Glossary & Terms
The person or entity named in the policy to receive the death benefit. A policy can have more than one beneficiary.
The amount of money that the policyholder of a permanent (whole life, universal, etc.) life insurance policy receives if he or she were to surrender or “cash in” the policy.
The amount of money the insurance company pays to the beneficiary or beneficiaries if the insured dies while the policy is in effect.
This is the stated amount that upon death or maturity is paid out by the insurance company.
The capacity of a person to purchase life insurance based on his or her health and other risk factors as determined by the insurance company. People with serious or terminal diseases are often non-insurable.
The person whose life is insured by the policy.
Life Insurance Policy
A contract between an insurance company and the policyholder to pay a death benefit if the insured dies while the policy is in effect.
The amount of money that you may lose if you cash in your policy early.
The amount of cash that the policyholder of a life insurance policy receives if he or she surrenders or “cashes in” the policy. The amount paid is less any outstanding surrender charges/ penalties.
A policy that remains in force although the policyholder no longer has to pay premiums.
The person who owns the insurance policy. This person may or may not be the insured.
A loan secured by the cash value of a life insurance policy. It must be less than the amount of the cash value.
The agreed upon amount of money paid on a regular basis by the policyholder to the insurance company to keep the policy in force.
Renewable Term Life Insurance
Term life insurance that allows the policy to be renewed usually without requiring evidence of the insured’s insurability.
Lifestyle choices, health conditions and other considerations that insurance company underwriters must take into consideration to determine a person’s insurability.
Whole Life Insurance
A form of life insurance designed to last a person’s “whole life” and includes a tax-deferred, life/cash value savings component. This type of policy accumulates cash value.
A section in some life insurance policies that cancels the death benefit if the insured commits suicide, usually within the first few years of the policy.
Term Life Insurance
A simple form of life insurance without a savings component that is designed to last a temporary period of time. Policyholders pay for “death benefit” coverage only.