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Benefits Rider A life insurance rider that
allows for the early payment of some portion of the policy's
face amount should the insured suffer from a terminal illness
Death Benefit Rider A life insurance policy
rider providing for payment of an additional cash benefit
related to the face amount of the base policy when death
occurs by accidental means.
Death Insurance: Insurance providing payment
if the insured's death results from an accident.
An authorized representative of an insurance company who
sells and services insurance contracts.
Renewable Term A form of renewable term
insurance that provides coverage for one year and allows
the policy owner to renew his or her coverage each year,
without evidence of insurability. Also called yearly renewable
The transfer of the ownership rights of a Life Insurance
policy from one person to another.
Age Your current age. Your attained age
is one of the factors life insurance companies use to determine
your premiums. The older you are, the greater chance you'll
die while you are covered - so the higher your premium.
A procedure for making the effective date of a policy earlier
than the application date. Backdating is often used to make
the age of the consumer at issue lower than it actually
was in order to get lower premium. State laws often limit
to six months the time to which policies can be backdated.
The person designated to receive the death benefit when
the insured dies.
A temporary insurance policy that expires at the end of
a specific time period or when the permanent policy is written.
A binder is given to an applicant for insurance during the
time the complete policy paperwork is being completed.
(or final expense insurance) is whole life insurance with
small face values ($5,000 to $25,000), a simple application
process, and hassle-free underwriting.
Benefits Money that is paid to the insured
upon settlement of a covered claim. Often found with Hospital
Income Programs, "cash benefits" are paid directly to the
insured rather than the doctor or the hospital directly.
Value The equity amount or "savings" accumulation
in a whole life policy.
Notification to an insurance company that payment of an
amount is due under the terms of the policy.
Receipt Given to policy owners when they pay a premium at
time of application. Such receipts bind the insurance company
if the risk is approved as applied for, subject to any other
conditions stated on the receipt.
Clause A provision in an insurance policy
setting forth the conditions under which or the period of
time during which the insurer may contest or void the policy.
After that time has lapsed, normally two years, the policy
cannot be contested. Example: Suicide.
Beneficiary Person or persons named to receive
proceeds in case the original beneficiary is not alive.
Also referred to as secondary or tertiary beneficiary.
Another word for insurance. Insurance companies use the
term coverage to mean either the dollar amounts of insurance
purchased ($200,000 of liability coverage), or the type
of loss covered (coverage for theft).
Privilege Allows the policy owner, before
an original insurance policy expires, to elect to have a
new policy issued that will continue the insurance coverage.
Conversion may be effected at attained age (premiums based
on the age attained at time of conversion) or at original
age (premiums based on age at time of original issue).
Term A policy that may be changed to another
form by contractual provision and without evidence of insurability.
Most term policies are convertible into permanent insurance.
Plan An agreement that provides that upon
a business owner's death, surviving owners will purchase
the deceased's interest, often with funds from life insurance.
Benefit The amount of money paid to the
beneficiary when the insured person dies.
Term Insurance Term life insurance on which
the face value slowly decreases in scheduled steps from
the date the policy comes into force to the date the policy
expires, while the premium remains level. The intervals
between decreases are usually monthly or annually.
Indemnity Payment of twice the basic benefit
in the event of loss resulting from specified causes or
under specified circumstances.
of Insurability Any statement or proof of
a person's physical condition, occupation, etc., affecting
acceptance of the applicant for insurance.
Specified hazards listed in a policy for which benefits
will not be paid.
The termination of a term life insurance policy at the end
of its period of coverage.
Amount The amount of insurance provided
by the terms of an insurance contract, u sually found on
the first page of the policy. In a life insurance policy,
the death benefit.
Expenses Expenses incurred at the time of
a person's death. These include funeral costs, court expenses
associated with probating his or her will, current bills
or debt, and taxes. Depending on their circumstances, the
survivors may also want to pay the outstanding balances
of mortgage and loans.
To Die Insurance Insurance policy whose
death benefit is paid to the surviving insured upon the
death of one of the insured's. There is no longer a benefit
once the benefit is paid, however, the surviving insured
usually has the option of purchasing a policy of the same
amount without providing evidence of insurability.
Benefit A death benefit, the dollar amount
of which does not vary.
Look Provision required in most states whereby
policy owners have up to 20 days to examine their new policies
at no obligation.
Expenses Expenses incurred for a funeral
and burial. These can include casket, vault, grave plot,
headstone and funeral director.
