Vocabulary Make You Cringe? Understand Insurance!
The last time you read through your insurance policy, did you have a difficult time understanding much of the insurance vocabulary? If so, you are not alone. Most Americans today do not fully understand what their policies offer, no matter how many times they carefully read their documentation. This confusion often leads to frustration, resulting in thousands of Americans being surprised at their benefits, or lack thereof, the first time they are in need of such services.
Fortunately, you have found one of the easiest and quickest sites to learn the basics of insurance vocabulary. In the next few paragraphs, you will learn the meanings of such important words as renewable terms, convertible terms, and contingent beneficiary. You will also learn the difference between four types of life insurance policies!
A Quick Summary of Insurance Vocabulary
Most people are only looking for a quick summary of insurance vocabulary. After all, only a small percentage of the population has a desire to study insurance in more depth than is required to understand their personal policies. However, please be advised that this summary may not necessarily give you the definitions of every term you need to understand. Please feel free to browse the web and other sources for further definitions, and note that no source can take the place of a qualified insurance professional.
In general, a renewable term means that, when your policy expires, you can continue to receive the same coverage without submitting further medical records. Normally, this term applies to health insurance, and most consumers will find that the premium on a renewed policy is higher than their previous premiums. A convertible term means that you can exchange your current policy for a permanent one without providing further information to the insurance company. Finally, a contingent beneficiary is, in layman's terms, your beneficiary's beneficiary. They receive the proceeds from your life insurance policy if your beneficiary is deceased or unable to receive them for mental competency reasons.
If shopping for life insurance, you need to be advised that there are four major types: term life insurance, whole life insurance, universal life insurance, and variable universal life insurance. Term life insurance pays your beneficiary a pre-determined amount if you die, but coverage lasts only if you die within a specified time period. Whole life insurance also pays your beneficiary in case of your death, but it is permanent insurance. Additionally, you may also be allowed to borrow against the amount of money you have paid into the policy while you are still alive. Universal life insurance is similar to whole life insurance, but it is more flexible, and you earn interest on the amount you have paid in while you are living. Variable universal life insurance is also similar to universal life insurance, but you are often allowed to invest your insurance premiums in various portfolios to further meet your current needs.
We understand that your struggle to better understand your current and/or future insurance coverage may be difficult and time-consuming, but it may also prove to be one of your best educational investments. Good luck!
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