Mastering the language of life insurance contracts
At Beneva, we aim to make insurance easily understandable for everyone. At the same time, we realize that many insurance contracts will never be read by the people who own them. Instead, they will look to you, their advisor, to explain their options and help them make decisions about their coverage.
This article highlights some of the insurance vocabulary that we believe you should master, so that you can clearly explain these concepts to your clients. But first, let’s go over a few tips for effectively communicating these concepts.
Tips for effective communication
Here are some tried-and-true strategies to help your clients understand and remember insurance concepts:
- Avoid jargon. Jargon means lingo, abbreviations, acronyms, or other language that is likely to be unfamiliar to your client. For example, if you suddenly start referring to Critical Illness insurance as “CI,” your client could lose track of what you’re talking about and tune out of the conversation. It’s best to use simple language, define your terms, and stick with them.
- Tell stories. It’s difficult for clients to follow sequences of events based on concepts and terminology. It’s far easier to understand a story about someone who is like them, why they selected a certain type of policy, and how they benefited from their coverage. Bonus points if you can tell a story from your own personal experience.
- Check understanding. Clients may not feel comfortable asking questions, or might not even know how to ask what’s on their mind. Before moving on to the next topic, check to see if they understood what was just explained. You could say something like, “I know insurance can be tricky - which part of what we just discussed could I explain a little more?”
A concise insurance glossary
Some of the following descriptions may seem obvious, especially if you are a seasoned insurance professional. Still, it is wise to practice delivering them in a jargon-free manner so that you are always prepared to answer when a client asks. For a deeper understanding of these terms, please download the latest Beneva insurance products guide.
Beneficiary
A beneficiary is the person or entity that you legally designate to receive the benefits from your insurance policy.
Critical Illness Rider
The Critical Illness Rider pays a benefit when an insured person is diagnosed with cancer, heart attack or stroke. It can be added to Term Plus, Whole Life, Enhanced Term 100, Term 100 and Universal Life products at issue on an individual basis.
Exchange Program
When a client with Term Plus coverage wishes to extend the term of their coverage, the Term Plus Life Insurance Exchange Program can make it possible without new evidence of insurability.
Extreme Disability Benefit (EDB)
Most Beneva life insurance policies include the Extreme Disability Benefit. If a client with this benefit is in a state of extreme disability for a continued period of six months, meaning that they require assistance with basic activities such as dressing, eating and washing, they could receive an advance of as much as 50% of their initial insurance amount up to $250,000.
Insurability Benefit
When a client with Term Plus coverage increases their debt load, gets married, has a child, or graduates from university, the Insurability Benefit can allow them to increase their insurance coverage without new evidence of insurability.
Multi-Life Concept
The Multi-Life concept enables several members of the same family or the same company to join multiple permanent or term plans under a single policy, and benefit from lower annual policy fees. This makes it possible to insure up to six individuals under a single policy.
Premium Payment Options
Payment flexibility is important to many clients, such as having the convenience of automatic bank withdrawals instead of having to write cheques. It can also mean taking advantage of some of our permanent life products, where premiums can be payable for a specific number of years or spread throughout the client’s lifetime.
Riders and Endorsements
A rider is optional coverage that can be added to a standard life insurance policy. It “rides along” and becomes part of the overall policy contract. An Endorsement is the same thing, and the two terms can be used interchangeably.
Term Life vs. Permanent Life vs. Universal Life
The simplest way for clients to understand these policy types is to know that term life insurance protects them for a set number of years, and permanent life insurance protects them for life. Universal life insurance is a type of permanent life insurance that has extra flexibility that can help them meet goals around insurance, investing and tax planning.
In many ways, the job of an insurance advisor is to be a “professional explainer.” After all, if you can explain to clients why they have an insurance need and how insurance can solve it, the decision to obtain coverage should be easy. And when it’s time to select the right life and health policy for the job, Beneva will be here to help.