Home | Finance | Wealth Building
Life insurance is one of those things you need, but probably not something you look forward to buying. Make half an effort and you can save money by getting the best product for your situation. Life insurance is the great safety net against all that life can throw you. That being said, it is hard to imagine another area of financial planning that uses such odd terminology. Well, let’s take some of the mystery out of the more common terms. The Accumulated Value is a phrase used in a Universal Life Insurance Policy to describe the total premiums paid and interest credited to the policy before deductions for any expenses, loans or surrender charges. An Assignment refers to the transfer of the ownership of an insurance policy from one person to another person. The actual document required to do this is also called the same thing. When you buy an insurance policy, you will be asked to designate a Beneficiary. This is the person that you want to receive the funds that will be paid out from the policy on the death of the life insured. What happens if the beneficiary listed in an insurance policy pre-deceases the owner of the policy? It can be a nightmare, so insurance companies require you to designate a Secondary Beneficiary. If the primary beneficiary is deceased, this person receives the funds. An Adult Provision, often referred to as a Control Provision, appears in life insurance policies for a minor. The clause designates an adult to handle all elements of the policy until the minor reaches a specified age. To really understand what you are getting into, you need to grasp the Cost of Insurance. This is the amount you pay in premiums minus what you get from the policy. It is a simple calculation with term insurance, but more complex for policies that build up cash. There are life insurance polices designed for business obligations. A Credit Life Insurance is taken out on a business owner and used as collateral for some debt. The beneficiary is the creditor providing the loan to the business owner. If the owner dies, the benefits are used to pay off the debt. A Waiver of Premium clause is something you should try to include in your policy. The waiver essentially says that if you become disabled, no further premium payments must be made. Coverage, however, continues. The Whole Life Insurance Policy is one of the staples of the life insurance industry. The policy provides a death benefit, but also accumulates cash within as premiums are paid in over time. There are many different ways to pay the premiums, so make sure to ask. Variable Contracts represent another pillar of the life insurance industry. These policies come in the form of annuities or straight life insurance. Cash builds up in the policy and may be invested in stocks or mutual funds and so on. As with any area of financial planning, there are a vast number of terms used in the life insurance world. If you don’t understand a term used by an agent, ask for an explanation. Don’t be shy!
Article Source: http://www.mintswords.com
Learn more about financial planning at UFCAmerica.com. Get your own completely unique content version of this article.
Please Rate this Article
5 out of 54 out of 53 out of 52 out of 51 out of 5
Not yet Rated
