Life Insurance Jargons and Terms You Need to Know Before Buying One
There is a selection of insurance policies you may choose from to help yourself, as well as your family in unfortunate circumstances like accidents, disability, and even from untimely death. There are also insurance policies that provide businesses with the financial assistance they might need in the event of damage or loss that occurred in their business property.
And that’s why every insurance buyer must not only know what their insurance policies cover, and don’t cover. But they must also understand the meaning of the insurance jargon and terms.
Being aware of the insurance jargon and terms is an advantage for the insurance buyer. With that, here’s an article that tackles the insurance terms, particularly in life insurance.
It’s because whole life insurance, being the most complex, is also one of the best-selling or in-demand insurance in the market. So, proceed to the following pages and learn for yourself.
In layman’s term, the word assignment refers to a student’s homework or an employee’s task to do. But in life insurance glossaries of jargon, the term assignment refers to the act in which the policyholder agrees to transfer his/s her rights or interest to a third party.
There are two kinds of life insurance assignment, the absolute assignment, and the collateral assignment.
○ Absolute assignment of life insurance
It’s the act of an entire transfer of legal rights, benefits or interests of the policy absolutely to the third party without considering terms and conditions.
○ Collateral assignment of life insurance
On the other hand, collateral assignment of life insurance is a provisional assignment designating the lender as the main beneficiary of a particular death benefit to use as collateral for a loan.
When you obtain business insurance, you and your business receive financial assistance from the damage and loss that transpired in your business premises. But unlike business insurance, life insurance grants a death benefit to a person or entity.
And that person is called the beneficiary of the life insurance policyholder. A beneficiary is authorized to accept the claim amount and benefits at the time of the benefactor’s death.
● Grace period
In the academia and business world, students and workers need to show up in time or within the given grace period before they’re marked late. In life insurance glossary of jargon and terms, a grace period, commonly of 15 days, is a supplementary period for the policyholder to pay his premium after its due date.
● Life insured
The life insured or insured is a term that refers to a person whose life is insured by the life insurance contract. The life insured is commonly the source of income or mainly supports the family.
In life insurance glossary of terms, the policyholder refers to the person or entity that holds the insurance contract.
That’s just some of the common jargons and terms you might encounter as you shop for life insurance in the market. Getting yourself familiarised with the terms that are used often will help you understand the insurance policy you’re considering.
If you have life insurance tips or ideas, which you might want to share with us and our readers, feel free to comment on your thoughts below.
Kath Ramirez embraced the dream of being a writer since she was in 4th grade. She took it seriously and she now writes for Insurance Advisernet AU, one of the top financial and insurance companies in Australia. Aside from writing, Kath also keeps herself busy spending time with her family, cherishing the role of a dog mum, reading random books, and diving into the world of photography. She’s not even a pro at whatever she’s engaged in right now, but one thing she knows, she’s happy and that’s more than enough.