurance company, and to process the claim easily, the beneficiary should possess full knowledge about the insurance policy.
Maturity
This term is usually described or used during communication as the maturity period or maturity age. Simply put, maturity is the stage where the insurance agreement is terminated. At the early stage of the insurance policy, the insurer informs the insured about the timeline of the insurance coverage, and this is calculated in years.
Final Thoughts
With these few key terms listed in this article, we are confident that when you come across a life insurance document, you’ll understand concepts and agreement clearly. Also, they are applicable and useful when you are ready to begin your life insurance journey, you will be acquainted with basic terms.
This article was made for people who are thinking about the possibility of buying life insurance. All those terms may be useful for you and your family. Be careful and never allow anything to happen to you or your relatives. If you have any concerns or queries, kindly leave a comment in the relevant section.
