Life and Disability Insurance:

If you have purchased a health insurance plan from Anthem Blue Cross, you may want to consider adding a life and disability policy to your health coverage. Most people do not realize just how important life or disability insurance is until they need it. If you have a family, you will need to make sure that they are prepared in the event that something should happen to you.

It is important to understand your options and the terminology that will be associated with your life or disability plan. This will assist you in finding the best level of coverage for your needs.

Life insurance coverage begins at $10,000. This is the usual minimum amount of life insurance coverage and if you cannot afford a higher level of coverage, it can be useful. A good guideline to follow when looking for a life insurance plan is to find a level of coverage that is comparable to your current annual income. This will help you family get on their feet, and have at least a year of the income that they are used to coming in.

If you have a mortgage, or credit card bills, a life insurance policy should cover these debts. In some cases, your credit company or mortgage company may require a policy that is large enough to pay for your home in the event that you pass away. This can be used during your approval process to improve your chances of getting a mortgage.

When you purchase a life or disability policy, you will be exposed to several different new terms. You may be familiar with some of the terms from your health insurance policy, but there will be a few new ones.

Here are a couple of the most commonly used terms in a life or disability policy:

Absolute Assignment - This is a term that means you irrevocably assign your life or disability benefits to a beneficiary. Once you have made this decision, you will not be able to change your mind.

Accelerated Benefits - This can also be known as “living benefits." It allows you to access your life insurance policy while you are still alive in the event that you need extra money. Common uses include long-term care, accident or illness or a disability.

Assignee - This is the party that will receive either an absolute or collateral assignment of your benefits.

Basic Death Benefit - This term refers to the basic amount that will be paid out in the event of your death. It is usually equal to the face value of your policy.

Collateral Assignment - Unlike an absolute assignment, a collateral assignment only assigns certain rights to your designated assignee. This is used in the event that a loan company requires your life policy as collateral, as mentioned above.

Contingent Beneficiary - You may be asked to provide more than one beneficiary for your policy. If the primary beneficiary dies before you do, the contingent beneficiary will then receive your benefits.

Double Indemnity - A clause in a life insurance policy that will pay an additional benefit in the event that you die in an accident.

Face Amount - The unchanging value of your policy. This is the amount that will be paid out at your death.

Income Protection Policy - A type of disability insurance policy that will provide a replacement of your income if you become disabled. The amount is typically 2/3 of your usual salary.

Permanent and Total Disability - An illness or injury that will prevent you from being gainfully employed in the future.

Primary Beneficiary - This is the person that you will designate to receive your life insurance policy benefit. You may need to supply a contingent beneficiary as well. Please see above.

Your insurance representative will be able to assist you in understanding any other terms that you may find in your policy that you are not familiar with.

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