Whole life insurance protects you right from the time you obtain the insurance to the day that you will die. That’s the reason it is called “whole life”– because it covers your entire life. Whole life insurance doesn’t have an expiry date. Let’s get to know the basic terminologies that are necessary before obtaining a whole life insurance coverage.
- Collateral
This refers to any possessions or amount money that you can use to show a bank that you are capable of paying back a loan. It is known as collateral. If your whole life insurance policy can be used to help obtain a loan, that implies that you can use your policy as collateral.
- Beneficiary
ThIS is the person that will be given the death benefit. When you acquire a whole life insurance policy, you have to find at least one beneficiary.
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- Probate estate
The term probate estate refers to all the assets, material goods and money your family will get after your death in whole life insurance package.
- Indemnity
This is any kind of charges that you might receive from an insurance company. A death benefit is a specific kind of indemnity that your family will receive if you buy a whole life insurance policy.
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- Cash value
The insurance firm assumes that you will alive for a very long time. While policyholders are still breathing, the premiums that they pay for every month go into a huge pot of cash held by the insurance firm. The insurance company calls this money as a policy’s cash value. Some policies allow policyholders to cash in their whole life insurance policies to help pay for life-threatening diseases or traumatic injuries.
- Level premium
Insurers know that many individuals like to know the precise amount of their monthly premium for each month. So, they devised “level” or “fixed” premiums– premiums that stay the same no matter how old you get. If the premium isn’t fixed, that means that it may rise up if you get sick or after you get old.
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- Premium
The premium is the sum you are required to pay every month to preserve your whole life insurance coverage active. If you don’t pay your monthly premium, the insurance company you registered with, will pay your death benefit if you die. Make sure to keep up with your bills.
- Death benefit
The death benefit is the sum of money that your family will get if you die. The death benefit is the most significant aspect of your life insurance. For this, you have to be very sure that you are satisfied with this amount before you reach an agreement. If you feel that the death benefit feel is too low, your insurance representative will work with you to come up with an amount that will be better for you.
- Ordinary level premium whole life insurance
Ordinary level premium whole life insurance is just a decorative way of saying whole life insurance. Insurance representatives may also call their whole insurance “straight life” or “traditional whole life.”
