Have you ever read a dissertation on quantum physics or advanced calculation? Skimming an insurance policy can give you the same confused feeling. So let’s get on the same page! These life insurance policies will help you understand different policies and choose the right coverage.
What the dictionary says about life insurance
Here is a life insurance definition from dictionary.com:
“Insurance which provides for the payment of a sum of money to a named beneficiary at the death of the policyholder or to the policyholder if he is still alive after reaching a certain age.”;
This definition creates two questions:
- Who is the policyholder?
- Who is the beneficiary?
A policyholder are:
“The individual or company in whose name an insurance is written; an insured. “
A beneficiary are:
“A person appointed as the recipient of funds or other property under a will, foundation, insurance, etc.”
To summarize:
- The policyholder pays a premium (usually a recurring payment) to the insurance company to keep the life insurance cover active.
- The policyholder names one or more beneficiaries when she draws up an insurance policy.
- The beneficiary receives the benefit (or sum of money) from the life insurance after the policyholder has died.
Life insurance bases: Areas of use
It might not comfort you to think, “soooo, my life insurance only works after I die?”
Instead of lingering on your last moments, think about how the life insurance benefit can be used to:
Calculate your life insurance needs
Go to Google and search for this: “How much life insurance do I need?” You will find some conflicting results. This is because different people have different needs for life insurance.
We can not predict how much coverage you need down to one krona, but the following calculation method will get started.
Your local Pekin Insurance agent will work with you to find the right insurance amount.
How your life insurance rates are determined
Your life insurance rates will be determined by a number of factors, including:
- Age
- Sex
- Coverage amount
- Coverage type
- Use of tobacco
- Length and weight
You may need to have a medical examination depending on the coverage you choose. A doctor (probably a nurse) will ask you a series of health questions, and you may need to give a urine or blood sample.
Simplified question life insurance skips the medical examination. This type of coverage can work best for someone who has health problems. In general, simplified issue plans offer lower coverage limits than other life insurance policies.
Different types of life insurance
Term life insurance Definition
Life insurance costs less than other forms of life insurance.
It is a “time insurance”, so it provides coverage for a certain period of time. It’s good for covering specific debts like a home loan or expected college expenses, but it may not cover your lifelong financial needs.
Your lifetime premiums may increase depending on age and other factors. When your insurance period expires, you may have the opportunity to convert your insurance to a permanent life insurance.
Permanent Life Insurance Definition
Unlike lifetime insurance, permanent life insurance accumulates a cash value and remains in effect throughout your lifetime. The two main types of permanent life insurance are whole life and universal life.
