Common Life Insurance Terms That You’ll Want To Know

If you live in the Dalton, GA, area and are shopping around for a life insurance policy, it is essential to understand the basics of life insurance. Life insurance is essentially a contract between an insurance company and a policyholder. First, the policyholder signs an agreement to pay a specific premium. Then, the insurance company pays the chosen beneficiaries when the policyholder dies. Familiarizing yourself with the important terms will help you compare quotes and get the right policy for you.

Basic life insurance terms

Policyholder

The policyholder is the person who bought the policy. They are responsible for making the payments and determining the specific details.

Insured person

The insured person is the person who is covered by the life insurance policy if they were to die. The insured person could be the policyholder, or a policyholder can take out a policy on a loved one. 

Beneficiary

A beneficiary in a life insurance policy is the person or persons who receive the payout benefit when the insured person dies. The beneficiary could be anything from a family member to a charity or even a business.

Premiums

Premiums are the payments a policyholder makes to their insurance company.

Lapse

A lapse occurs when you fail to make payments on time, and your insurance company drops you from the policy.

Evidence of insurability

Evidence of insurability is documentation provided in the application process from your health provider consisting of medical reports to prove your health. This helps the insurance company determine the type of policy you qualify for.

Reach out to AWARD Insurance Group today to discuss the life insurance policy that’s right for you!