Life Insurance

Life Insurance terms

1. Accelerated Death Benefits Benefits available in some life insurance policies prior to death.
2. Accidental Death Benefit A provision added to a life insurance policy for payment of an additional benefit in case of death as a result of an accident.
3. Annuity A life insurance contract sold by insurance companies, brokers, and other financial institutions. It is usually sold as a retirement investment.
4. Automatic Premium Loan A provision in a life insurance policy that any premium not paid by the end of the grace period (usually 31 days) will be automatically paid by a policy…
5. Beneficiary A person who is entitled to receive the benefits or proceeds of a will, trust, insurance policy, retirement plan, annuity, or other contract.
6. Cash Value (Cash Surrender Value) The amount available in cash upon surrender of a policy before it becomes payable upon death or maturity.
7. Convertible Term Insurance Term insurance that offers the policyholder the option of exchanging it for a permanent plan of insurance without evidence of insurability.
8. Cost Index A way to compare the costs of similar plans of life insurance. A policy with a smaller index number is generally a better buy than a comparable policy…
9. Cost-Of-Living Rider An option that permits the policyholder to purchase increasing term insurance coverage.
10. Current Assumption Whole Life A variation of universal life insurance, this product involves fixed premiums and fixed death benefits. Its cash value growth depends on market conditions.
11. Dividend See Dividends
12. Double Indemnity (See Accidental Death Benefit.)
13. Face Amount The amount stated on the face of the policy that will be paid in case of death or at maturity.
14. Grace Period A time period after the due date that you may pay a premium without penalty. The policy remains in force during this time.
15. Guaranteed Insurability An option that permits the policyholder to buy additional stated amounts of life insurance at stated times in the future without evidence of insurability.
16. Insured The policyholder or person(s) protected in case of a loss/claim.
17. Lapsed Policy A policy that has terminated for non-payment of premiums.
18. Level Premium Insurance Insurance for which the cost is distributed evenly over the premium payment period.
19. Living Benefits (See Accelerated Death Benefits.)
20. Loan Value (See Policy Loan.)
21. Mortality Table A statistical table showing the death rate (probability of death) at each age.
22. Mutual Life Insurance Company A life insurance company owned by policyholders who share in the company's surplus earnings.
23. Non-forfeiture Values The value of the policy if cancelled, either in cash or in another form of insurance.
24. Non-participating Insurance Insurance on which no dividends are paid.
25. Paid-up Insurance Insurance on which all required premiums have been paid.
26. Participating Insurance Insurance on which the policyholder is entitled to share in the surplus earnings of the company through policy dividends that reflect the difference…
27. Policy The contract form issued by the company to explain the coverage provided. It is a legal document.
28. Policy Dividend (See Dividend.)
29. Policy Loan Under an insurance policy, the amount that can be borrowed at a specified rate of interest from the issuing company by the policyholder, who uses the…
30. Premium The price charged for insurance.
31. Producer An authorized representative of an insurance company who sells and services insurance contracts.
32. Reinstatement The process by which a life insurance company puts a policy back in force after it lapsed because of nonpayment of renewal premiums.
33. Renewable Term Insurance Term insurance providing the right to renew at the end of the term for another term or terms, without evidence of insurability.
34. Rider A written agreement attached to the policy expanding or limiting the benefits otherwise payable under the policy. Same as an "endorsement."
35. Risk Classifcation (See Underwriting.)
36. Settlement Option One of several ways, other than immediate payment in a lump sum, in which the insured or beneficiary may choose to have the policy proceeds paid.
37. Stock Life Insurance Company A life insurance company owned by stockholders who share in the company's surplus earnings.
38. Straight Life Insurance (See Whole Life Insurance.)
39. Term Insurance A plan of insurance that covers the insured for only a certain period of time (the term), not for his or her entire life.
40. Term Rider Term insurance that is added to a whole life policy at the time of purchase or that may be added in the future.
41. Underwriting The purchase for resale of a new issue of securities by an investment dealer or group of dealers.
42. Universal Life Insurance A flexible premium life insurance policy under which the policyholder may change the death benefit from time to time (with satisfactory evidence of…
43. Variable Life Insurance Life insurance under which the benefits relate to the value of assets behind the contract at the time the benefit is paid.
44. Waiver Of Premium A provision that sets certain conditions under which an insurance policy would be kept in full force by the company without the payment of premiums.
45. Whole Life Insurance (Straight Life or Permanent Life) A plan of insurance for life, with premiums payable for a person's entire life.