INSURANCE 101
Insurance (Coverage just in case it happens.)
Coverage by contract whereby one party (the Insurer) undertakes to indemnify or guarantee another (the Insured) against loss by a specified contingency or peril.
Life Insurance (Coverage when life ends.)
Coverage by contract between policyowner and insurer. It provides payment of a set sum to a designated beneficiary upon the death of the insured.
Insurer (The one that provides coverage.)
A person or company who agrees to compensate the Insured (people, companies, or other organizations) for specific financial losses.
Insured (The one that is covered.)
A person or entity that is covered by the insurance policy issued by the Insurer (the one that provides coverage).
Insurability (Can you be insured?!)
The degree for which a person or entity (the Insured) is found to be acceptable by an insurance company (the Insurer).
Whole Life (Permanent life insurance for your entire life.)
A permanent life insurance policy that will pay a specific death benefit amount, in return of your insurance premium (insurance payment), as long as you pay your insurance premium.
Final Expense (Whole life policy meant to cover final expenses.)
A type of whole life policy, with a smaller death benefit, making it more affordable, that is typically taken out to cover final expenses, such as funeral or memorial services, casket expense, cremation, or embalming. The cost of the premium does not increase, as long as you pay your insurance premium.
Universal Life (Permanent life insurance with flexible premiums.)
A form of permanent life insurance that has a savings component and has an element that allows flexibility of the premium and death benefit, as long as you pay your insurance premium.
Term Life (Coverage for a specified period.)
A type of life insurance policy that pays a death benefit of the insured during a specific term.
Insurance Premium (The amount you pay for insurance.)
An insurance premium is the amount an individual or business pays for an insurance policy. Depending on the policy, the premium is paid monthly, semi-annually, or annually.
Annuity (You pay into it and, in return, you get payment now or later.)
An annuity is a contract between you and an insurance company, that is paid by you with a lump-sum payment or a series of payments, an in return, you receive regular disbursements, which can begin either immediately or at some point in the future.
Insurance License (Authority to sell.)
A certification from a state department of insurance that gives authorization to a person or organization to sell insurance under the state law.