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Life insurance can seem daunting at first. But don’t worry. A Life Specialist can help you to choose a policy that works for you and your budget. And we’re here for you as your trusted partner with answers to those nagging little questions that keep you up at night. Now, why is life insurance so important to have?

There are as many kinds of life insurance and annuities as there are reasons to have them. For instance, your most important consideration might be lifetime protection without a set term. Or affordable protection for a set period of time. Or a steady stream of income that lasts your lifetime. Each consideration points to a specific kind of life insurance, and a Life Specialist can help you find the best kind for you.

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Basic Life Insurance Terms

Life insurance can seem like its own language. Here are some common terms you’re sure to come across.

Named Insured

The insured is the person whose life is covered by the life insurance policy. If the insured person passes away during the policy term, the insurer pays out the death benefit to the designated beneficiaries. In most cases, the insured is also the policyholder.


The policyholder is the legal owner of the life insurance contract. They are the one who initiates the policy, pays the premiums, and has control over the policy’s terms and conditions. In many cases, the policyholder and the named insured are the same person.


The beneficiary is the person or entity that you legally designate to receive the benefits from your financial products. For life insurance coverage, that is the death benefit your policy will pay if you die.

Face Value

The face value of a life insurance policy is the amount paid to your beneficiaries when you die. It represents the dollar amount of coverage provided by the policy.

Cash Value

Cash value refers to the portion of a permanent life insurance policy that accumulates savings over time. It is a feature found in policies like whole life and universal life insurance. Unlike term life insurance, which has no cash value, these permanent policies build up a savings component.

Insurance Rider

A life insurance rider is an addition of terms and conditions to a life insurance policy that a person can choose when they purchase their life insurance policy. These riders come at an additional cost but add benefits to the insurance coverage.

Find a life insurance policy that works for you.

You and your life insurance advisor can help choose which life insurance policy offered through AAA works best for your needs and budget:

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Term Life Insurance

A popular choice as it usually is the least expensive option. Term Life Insurance helps provide coverage for a specified period of time, such as while paying off a mortgage or when you have children at home. It’s also often used to help pay for housing expenses, outstanding debt, and daily living costs such as groceries and bills.

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Whole Life Insurance

Provides coverage for a lifetime. It builds cash value over time and once locked in, your premiums never increase.

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Universal Life Insurance

Designed for flexibility: it can last a lifetime, with options offering level or flexible premiums, cash value accumulation features, and the ability to leave an inheritance.

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Annuities can provide a secure way to grow your money for retirement and help provide a steady stream of income that could last for life.

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Budgeting tip: Pay yourself first.

Pay yourself first. Because that’s the best way to help make sure you have money saved for the most important things in life, like protecting those you love.

  • Set aside a percentage of your income for retirement, life goals and a family emergency fund. No matter how small the percentages you earmark, make sure to keep putting money toward you and your family. 
  • Write it down. Use a spreadsheet, a notebook, even on a napkin (not really, you should go for something more durable) but write it down. 
  • Increase your payments to yourself whenever your income increases. Assign a minimum percentage to pay yourself and ramp it up when your salary or income increases.

Learn about life insurance and what makes sense for you.

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The Whole Truth About Whole Life Insurance

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Is Life Insurance Through Your Employer Enough?

Employer-provided life insurance is often not enough to truly protect your legacy. See what we mean…

Life insurance underwritten and annuities offered by our affiliate AAA Life Insurance Company, Livonia, MI. AAA Life (CA Certificate of Authority #07861) is licensed in all states except NY. Products and their features may not be available in all states.