Period Period of time after the due date
of a premium during which the policy remains in force without
Premium Policy A type of whole life policy
designed for people who want more life coverage than they
can currently afford. They pay a lower premium rate that
increases gradually over the first three to five years and
then remains constant over the life of the policy.
Term A form of renewable term insurance
that remains in force as long as the premiums are paid on
time. With guaranteed term insurance, the insurance company
cannot terminate the policy during the term.
Insurability (Guaranteed Issue) Arrangement,
usually provided by rider, whereby additional insurance
may be purchased at various times without evidence of insurability.
Clause A clause in a policy providing that
a policy has been in effect for a given length of time (two
or three years), the insurer shall not be able to contest
the statements contained in the application. In life policies,
if an insured lied as to the condition of his health at
the time the policy was taken out, that lie could not be
used to contest payment under the policy if death occurred
after the time limit stated in the incontestable clause.
Force Insurance on which the premiums are
being paid or have been fully paid.
All conditions pertaining to individuals that affect their
health, susceptibility to injury and life expectancy; an
individual's risks profile.
Interest Requirement of insurance contracts
that the applicant upon the death of another must sustain
loss and it must be sufficient to warrant compensation.
A formal social device for reducing risk by transferring
the risks of several individual entities to an insurer.
The insurer agrees, for a consideration, to pay for the
loss in the amount specified in the contract.
Policy The printed form, which serves as
the contract between an insurer and an insured.
The party who is being insured. In life insurance, it is
the person because of his or her death the insurance company
would pay out a death benefit to a designated beneficiary.
Party that provides insurance coverage, typically through
a contract of insurance.
Beneficiary A beneficiary that cannot be
changed without that beneficiary's consent.
Term Insurance Term life insurance in which
the death benefit increases periodically over the policy's
term. Usually purchased as a cost of living rider to a whole
Termination of a policy upon the policy owner's failure
to pay the premium within the grace period.
Term Insurance Term coverage on which the
face value and premiums remain unchanged from the date the
policy comes into force to the date the policy expires.
Expectancy The average number of years remaining
for a person of a given age to live as shown on the mortality
or annuity table used as a reference.
Insurance An agreement that guarantees the
payment of a stated amount of monetary benefits upon the
death of the insured.
Pay Policy A type of whole life insurance
designed to let the policyholder pay higher premiums over
a specific period such as 10 or 20 years and then not pay
any premiums for the rest of his or her life.
A document completed by a physician or another approved
examiner and submitted to an insurer to supply medical evidence
of insurability (or lack of insurability) or in relation
to a claim.
Expenses Reasonable charges for medical,
surgical, x-ray, dental, ambulance, hospital, professional
nursing, prosthetic devices, and funeral expenses. (The
insurance company defines what is reasonable.)
Act of making, issuing, circulating or causing to be issued
or circulated an estimate, an illustration, a circular or
a statement of any kind that does not represent the correct
policy terms, dividends or share of surplus or the name
or title for any policy or class of policies that does not
in fact reflect its true nature.
Premium Policy (See Graded Premium Policy)
Charge The charge for the element of pure
insurance protection in a life insurance policy.
Cost The first factor considered in life
insurance premium rates. Insurers have an idea of the probability
that any person will die at any particular age; this is
the information shown on a mortality table.
Rate The number of deaths in a group of
people, usually expressed as deaths per thousand.
Table A table showing the incidence of death
at specified ages. Non- medical Insurance A contract of
life insurance underwritten on the basis of an insured's
statement of his health with no medical examination required.
Hazard A condition in an occupation that
increases the peril of accident, sickness, or death. It
usually will mean higher premiums.
applicant signing the application, paying the first premium
and, if necessary, submitting to physical examination may
make offer and Acceptance the offer. Policy
issuance, as applied for, constitutes acceptance by the
company. Or the company may make the offer when no premium
payment is submitted with the application. Premium payment
on the offered policy then constitutes acceptance by the
Age The age you were when you bought the
Insured Rider A term rider covering a family
member other than the insured that is attached to the base
policy covering the insured.
All rights, benefits and privileges under life insurance
policies are controlled by their owners. Policy owners may
or may not be the insured. Ownership may be assigned or
transferred by written request of current owner.
(Paramedical) Examination The medical examination
of an applicant for Life Insurance.
(Paramedical) A physician, nurse, or para-med
appointed by the medical director of a life insurance company
to examine applicants. Permanent
Life Insurance A term loosely applied to
life insurance policy forms other than Group and Term, usually
Cash Value Life Insurance, such as Whole Life Insurance.
