7 Life Insurance Terms You Need to Know June 1, 2023 You probably already know that life insurance is a way to protect your loved ones financially if something happens to you. But do you know all the terms that go along with it? Don’t worry, we’re here for you. Keep reading as we break down seven life insurance terms that you should know about while considering your options. Term life insurance Term life insurance provides coverage for a specific period of time, usually 10-30 years or the number of years until you reach age 65. If you pass away during the term, your beneficiary will receive the death benefit. This option is perfect if you’re just starting out, raising your family or building your business. Whole life insurance Whole Life provides coverage for–you guessed it–your whole life, as long as you pay the premiums. It also accumulates a cash value over time, which can be borrowed against or used to pay premiums. This type of policy is typically more expensive, but it offers more long-term financial protection. Universal life insurance Universal Life insurance is similar to Whole Life, but offers more flexibility. You can adjust elements of the policy, such as premium payments and death benefits, as needed. This type of policy is often used as an investment vehicle, as the cash value can grow over time. Universal Life is a good option if you want to have life insurance and save for retirement at the same time. Now that we’ve talked about the different types of life insurance, let’s dive into some more general terms. Beneficiary A beneficiary is the person (or people) who will receive the death benefit from your life insurance policy if you pass away. It’s important to designate a beneficiary so that your loved ones know who to contact and how to receive the funds. Lump sum When it comes to payout options, a lump sum is usually the default for most life insurance policies. This means that your beneficiary will receive the entire death benefit in one large payment. While this can be helpful for those who need the money immediately, it may not be the best option for everyone. Talk to your local OKFB agent to discuss payout options. Retained asset account A retained asset account is like a checking account for your beneficiary. Instead of receiving a lump sum payment, the insurance company holds onto the payout in an interest-accruing account. Your loved ones can then write checks from the account as needed. This option can be helpful if your beneficiary isn’t quite sure how to manage a large sum of money. Pre-death benefits Did you know that some life insurance policies allow you to access the death benefit while you’re still alive? Pre-death benefits, also known as accelerated death benefits, can help you pay for medical expenses or other costs associated with a terminal, chronic or critical illness. While it may not be the most lighthearted topic, understanding these terms can help you make informed decisions about your financial future. We’re Here to Help Whether you’re shopping for life insurance or want to update your policies, we have agents who can help. If you have questions or concerns that you want to discuss, connect with your local OKFB agent today. If you have any insurance-specific questions, we would love to help you find the coverage that best meets your home, auto, commercial and life insurance needs. Don’t forget to follow us on social! This kind of information and more is just a click away. You can find us on Facebook, Instagram and LinkedIn.