Important Facts

Your Life Insurance Application: 3 Definitions You Should Know

Insurance policy language can be a bit challenging, but it's important understand a few policy definitions. Learn these terms and be prepared to begin the policy application process.

Know what these terms mean before applying for any type of life insurance coverage

No matter what type of life insurance policy you're applying for, it's important that you understand certain policy definitions before you begin to complete your application. By doing so, you can be certain that your contract is written the way you intended it to be.

Unfortunately, many people aren't as prepared as they should be when applying for life insurance coverage, making it difficult to make important policy decisions. In this article, we'll look at three policy terms that are sometimes misunderstood: the policyowner, the insured, and the beneficiary.

The Policyowner

When you purchase a life insurance policy, you are considered the policyowner (also known as the applicant). As the policyowner you:
  • Are responsible for making the premium payments
  • Have the right to make changes to the beneficiary
  • Can take policy loans or withdrawals (if you have a type of permanent* life insurance policy)

Simply put, it's your policy and you alone have the right to make any policy adjustments that you like.

The Insured

In many cases, the insured is also the policyowner. However, there are instances where this can differ, and why it's important to know the difference. For example, you could be the policyowner on a contract for a minor child who is the insured.

An easy way to understand this term is to know that the insured is the person whose life is being insured under the terms of the contract. It's the person on whom the premiums are based (their health, age, and other factors) at the time the application is written. When the insured dies, the death benefit is paid out to the beneficiary.

The Named Beneficiary

The named beneficiary is the person(s) or entity listed on the life insurance contract who receives the death benefit when the insured dies. When you're ready to start your application, you'll be asked to name primary, secondary, and tertiary beneficiaries. A primary beneficiary is first in line to receive the life insurance proceeds, the secondary is second, and tertiary is third.

For example, let's say that your spouse is the primary beneficiary on your policy and your children are secondary beneficiaries. If you and your spouse were to pass away at the same time, then the death benefit will be paid out to your children as specified in your contract. Having a tertiary beneficiary isn't always required at the time of the application, but it can be an important step that you may not want skip. Basically, it's naming a person(s) or entity that is third in line in the event the primary and secondary beneficiaries are deceased at the time the policy pays out.

Taking your time to select the right type of life insurance policy is important. However, so is understanding the often confusing terminology involved with the life insurance application process. You can read more about the life insurance application process by visiting the Protective Learning Center.


*Provided required premium payments are timely made.
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All Learning Center articles are general summaries that can be used when considering your financial future at various life stages. The information presented is for educational purposes and is meant to supplement other information specific to your situation. It is not intended as investment advice and does not necessarily represent the opinion of Protective Life or its subsidiaries.

Learning Center articles may describe services and financial products not offered by Protective Life or its subsidiaries. Descriptions of financial products contained in Learning Center articles are not intended to represent those offered by Protective Life or its subsidiaries.

Neither Protective Life nor its representatives offer legal or tax advice. We encourage you to consult with your financial adviser and legal or tax adviser regarding your individual situations before making investment, social security, retirement planning, and tax‐related decisions. For information about Protective Life and its products and services, visit www.protective.com.

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