No one wants to think about their passing, but it happens to everyone, and it is better to be prepared. One way to do this is with a life insurance policy. A life insurance policy can be used to help pay for your funeral expenses, and/or it can provide financial help for your loved ones. If you would like to learn more, check out these four life insurance terms you should know.

1. Beneficiary

When filling out your life insurance application, you'll need to list your beneficiaries. These are the people who will receive the death benefits upon your passing. Most people put their closest family (parent, child, and/or spouse) as their beneficiary, but you can put anyone as your beneficiary. You can list one beneficiary or multiple, and you can change it at any time.

In addition, you may be asked to list a contingent beneficiary. This person receives the benefits if the primary beneficiary/beneficiaries have passed. Again, you can list multiple contingent beneficiaries and change it any time.

2. Premium

As with any form of insurance, the premium is the amount you pay each month to keep the insurance. With life insurance, however, this is incredibly important. Forgetting to pay your premium could result in termination of your account. If this happens, your beneficiaries won't receive anything after your passing.

If you have made a lapse in payments, you can get reinstated. For starters, you must repay all unpaid premiums with interest. However, you must also prove again that you qualify for life insurance. This may involve another physical with your doctor to measure your overall health.

3. Risk

The price of your premium largely depends on risk. In the case of life insurance, however, risk is heavily tied to your health and behavior. To measure your overall health, the insurance carrier will require a physical examination before providing benefits, and your premium can be affected by adverse health issues like diabetes.

In addition, your behavior is considered. For example, if you are a daredevil who likes extreme activities like skydiving and bungee jumping, the insurance carrier will view you as a higher risk than someone who avoids those activities. As a result, your premiums will be higher to offset the risk.  

4. Term/Whole

Term and whole refer to types of life insurance policies. If you purchase term life insurance, you have the policy for 20 to 30 years, depending on the specifics of the policy. During the policy, as long as you stay current, your premiums cannot be changed, even if your risk changes. However, if the policy ends before your passing, you'll need to buy a new policy, which comes with a new risk assessment.

With whole life insurance, you have the policy for life, as long as you pay the premiums. The downside is higher premiums, but unlike term life insurance, you can borrow from your whole life insurance.

Life insurance is a great option for anyone at any age. It can take a huge weight off the shoulders of your loved ones, so they can focus on mourning instead of money. For more information, contact a life insurance provider in your area today.