The Top Five Life Insurance Terms That You Should Know!

October 27th, 2019

The trend of owning life insurance is increasing day by day. Today everyone wants to live a happy and secure life, so they invest in a life insurance policy to secure their future. There are major three types of life insurance. But here we are talking about the oldest form of life insurance that is term insurance. It assures life for a specified period. So before buying the life insurance policy, the person should compare its type and different plans of the system. Many people compare life insurance UK with other countries to know about the intentions of different regions.


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Everyone should know the meaning of term insurance before knowing the term life insurance facts. The term investment is a type of temporary investment, and the person gets the claim if he dies within the tenure of the policy. If the person still survives after the expiry of the term insurance, then it is not liable to get any claim of the plan. So the chances of claim are less in term insurance. Therefore, term insurance is the purest form of giving assurance to the person, but he only gets the claim if he dies within the time period of the policy; otherwise, the policy becomes void. And no one has the power to redeem the policy.


Some people think that term life insurance is expenditure while others believe that it is a temporary mode of investment. Term insurance involves the risk of payment because the money is only credited if the policyholder dies within the tenure of the policy. After the expiry of the term life insurance, the person has no right to claim the life insurance policy. It means that the person needs to die within the specified period. As we know that death is uncertain so no one can estimate the amount of maturity .although, the amount received by the policyholder or its beneficiary is not confirmed.


Let’s discuss the types of term insurance


There are various categories of term insurance, so if the person is deciding to invest in term insurance, then they should know about the types of term insurance to make the right choice.


Premium term insurance: the word premium means high-class insurance, which is payable throughout the specified time period. This sum of money is pre-fixed by the life insurance company. It is beneficial for the life insurance company as in this, the amount of premium is fixed, and it does not increase with time as we can see that many policies have a feature of growing dividends every year. This time of policy is generally available for a limited period; it varies from 3years to 40 years. Therefore, the level of premium is pre-decided, and the companies pay a fixed amount of money at the maturity period.


Convertible term insurance: The term policy has a great feature of convertibility, which means that the policy can be converted from one type to another type of plan. In the beginning, some person purchases term insurance because they know that it can be further converted into other programs. For example, term insurance can be converted into permanent life insurance. The quality of convertibility has made the term insurance more accessible.