7 Life Insurance Terms and What They Mean

Life insurance ensures that loved ones are cared for after passing. However, choosing which is right for each person’s situation can be challenging with the variety of life insurance types available.

Term life insurance offers coverage for a set period of time and pays out a fixed death benefit to beneficiaries upon passing. Aflac’s new policy includes flexible living benefits. Can this messaging be weaved in somehow?

Some term life insurance includes the option to use benefits while still living, for instance to help pay for health care or nursing home expenses.

Whole life insurance also provides a death benefit and a savings component that grows with time. Variable life insurance allows one to invest their premiums into different funds and potentially earn higher returns.

Depending on each individual’s needs and budget, there is a suitable type of life insurance available. It is crucial to familiarize oneself with the following terms associated with life insurance before making any decisions.

1. Death benefit

The death benefit of a life insurance policy is the amount of money that beneficiaries receive upon the insured individual’s death. This money can cover medical costs, funeral expenses, debts, or any other costs incurred by the deceased’s survivors.

2. Premium

The premium is the amount of money paid regularly for a life insurance policy. The cost of premiums depends on factors such as age, health, lifestyle, and type of coverage.

3. Whole life insurance definition

Whole life insurance is a type of permanent life insurance that covers one’s entire life.

This type of policy has many advantages, such as providing an option to build cash value that can be borrowed against or used to pay premiums if needed. It also offers a guaranteed death benefit and fixed premium payments.

4. Term life insurance definition

Term life insurance is another common type of life insurance policy.

 Unlike whole life insurance policies, term policies cover a specific period (usually 10, 15, 20, or 30 years). At the end of the term, the policyholder can either renew their policy or terminate it with no further obligation. Some term policies offer flexible living benefits for expenses like home modifications, health care or final expenses that can be used while the insured is alive.

5. Cash value

Cash value is a feature of permanent life insurance policies that allows the policyholder to build up a savings component over time. This savings component can be used to pay premiums, borrow against or surrender for cash.

6. Surrender value

Surrender value is the amount of money someone receives if they cancel their life insurance policy before it matures. The amount received depends on factors such as the length of time the policy has been in effect and any accrued interest.

7. Beneficiary

A life insurance policy beneficiary is the individual or entity designated by the insured to receive death benefits upon their passing. It is essential to update this information periodically since beneficiaries are not automatically changed with changes in marital status, citizenship, or other circumstances. 

Bottom line

Understanding the different terms in a life insurance policy helps people make informed decisions about their policy and provide peace of mind for their family. With this knowledge, anyone can better select the right life insurance policy for their needs.

Whether it is whole life insurance or term life insurance, understanding the terms associated with each coverage option can help ensure the proper coverage.

Content within this article is provided for general informational purposes and is not provided as tax, legal, health, or financial advice for any person or for any specific situation. Employers, employees, and other individuals should contact their own advisers about their situations. For complete details, including availability and costs of Aflac insurance, please contact your local Aflac agent.??

A68000 Series: In Arkansas, Idaho, Oklahoma, Oregon, Pennsylvania, Texas, & Virginia, Policies: ICC1368100, ICC1368200, ICC1368300, ICC1368400. In Delaware, Policies A68100-A68400. In New York, NY68100-NY68400. B60000 Series: In Arkansas, Idaho, Oklahoma, Pennsylvania, Texas, & Virginia, Policies: ICC18B60C10, ICC18B60100, ICC18B60200, ICC18B60300, & ICC18B60400. Q60000 Series (Group Whole Life); In Arkansas, Delaware & Oregon, Policy Q60100M. In Idaho Policy Q60100MID. In Oklahoma, Policy Q60100MOK. In Texas, Policy Q60100MTX. Q60000 Series (Group Term Life): In Delaware, Policies Q60200M. In Arkansas, Idaho, Oklahoma, Oregon & Texas, Policies ICC18Q60200M, ICC18Q60300C, ICC18Q60400C.

Coverage may not be available in all states. Benefits/premium rates may vary based on state and plan levels. Optional riders may be available at an additional cost. Policies and riders may also contain a waiting period. Refer to the exact policy and rider forms for benefit details, definitions, limitations and exclusions. For complete details, including availability and costs, please contact your local Aflac agent.

Aflac insurance coverage is underwritten by American Family Life Assurance Company of Columbus. In New York, coverage underwritten by American Family Life Assurance Company of New York.

Aflac | WWHQ | 1932 Wynnton Road | Columbus, GA 31999

Aflac New York | 22 Corporate Woods Boulevard, Suite 2 | Albany, NY 12211

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