Every product and service has some technical terms associated with it. It therefore becomes important to know every term associated when a person is about to engage in the buying process. This helps him in understanding the working and choosing the best option. This also applies when a person decides to buy a term life policy. There are certain terms which are frequently used by the company and are important to be aware of. Learning Important Terms Associated These terms though sound to be easy and simple but if they are not understood properly, this could lead to chaos later.
Insured person: A person who applies for the insurance coverage is the insured person. It is after his death that the family will get the death benefits. Beneficiary: The person, who will receive the insurance money and is eligible to claim the money, is the beneficiary. It is decided by the insured person. He can also go for multiple options and designate all of them as beneficiaries. Insurance companies also allow making a charitable organization the beneficiary of the policy.
Attained age: This affects the cost and premium plan of the person. Companies calculate age through this technique. Suppose a person’s age is 24 years and 7 months on the date he applies for the insurance. The company will consider it to be 24 years and calculate the cost of insurance that a person can have.
Nearest age: This is another technique used to calculate age by some companies. For example, if a person is 35 years and 3 months old on the date of application, then he will be considered to be 35 years old. While if a person is 29 years and 7 months of age on that particular date, the company will consider it to be 30 years and calculate premiums.
Premium: This is the payment you need to make to the company in order to avail the term life policy. It can be paid monthly, quarterly or even yearly. However, a yearly payment comes out to be a huge amount. Some Other Important Terms Apart from these frequently used terms, there are certain others used by the insurance companies and a person must know them to understand the insurance process.
Coverage: This is also called face value and is the money that the company will pay to the beneficiary. The person who wants to get an insurance must be aware of the coverage his dear ones will get upon his death.
Expiry: This is a very relevant term when it comes to term life policy since such policies are for a defined time period. Therefore, they expire once the time limit is completed. Renew: This is used when the duration for which policy was bought ends. In order to stay insured a person has to ask the company to renew it and continue.
With proper knowledge of these terms, a person can ensure that he does not make mistakes in choosing the right insurance.