Important Life Insurance Terms To Know

Purchasing the right type of life insurance policy can be critical because it can help protect the ones you love in the event that something happens to you. Searching for the most appropriate life insurance policy can sometimes seem overwhelming because there are so many options available, and also, because of all of the complicated jargon and insurance phrases. Fortunately, if you live around San Diego, California, and want to better understand your life insurance options, Windfall Insurance Services Inc. is here to help. Continue reading to learn more about important life insurance terms to help you determine the policy that is most suitable for you.

How Life Insurance Works

The purpose of a life insurance policy is to pay out a death benefit to the policyholder’s loved ones when they pass away in exchange for a policyholder’s payments while they are alive. These policies will generally cover a natural or accidental death, and some policies can even cover a living benefit that can be paid out to a policyholder while they are still alive and have been diagnosed with a terminal illness. In short, a life insurance policy covers the life of the insured individual, they pay insurance premiums to an insurance provider, and then that insurance company pays money to the beneficiaries listed on the insured’s policy. Again, there are several different kinds of life insurance, including term life and permanent life insurance, and you will want to work closely with your insurance agency to understand the best policy for your situation.

Terms To Know When Deciding On A Life Insurance Policy

As you determine the type of life insurance policy you want to purchase, understanding the following buzz words will help you make the most appropriate choice for you and your family.

• Policyholder – This refers to the individual that owns the insurance policy and makes the life insurance payments.
• Premium – This is the payment that a policyholder makes to an insurance provider in exchange for life insurance benefits that it provides.
• Beneficiary – the individual (or individuals) that are set to receive a death benefit when the policyholder passes away.
• Permanent Life Insurance – This is a kind of life insurance policy that lasts for a policyholder’s entire lifetime and will remain active as long as the insurance premiums are paid. Permanent life insurance also includes a separate, tax deferred cash value in addition to the standard death benefit.
• Term Life Insurance – This is a kind of life insurance that covers a policyholder for a specific time period that typically lasts anywhere from one to thirty years. It is intended to cover a policyholder’s working years and doesn’t pay out after that insured time period ends. Because of this, permanent life insurance is usually cheaper than other life insurance types.

If you are looking for the right type of life insurance policy in San Diego, California, contact Windfall Insurance Services Inc. today for a consultation.