SUMMARY: Before you choose a life insurance policy, you should learn some basic terms that will help you get the benefits that you need.Once you become familiar with the following terms, you can start to compare life insurance policies knowledgeably.
Types of Life Insurance Policies
Term Life Insurance - A life insurance policy designed to last for a specific number of years. When the policy expires, the owner and beneficiary do not receive any money.
Guaranteed Universal Life Insurance - A life insurance policy with fixed costs and benefits. Missing a single payment can invalidate the entire policy.
Indexed Universal Life Insurance - A life insurance policy that has a value determined by a stock market index.
Variable Life Insurance - A life insurance policy that has a value determined by investments in bonds, money markets, equity accounts or other vehicles.
Whole Life Insurance - A life insurance policy that accumulates value over time and never expires.
Policy Participant Terms
Policy Owner - The person who owns the policy and typically pays the premiums.
Beneficiary - The person who receives benefits from a life insurance policy when the policy owner passes away. You can often name more than one beneficiary.
Contingent Beneficiary - The person who receives the life insurance policy benefits if the original beneficiary is deceased.
Irrevocable beneficiary - Also called an "absolute beneficiary," a beneficiary who cannot be changed without authorization from the policy owner.
Policy Terms You Should Know
Cash Value - The amount of money that the policy owner will receive after canceling the life insurance policy. Also known as the "surrender value" and "cash surrender value."
Dividend - A portion of the insurance company's profits that are paid to whole life policyholders.
Face Amount - The amount of money paid to the beneficiary upon the policy owner's death. The policy owner may also receive the face amount when a policy reaches maturity.
Original Age Conversion - A conversion standard used when transferring a term life policy to a permanent plan. The conversion is based on the policyholder's age and when the original policy was bought.
Premiums - The amount that you pay for your life insurance policy.
Purchasing a life insurance policy helps ensure that your family will have enough money to thrive even after your death. Without one, your family's financial security could be at risk. Contact TDECU Life Insurance to find a policy that matches your unique needs.