If you’re considering purchasing life insurance, you’ve got the right idea. Life insurance can provide much-needed financial assistance for your loved ones in the wake of your passing, assist with paying off any outstanding debts, and (in the case of some permanent life insurance plans) provide a tax-advantaged savings vehicle.
The only thing not beneficial about life insurance? It can be very confusing to find the right plan for you. Not only are there a wide variety of life insurance policies out there (all of which can vary depending on your health, age, and financial standing), but a slew of industry terms further muddy the waters.
The good news: Learning common life insurance terms can help you navigate the world of life insurance so you can find the best policy for you and your family. Here’s a brief rundown of some of the most common terms you’ll encounter as you begin researching your options.
Accelerated Death Benefit (also known as “Living Benefit”)
A popular policy rider that allows for partial payment of the benefit prior to the insured person’s death in the event that the insured person becomes terminally ill
Adjustable Life Insurance
A type of life insurance that allows the insured person to alter different aspects of the policy, including its face amount, premium, and length of coverage
The person who will receive the insurance payout in the event of the insured person’s death, as designated in the policy. If the primary beneficiary is also deceased at the time of the insured person’s death, then the benefit may be received by a Contingent or Secondary Beneficiary
Benefit (or “Death Benefit”)
The amount of money that will be paid to the beneficiary in the event of the insured person’s death
A feature of certain permanent life insurance policies that allows for cash to accumulate as the policy matures. This growth is tax-deferred, and policyholders may be able to withdraw or borrow from their accumulated cash value
A provision that allows for a policy to be exchanged for another type of policy without facing further scrutiny by underwriters. For example, term life insurance could be converted to a type of permanent life insurance under a convertible policy
WHAT’S YOUR LIFE INSURANCE IQ?
Health IQ has created a fun way to test your life insurance knowledge. Take the below quiz to see how much you know about picking the right policy!