Also be referred to as the payment, cost, or price, the premium is the amount of money you will have to pay to the insurance company to keep your insurance policy in force, or active. Depending on the policy, premiums can be paid in one lump sum, annually, semi-annually, quarterly, or monthly.
The insurance company evaluates each applicant to determine the amount of premium required to cover the risk the insurance company assumes when the policy is issued. The risk class is the health classification they assign to the applicant, which is typically based on height/weight, age, tobacco use, family health history, and personal health history.
Also referred to as the face amount, the death benefit is the amount your beneficiary, or loved one, will receive from the insurance company upon your death. Some people think of life insurance only in terms of its death benefit, but there is a flip side to some types of life insurance that is very interesting: living benefits.
Life insurance policies contain many terms. Four of the most important ones are: premiums, risk class, death benefit, and living benefits.
Living Benefits allow the policy owner to access cash while they are still alive. Many permanent life insurance policies offer the advantages of living benefits for policies that build equity over time, also known as cash value. This cash value allows a person to enjoy many living benefits, including guaranteed tax-deferred growth, tax-free access to cash value, supplemental retirement income, and cash for financial emergencies, college savings, legacy opportunities, and long-term care.
Most term insurance policies come with an accelerated death benefit rider, at no additional cost, allowing access to the death benefit in case of terminal, chronic, or critical illness, instead of digging into a savings account. Having the option to accelerate your death benefit funds could be a critically important step in helping you and your family through an unexpected health crisis. It could even be the saving grace that helps you enjoy a long and healthy life after an illness.
If you have any questions about the various features of life insurance, please feel free to reach out or call me anytime.