Insurance Demystified: 3 Basic Terms to Know Before Getting Life Insurance
27 June 2022
The most difficult thing about signing up for Life Insurance is all the formalities. It’s easy to recognize why insurance is important. But the moment people start dealing with contracts and terminologies, it should come as no surprise that the process gets intimidating. Even though it’s confusing to deal with complicated jargon, that shouldn’t stop anyone from doing the right thing by buying insurance. IA Financial Group advises that “Life Insurance is important, whether you are single or in a relationship. In the event of your death, your loved ones will have to pay your funeral expenses and pay off any financial liabilities you have.” Here are a few helpful explanations to clear things up when it comes to Life Insurance:
1. What is a Primary Beneficiary?
The Beneficiary on an insurance policy is the person/organization eligible to receive a payout once the situation being insured takes place. That being said, there are different kinds of Beneficiaries when it comes to Life Insurance. There are Primary Beneficiaries, and Contingent Beneficiaries. A Primary Beneficiary is the main person/organization that the policyholder designates as eligible for payment.
2. What is a Contingent Beneficiary?
A Contingent Beneficiary is essentially a backup beneficiary. It is a person/organization eligible to receive a payout, in case the Primary Beneficiary is either dead or otherwise ineligible. Contingent Beneficiaries are second in line to receive payments from Life Insurance policies. Much like Primary Beneficiaries, Contingent Beneficiaries are chosen by the policyholder.
3. What is an Owner?
An Owner of a Life Insurance policy is essentially the principal policyholder. It is the person who subscribes for, configures and controls who the beneficiaries are. The Owner of a Life Insurance policy is responsible for deciding the scope of coverage. For example, they can opt to have a policy with only one beneficiary, or they can make a list of individuals or organizations which should be allocated payments in various amounts.
Conclusion:
If you ever find yourself sitting across the table from an insurance agent, and everything they’re saying sounds like Greek, don’t be afraid to slow things down and make your discomfort known. Even though you might feel embarrassed about not knowing the lingo, it’s more important for you to have a proper understanding of the contracts you’re entering into. Read up as much as you can before committing to an insurance policy, and ask as many questions as necessary. Arm yourself with knowledge so that you can make smart and efficient choices. For more information, visit our website or give us a call at 1-800-639-7654 to find out how Adriana’s Insurance Services can help you stay safe. We got you covered!
-z6m7i.png&w=3840&q=75)
