Buying term life insurance can be a daunting experience for some people. Exactly like in many sectors, insurance policies use words which are defined differently than what the typical definition is. As the insurance industry has a vocabulary of its own, the best thing to do is to educate yourself on some of the key words so that when it is time to apply for your term life insurance coverage it is a clearer and much less intimidating process. The following is a list of the more unusual definitions you will have to understand before purchasing term life insurance coverage. The beneficiary of your term life insurance coverage is the individual designated by you to get the policy benefits upon your death. You may designate that the benefits in the coverage be allocated to multiple beneficiaries or maybe a charity. Beneficiary designations may be changed at any time.
Age is an important factor in the insurance market. The premiums you will be billed for term policy for 10 years coverage are based in large part on the age of the proposed insured. Some businesses use the attained age of the insured in this calculation, while other companies use the nearest age of the insured. This method employs the proposed insured’s actual age in years. As an instance, if the proposed insured is 39 years and 5 months old they would be categorized as a 39 year old, as would a man who’s 39 years and 8 months old. Basically, unlike the nearest age method, months aren’t a consideration in attained age. The nearest era method for determining age takes into account whether the proposed insured is closer in age to their birthday or their next birthday.
As an instance, a woman who’s 24 years and 5 months old could be categorized as a 24year old girl for the term life premium calculations. In contrast, a man who is 34 years and 9 months old could be categorized as a 35 year old guy for the premium calculations. The premium is the number a term life insurance carrier charges you in exchange for a life insurance plan. The premium mode is essentially the frequency where premiums are paid by the insured. Typically, the total yearly premium is slightly higher when payments are spread out over the course of the year instead of being paid in a lump sum. The coverage amount or face value is the first dollar amount you choose as your term life insurance plan coverage. As an example, if you purchase a policy for 250,000 dollar that is the coverage amount/face value which will be paid to your designated beneficiaries upon your death. The coverage amount/face value doesn’t include adjustments for outstanding policy loans, withdrawals, dividends, paid up improvements or late/outstanding premium payments.