Life insurance is important for many of us, but often the terms used are confusing. By becoming well-versed on the basic life insurance terms, you can better understand what companies are offering you.
Term life insurance
Term life insurance guarantees a predetermined amount of monetary coverage for a certain amount of time if the covered person dies. An example would be that a 30-year-old male might purchase 20-year term life insurance for $100,000. If he dies between 30 and 50 years of age, the beneficiaries would receive $100,000.
Universal life insurance
Universal life insurance refers to a policy that covers an individual over the span of his or her entire life. This is not like term insurance, where there is a date that the policy ends. This policy is payable to the beneficiaries upon the death of the policyholder. These policies may also be drawn against for other investments, such as real estate or annuities.
Group life insurance
Group life insurance is a form of protection that is usually offered through your employer. The rates are based on your line of work and may be lower than the rates for individual policies because the insurance company is providing a set amount of coverage for a group. It should be noted that group life insurance will expire when you leave your place of employment.
Life insurance quote
A life insurance quote is the amount of money a policyholder can expect to pay as a monthly premium for life insurance coverage. This amount fluctuates based on several factors including — but not limited to — age, amount of coverage, family history and more. The numbers act in direct proportion to those factors, meaning the more coverage you would like and the older you are, etc., the more you will pay per month.
Accelerated death benefits
Accelerated death benefits is an option that pays out to the insured individual under certain conditions, such as the individual has a serious illness. If the insured becomes terminally ill, in need of extreme medical intervention, or must be placed in a nursing home, the accelerated death benefits may kick in.