An agent provides financial planning advice, and is licensed to sell and service life insurance products. A good agent always acts in the best interest of his clients by fitting products to their needs.
The beneficiary is the person(s) or entity(s) who receive the death benefit of a life insurance contract upon death of the insured.
Most types of life insurance contracts, except for term insurance, have a cash value which builds over the lifetime of the policy. The cash value can be accessed by the owner for loans and withdrawals, while still keeping the insurance in force.
The amount paid to the beneficiary by the insurance company upon death of the insured person.
The free look period is the period of time required by law after a contract is delivered to the owner, where the owner can decide not to accept the contract and be refunded all premiums paid. If an insured person dies during the grace period the insurance company is still required to pay the full death benefit. Free look period lengths vary by state but are 10 days long in most states.
The grace period is a 31 day period of time required by law after a missed payment, where the contract remains in force and a death benefit is required to be paid.
A provision in most life insurance policies that prevents the provider from voiding coverage due to a misstatement by the insured after a specific amount of time, usually 2 years, has passed.
The named person in the contract whose death triggers a death benefit payout by the insurance company to the beneficiary. All underwriting and risk considerations are based on the insured in a contract.
A life insurance policy that insures the life of a minor. It provides tax advantages as well as a life time of benefits for the child and his parents.
When premium payments are not made in a timely manner and no cash value remains in the policy. This effectively terminates your policy, though there may be provisions to reinstate the policy for a period of time without underwriting required. If death of the insured occurs when a policy is in lapsed status, no death benefit is paid.
The reason life insurance can be inexpensive for everyone. Over a large enough sample of people a life insurance company can accurately predict at what age the average client will die, and they can price their insurance accordingly, even though some clients will die at a very young age.
Life insurance is a contract between an insurance company and the owner of the policy which requires the insurance company to pay a stated death benefit upon the death of an insured person. Life insurance is used to transfer the financial risk of a persons death to the insurance company. It is also used for savings and investments purposes and to pass an estate on to the next generation in a tax efficient manner.
Life insurance contracts with a cash value typically allow the policyholder to borrow money against the cash value, tax free at time of loan and for any purpose. The loan does not necessarily need to be paid back to keep the insurance in place.
A medical exam is performed during the underwriting process prior to approval for life insurance policies. This is also known as a paramedical exam. The purpose of the exam is to more accurately assess the risk of premature death, and to place each person in the appropriate underwriting tranche.
The Medical Information Bureau, or MIB, checks past records to uncover "errors, omissions or misrepresentations made on insurance applications." It's similar to a credit report for the life insurance process, and it helps prevent fraud, risk, and increased costs.
You can request a free copy of your MIB report here.
The owner of the contract is responsible for making premium payments, designating beneficiaries, and has all rights of contract changes.
Premium is the amount of money paid into an insurance contract. Depending on how the contract is structured, the premium payment may be more or less than the true cost of insurance. The difference between premium paid and cost of insurance will result in adjustments of the cash value. In a term insurance contract premium and cost of insurance usually match exactly.
This is the risk class the insured is deemed to be after undergoing underwriting by the insurance company. People with similar risk characteristics are grouped together so that the insurance company can accurately predict the expected age of death for a given risk class. Lower risk classes (higher ratings) enjoy less expensive insurance because the expected age of death is later. The name of each rating class can vary among insurance companies but preferred plus, preferred, select, nonsmoker, and smoker are common classes.
Reinstatement occurs after a policy has lapsed. This process involves a payment to the insurance company which will make the policy in active standing once again, and may require a statement from the client that their health has not changed, or reinstatement may even involve underwriting.
A rider is an additional feature or benefit added to a life insurance policy. A rider may or may not have an associated charge.
Risk is the possibility of an outcome occurring that is not an expected result. While this can refer to both good or bad outcomes, usually people use risk to refer to a negative possibility. Risk in the life insurance industry refers to risk of a premature death. Life insurance helps protect beneficiaries from the loss of income from this risk.
A surrender is when a policy owner terminates insurance coverage for the purposes of obtaining the cash value of the policy, before death of the insured.
Term life insurance is a temporary insurance contract that will expire at a stated point in the future. Normally the least expensive form of insurance coverage.
The standard and oldest form of modern life insurance. Whole life insurance is guaranteed to be in place for the entire life of the insured. Premium payments are typically level, and may end at some point in the future. Whole life insurance guarantees a minimum cash value throughout the life of the policy if all premium payments are made in a timely manner. The most secure form of life insurance available.
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8865 Grissom Road, San Antonio, Texas 78251, United States
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