Understanding life insurance jargon can be tricky! Let’s break down some essential terms to help you better navigate your policy.

• Insurability
  Insurability refers to the criteria that determine if you are eligible for life insurance coverage. Factors like health and age play a role. When applying for life insurance, your insurer will assess these conditions.

• Life Insurance
  Life insurance is a contract where an insurance company agrees to pay a specific amount (the benefit) to a designated person (the beneficiary) upon the insured person’s death. This payment can help cover funeral costs, debts, or a mortgage.

• Term Life Insurance
  Term life insurance provides coverage for a specified period, typically 10 to 30 years. It’s simple, affordable, and can be renewed or combined with permanent life insurance for added flexibility.

• Permanent Life Insurance
  Permanent life insurance offers lifelong coverage with a fixed premium. It usually provides more protection, and there’s no need for renewal.

• Insurer
  The company that issues your life insurance policy and is responsible for paying out the benefit upon the insured person’s death.

• Rider
  An optional add-on to your life insurance policy that provides additional benefits, such as disability coverage.

• Beneficiary
  The person who receives the death benefit when the insured person passes away. There are two types of beneficiaries: revocable and irrevocable.

• Revocable Beneficiary
  A beneficiary who can be removed or replaced at any time by the policyholder without the beneficiary’s consent.

• Irrevocable Beneficiary
  A beneficiary who cannot be changed or removed from the policy without their written consent.

• Pre-existing Condition
  A health issue that exists before applying for life insurance. Some policies may not cover pre-existing conditions, so it’s essential to check eligibility based on your medical history.

• Elimination Period
  The waiting period between the onset of a disability and when benefits begin. It typically ranges from 30 to 120 days, depending on the policy.

• Insured Person(s)
  The individual(s) whose lives are covered under the life insurance policy.

• Policyholder
  The person who owns the life insurance policy. If you buy a policy for yourself, you are both the policyholder and the insured person. If you purchase insurance for a child, you are the policyholder, and your child is the insured person.

• Premium
  The amount you pay to the insurance company in exchange for the coverage provided under your contract.

• Surrender Value
  A clause in some life insurance policies, usually permanent ones, allowing the policyholder to receive a portion of the policy’s value if they cancel the coverage before maturity. Taxes may apply if there are policy gains.

Take Action Today
Understanding your life insurance terms helps you make smarter decisions that align with your financial goals. Keep this guide handy, and when you’re ready to discuss your options further, reach out to Finance with Yomi for expert advice. I am here to guide you every step of the way. Contact me now to schedule a consultation and secure your family’s financial future!