10 Important Terms You Need to Understand about Life Insurance

If you wish to buy life insurance, there are some important terms you need to understand. We see these terms regularly in life insurance contracts.  It is essential that you understand these terms before you sign any life insurance policy. We have compiled a list of 10 important terms you need to understand about life insurance.

  1. Beneficiary

This is the person that receives the life insurance benefits after the death of the life insurance holder.

  1. Cash value

This is the amount of money accumulated in some permanent life insurance policies. The life insurance policyholder can borrow the cash value. The insurance company can also give this money to the insured if they wish to end the contract.

  1. Claim

This is informing the insurance provider that the beneficiary is due to receive the death benefits.

  1. Coverage

Coverage refers to the amount of risk that is covered for an individual by an insurance provider.

  1. Death benefits

This term is common in life insurance contracts. It is the amount of money the beneficiary is due to receive after the death of the insured individual.

  1. Exclusions

Exclusions refers to circumstances or risks that a life insurance policy does not cover.

  1. Lapse

This is the termination of an insurance policy caused by the failure to pay insurance premiums.

  1. Premium

A premium is an amount the insurance holder pays periodically to maintain their life insurance policy.

  1. Riders

Riders are additional benefits that you buy with a basic life insurance plan. Riders can help you customize your life insurance plan to suit your needs.

  1. Surrender value

This is the amount you receive from the insurance provider when you end your policy before the agreed term.