What is Life Insurance – Defined

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Posted on 16th August 2012 by Rita in Life Insurance

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Insurance that guarantees a sum of money to be paid out on the death of the insured or after a set period of time.

Life Insurance is a contract between an insurance policyholder and an insurer (company). The insurer promises to pay a sum of money typically to the beneficiary, upon the insured’s death.

The essential goal of life insurance is to provide a level of financial security for loved ones who depend on another financially. Before purchasing a life insurance policy consider the following…

  • Your financial situation and the standard of living you will want to maintain for those who depend on you financially.
  • Is there money set aside for funeral cost and final medical bills?
  • Who will be responsible for the arrangement and payment of funeral/medical costs?
  • Will there be adequate funds for everyday expenses such as mortgage payment, daycare, food, utilities etc.

Note: There is no single life insurance policy that is best for everyone. Each person’s situation is unique, therefore talking with an insurance professional is recommended to help you define what is the best course of action in your personal situation.

 

Following are some common insurance terms used and their definitions:

Agent (Producer): An individual who is a state licensed professional in selling and serving insurance contracts on behalf of the insurer.

Applicant: An individual who makes a formal application to be insured under an insurance contract.

Beneficiary: The person(s) named in a life insurance policy who receives the proceeds from the policy when the insured dies.

Face Amount: The amount stated on an insurance policy, to be paid upon the insured’s death or maturity of the policy.

Free Look: A period of time during which the purchaser (usually policy-owner) of a newly issued life, health or annuity policy, may inspect and cancel the contract with no penalty if not satisfied for any reason.

Insured: A person or organization that is covered/protected by insurance.

Insurer: An individual or company that compensates against specified losses. In the case of life insurance… Is the authorized provider of a financial protection plan.

Policy-owner: Person who owns an insurance contract or policy. Usually the insured person, but it may also be a relative, partnership or corporation if insured interest is present.

Premium: An amount to be paid for an insurance policy to be kept in force.

Proceeds: Money payable from an event or activity; in this case usually at the insured’s death or when the policy matures.

Term Life Insurance: Insurance that provides protection for a specified and limited period of time.

Universal Life Insurance: Is permanent insurance that combines features of term insurance and whole life insurance.

Whole Life Insurance: Insurance that provides protection for a person’s entire life (provided the premium payments are paid).

 


Note: This blog is designed for general information purposes only. All information presented on this site should not be interpreted as legal advice and the author assumes no responsibility or liability for the actions taken or not taken by the readers based upon such information. For legal and tax advice contact your attorney or tax adviser.

Rita Sollie, Direct Insurance Representative with North Coast Life Insurance Company (NCL). No gimmicks or schemes here, just genuine and honest service. We don’t sell insurance, we solve problems. I welcome the opportunity to show you what NCL can do for your Life Insurance and Financial needs.
View INSTANT Term-Life Quote: www.insureyourfamily.com
If you prefer to speak with a local financial representative, call or email your request and you will be connected with a representative in your area.
Contact info: Phone: 800.541.5858 Email: rita.sollie@nclife.com or Live Chat below.

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