You’ve been part of the life insurance game for a while; you know the ins-and-outs of annuities, the ups-and-downs of assets, and you know your policies and plans back-to-front. But if you?re going to guide clients who barely speak the language of life insurance through all they need to know, you?re going to need to make sure you?re a life insurance scholar. Here at SilverSide, we?re proud to offer the information and tools you need to become an expert in the life insurance industry. [Read more…]
Life Insurance Terminology
The insurance world is a jungle filled with complicated policies and terms. As insurance agents, it is your job to be the guides for your clients through the trees. Can you sufficiently explain to clients and potential clients the difference between Increasing Term Insurance and Level Term Insurance? How are they going to learn about the policies available to them and choose the right life insurance plan? SilverSide Insurance Marketing is here to help with our monthly Life Insurance Glossary blog that will provide some basic definitions and explanations for life insurance terminology.
The beneficiary is the person(s) who receives the proceeds from a life insurance policy when the insured dies. The three types of beneficiaries are: primary beneficiaries who are the first person(s) entitled to the proceeds; Secondary beneficiaries who are the person(s) entitled to the proceeds in the event that the primary beneficiary is not living when the insured dies. The final type is the tertiary beneficiary who is entitled to the proceeds if the primary and secondary beneficiary are not alive when the insured dies. Secondary and tertiary beneficiaries are also known as contingent beneficiaries. For all of the animal lovers out there, there is good news and bad news. No, your client cannot make a pet a beneficiary. The law designates pets as property, and it is not possible to leave property to property. You would not leave all of your assets to your favorite toaster, right? (Or would you??) The good news is that the pet can be bequeathed to a certain beneficiary, who can take care of it for the remainder of its life.
2. Term Life Insurance:
Also known as ?term insurance?, term life is life insurance that provides coverage at a fixed rate for a limited period of time. After the period expires, the client must either forgo life insurance altogether or purchase more life insurance with potentially different payments and conditions. Term life insurance is the least expensive form of life insurance. There are multiple kinds of term life insurance including decreasing term insurance, level term insurance, and increasing term insurance. SilverSide Insurance professionals usually recommend Term Life to our agents and their clients.
3. Decreasing Term Insurance:
Decreasing term insurance is a type of annual renewable term life insurance that provides a death benefit that decreases during the life of the policy. ?The monthly premiums are usually constant throughout the life of the contract and the reductions in payout reduce monthly or annually. The thinking behind decreasing term insurance is that the older you are, the less risk you take, and the less likely you need life insurance. ?Decreasing life insurance is not recommended for someone that has no other form of life insurance. Decreasing term insurance is usually used to cover a mortgage, a loan, or any other type of debt.
4. Increasing Term Insurance:
Increasing term coverage is a type of annual renewable term life insurance that provides a death benefit ?that increases during the life of the policy. ?The monthly premiums usually increase throughout the life of the contract and the increase in payout increases monthly or yearly. The thinking behind increasing term insurance is short term protection. If clients are looking for long term insurance, increasing term insurance is not for them because monthly and yearly increases in premiums reduce the value of the coverage in the long run. After a certain amount of time the increase in premiums can potentially overtake the increase in benefits. Again, this should only be purchased for short term protection.
5. Level Term Insurance:
Level term insurance is a type of annual renewable term life insurance that provides a death benefit that remains constant during the life of the policy. The monthly premiums stay constant throughout the life of the contract and the payout also stays constant. The thinking behind level term insurance is that it provides coverage for only a specified amount of time. This type of life insurance is popular with parents that have kids. If the kids are very young it is recommended to buy life insurance that pays out for twenty years, and if the kids are already in their teens, it is recommended to buy life insurance that pays out for only ten. These certain year policies will make sure the kids will be supported financially by the insurance until they are old enough to support themselves.
Armed with this new information, you will be able to provide your clients with the confidence they need to invest in life insurance and help your clients make the best decision for their family. You can also talk with your clients about different types of beneficiaries (and remind them that they cannot have their pet or toaster as a beneficiary). In this ever changing and complex world we live in, it is extremely important to have life insurance. SilverSide Marketing is always here to help!