Demystify life insurance jargon with our comprehensive Jargon Buster page. From beneficiaries to premiums, our user-friendly page offers clear and concise definitions for all those confusing terms you encounter when navigating the world of life insurance. Say goodbye to confusion and gain a solid understanding of key concepts. Navigate the complexities of life insurance with confidence and make informed decisions for your future.
Remember if you have any questions don't hesitate to call us on 0333 188 7617.
Life insurance is a contract between an individual (policyholder) and an
insurance company, where the insurance company agrees to pay a specified amount of money (death benefit) to the beneficiaries upon the death of the insured person.
The person who owns the life insurance policy and pays the premiums.
The person(s) or entity designated by the policyholder to receive the death
benefit upon the insured person's death.
The amount of money paid out by the insurance company to the
beneficiaries when the insured person passes away.
The payment made by the policyholder to the insurance company to maintain the life insurance coverage. Premiums can be paid monthly, annually, or in other specified intervals.
Term Life Insurance
A type of life insurance policy that provides coverage for a specific
period, such as 10, 20, 30 years or more. If the insured person passes away during the policy term, the death benefit is paid out to the beneficiaries.
Whole Of Life Insurance
A type of life insurance policy that provides coverage for the entire
lifetime of the insured person. It combines a death benefit with a savings component called cash value, which grows over time.
The process that insurance companies use to assess an applicant's risk and determine whether to offer coverage and at what premium rate. It typically involves reviewing the applicant's health history, medical exams, and other relevant factors.
Term Of Policy
The length of time that the life insurance policy remains in force. It can be a specific number of years (e.g., 20-year term) or for the lifetime of the insured person (in the case of whole life insurance).
Waiver Of Premium
A common provision in life insurance policies that provides financial
protection to policyholders in case they become disabled or unable to work due to injury or illness. The insurance company waives the requirement for the policyholder to pay further premiums during the period of disability. This relieves the policyholder from the financial burden of maintaining the policy during the disability period.
Why a medical application needs to be done with the client in order to get insurace
Life insurance premiums are typically based on the applicant's age, health, and other risk factors. An applicant with a higher risk of mortality, such as someone with pre-existing medical conditions or a history of certain illnesses, may be considered a higher risk and may face higher premiums. The medical application helps the insurance company accurately assess the applicant's risk level and determine appropriate pricing.
The predetermined amount of money will be paid out to the beneficiaries or policyholders' estate upon the death of the insured individual. It is also known as the death benefit. The sum assured is the core element of a life insurance policy, and it represents the financial protection provided by the policy. When the insured person passes away, the insurance company will pay out the sum assured to the designated beneficiaries as a lump sum payment. The beneficiaries can use this amount to cover various expenses, such as funeral costs, outstanding debts, mortgage payments, or ongoing living expenses.
Decreasing Term Assurance
also known as decreasing term life insurance, is a type of life insurance policy where the sum assured (death benefit) decreases over time. It is designed to provide cover for a specific period, such as the duration of a mortgage or loan, where the amount owed decreases over time.
How decreasing term assurance typically works:
1. Coverage period: You select the coverage period based on your needs, such as the length of your mortgage or loan repayment term. The policy remains in force for this period.
2. Decreasing coverage: The sum assured decreases over time, usually in line with the outstanding balance of your mortgage or loan. The idea is that as you pay off your debts, the amount you need to cover decreases, so the insurance payout decreases as well.
3. Premiums: You pay regular premiums for the duration of the policy. The premium amounts usually remain fixed throughout the term.
4. Death benefit: If you pass away during the policy term, your beneficiaries will receive the death benefit. The payout amount will be determined by the sum assured at the time of your death.
Level Term Assurance
Is a type of life insurance policy that provides a fixed sum assured
throughout the policy term.
Here are some key features of level term assurance:
1. Sum Assured: The sum assured, or the death benefit, remains constant throughout the policy term. This means that if the insured person passes away during the term, the beneficiaries will receive the predetermined amount.
2. Premiums: The premiums for level term assurance are usually higher compared to decreasing term assurance because the sum assured does not decrease over time. However, the premium amounts remain fixed throughout the policy term, making it easier to budget for insurance expenses.
3. Policy Term: You can select the duration of the policy term. The coverage remains in force for the entire term, providing protection to your beneficiaries in case of your untimely death during that period.
4. Purpose: Level-term assurance is commonly used to provide financial protection for dependents, pay off debts (such as mortgages), or ensure a predetermined amount is available to support the family's financial needs in the event of the insured's death.
Over 50's Guaranteed Life Insurance
also known as over 50s life insurance or guaranteed acceptance life insurance, is a type of life insurance specifically designed for individuals who are aged 50 and above.
Here are some key features of over 50's guaranteed life insurance policies:
1. Guaranteed Acceptance: One of the main features of this type of policy is that it offers guaranteed acceptance, regardless of the insured person's health condition or medical history. There are usually no medical exams or health questions required to qualify for coverage.
2. Age Requirement: Over 50s guaranteed life insurance policies are specifically available to individuals who are aged 50 or older. The maximum age for eligibility may vary among insurance providers, but it is typically around 85 years.
3. Fixed Premiums: Premiums for over 50s life insurance policies are usually fixed, meaning they remain the same throughout the duration of the policy. This allows individuals to plan their budget and ensures that the premium amount does not increase as they age.
4. Sum Assured: These policies typically offer a relatively low sum assured compared to traditional life insurance policies. The sum assured may range from a few thousand to a fixed maximum amount specified by the insurance provider. This is to make the coverage affordable for individuals in this age group.
5. No Medical Underwriting: Unlike traditional life insurance policies that assess the applicant's health and medical history, over-50s guaranteed life insurance policies do not require any medical underwriting. This means that individuals with pre-existing health conditions can still obtain coverage.
6. Waiting Period: Many over 50s guaranteed life insurance policies have a waiting period, usually 6 months, one or two years before the full death benefit is paid out. If the insured person passes away during the waiting period, the policy may refund the premiums paid or provide a limited death benefit, typically a percentage of the sum assured. (This is specific per provider).
Navigating the world of life insurance can be overwhelming, with a multitude of options and confusing terms. But fear not, this section is here to simplify it all for you. We break down the different types of life insurance - decreasing term life, whole life, and over-50's life insurance - into easy-to-understand explanations. Discover the benefits, features, and suitability of each type, empowering you to make informed decisions about your financial security.
Remember if you have any questions don't hesitate to call us on 0333 188 7617.
*A common misconception about life insurance:
Cash Value: Level term assurance does not accumulate any cash value or savings
component. It is designed to provide pure life insurance coverage without any investment
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