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Nate Obringer, CFP®, RICP®
Financial Planner
Prudential Advisors
9800B McKnight Road, Suite 223
Pittsburgh, PA 15237
Phone: 412-318-4129
Fax: 877-840-2322
Email: nate.obringer@prudential.com
July/August 2018
The ABCs of Insurance
Life insurance terminology is often difficult to understand. Here’s an explanation for some puzzling insurance phrases so that you’ll know what they mean.
Underwriting
How an insurance company examines risk to decide whether or not to approve applicants to buy insurance.Evidence of insurability
This is generally proof of your health, although some insurers may also check your finances and employment to determine insurability.Standard risk
This is underwriting — or rating — which determines normal risk. A standard risk will pay more for insurance than the lowest risks, but less than substandard risks, who are the highest risks.No underwriting is required
You hear this phrase when an actor pitches a term life insurance policy on television. In reality, individual term insurance is typically for a low amount and doesn’t fully pay a death benefit for the first two or so years.Group insurance
This is typically a nominal amount of coverage underwritten on a large amount of people. This is usually a benefit offered by employers and associations.Beneficiary
The person or entity that receives the insurance policy’s death benefit. An entity could be a charity or even a business.Rider
Most whole life and some term life policies offer riders, which insurers also call endorsements. You can consider them addendums that, sometimes for an extra fee, may add to your benefit or suspend premiums, among other options.Lapse
When policy owners miss a payment, an insurance policy could lapse, or be cancelled. There are riders to protect against this possibility, too.Dividend
Whole life insurance policies often pay a predetermined rate of interest on paid premiums. The insurer can use earnings and expense savings to reduce your premiums, increase your benefit and pay periodic dividends.Agents
These are people, licensed by the states in which they sell insurance, you should contact to learn more about individual life insurance.0314587-00001-00
Nate Obringer is a Financial Planner with, and offers securities and investment advisory services through LPL Enterprise (LPLE), a Registered Investment Advisor, Member FINRA/SIPC, and an affiliate of LPL Financial.
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