Life Insurance is a guarantee by the insurance company that a specific amount of money would be paid to a designated or nominated beneficiary if the insured person dies during the policy period; or the amount would be paid to the insured person if he lives beyond a certain age. The aim and terms of insurance is to provide financial security to your family after your death. It protects society from the consequences of financial loss from accidents, sicknesses, death, and damage to property. But, before going in for coverage you will have to know some of the common life insurance terms.
- Term Insurance - This gives coverage to policy holders for a fixed time. This is called as pure coverage
- Level Term Premium - In this coverage, the premiums remain constant throughout the life of the policy
- Whole Life Insurance - This is term life insurance clubbed with an selement of investment. It builds cash which you can borrow against
- Variable Life Insurance - Variable-life insurance combines a mortality charge with savings for you to choose from a number of alternatives offered by the insurer. Here, the terms of the contract change
- Universal Life Insurance - A policy that has a savings plan component along with life coverage
- Annually renewable - A policy that can be renewed every year. When applied to a Term life, it means the premium will increase each year
- Cash Value - All whole life policies build a cash value. This is the amount of money you would receive if you decided to surrender or "cash in" your life insurance
- Decreasing Term - A conversion option for most Term policies and a common form of mortgage life insurance. The premium remains level, but the face value decreases each year
- Face value - The original amount of coverage for which the insured applied