The printed document issued to the policyholder by the company
stating the terms of the insurance contract.
Holder The person who owns a life insurance
policy. This is usually the insured person, but it may also
be a relative of the insured, a partnership or a corporation.
Risk A risk whose physical condition, occupation,
mode of living and other characteristics indicate a prospect
for longevity superior to that of the average longevity
of unimpaired lives of the same age.
The periodic payment required to keep an insurance policy
Flexibility The policyholder's right to
vary the amount of premium paid each month towards a universal
Beneficiary In life insurance, the beneficiary
designated by the insured as the first to receive policy
Policy The insurance policy that pays first
when you have a loss that's covered by more than one policy.
Costs The legal fees and other costs incurred
in the probate process, which is the legal processing of
your will. Assets that you leave to other people through
your will cannot be distributed until the will is probated.
Statements contained in an insurance policy, which explain
the benefits, conditions and other features of the insurance
Coverage's issued at a higher rate than standard because
of some health condition, or impairment of the insured.
Option An option in a renewable term life
policy under which the policy owner is guaranteed, at the
end of the term, to be able to renew his or her coverage
without evidence of insurability, at a premium rate specified
in the policy.
Putting a lapsed policy back in force by producing satisfactory
evidence of insurability and paying any past-due premiums
Term/Annual Renewable Term Term insurance
that may be renewed for another term without evidence of
insurability. Level term usually turns into renewable term
with increasing premiums after the level premium period.
A new policy written to take the place of one currently
Statements made by applicants on their applications for
insurance that they represent as being substantially true
to the best of their knowledge and belief but that are not
warranted as exact in every detail.
Beneficiary The beneficiary in a life insurance
policy in which the owner reserves the right to revoke or
change the beneficiary. Most policies are written with a
An attachment to a policy that modifies its conditions by
expanding or restricting benefits or excluding certain conditions
The chance of injury, damage, or loss.
Selection The method a home office underwriter
uses to choose applicants that the insurance company will
accept. The underwriter must determine whether risks are
standard, substandard or preferred and set the premium rates
Beneficiary An alternate beneficiary designated
to receive payment, usually in the event the original beneficiary
predeceases the insured.
Premium Policy A whole life policy for people
who want to buy a policy for a one-time lump sum, and then
be covered for the rest of their lives without paying any
Risk Person who, according to a company's
underwriting standards, is entitled to insurance protection
without extra rating or special restrictions.
Risk Person who is considered an under-average
or impaired insurance risk because of physical condition,
family or personal history of disease, occupation, residence
in unhealthy climate or dangerous habits.
Insurance Protection during limited number
of years; expiring without value if the insured survives
the stated period, which may be one or more years but usually
is five to twenty years, because such periods usually cover
the needs for temporary protection.
Period for which the policy runs. In life insurance, this
is to the end of the term period for term insurance.
Beneficiary In life insurance, a beneficiary designated
as third in line to receive the proceeds or benefits if
the primary and secondary beneficiaries do not survive the
Owner A policy owner who is not the prospective
insured. The policy owner and the insured may be, and often
are the same person. If for example, you apply for and are
issued an insurance policy on your life, then you are both
the policy owner and the insured and may be known as the
policy owner-insured. If, however, your mother applies for
and is issued a policy on your life, then she is the policy
owner and you are the insured.
Company receiving premiums and accepting responsibility
for fulfilling the policy contract. Also, a company employee
who decides whether the company should assume a particular
risk; or the agent who sells the policy.
Risk A person who is not acceptable for
insurance due to excessive risk.
Life An interest-sensitive life insurance
policy that builds cash values. The premium payer has control
over how the policy is structured. He has the flexibility
to eliminate the premiums (essentially pay up the policy
and pay no more premiums) or have the premiums continue
for life. It is a matter of juggling three variables: the
assumed interest rate, the cash value and the premium payment
plan. The policy is interest-sensitive, and if interest
rates change from the assumed interest, it will affect the
other two variables. In the past, many Universal Life Policies
were structured assuming a higher interest rate then was
actually received; therefore, most of them have under performed.
If you have a Universal Life Policy, you should have it
evaluated to see if it needs to have the premiums adjusted
to get it back on track. A fourth variable that has not
been a factor but could be in the future, and the owner
should be aware of, is the Mortality variable. Universal
Life policies are usually structured assuming current mortality
rates. The insurance companies reserve the right to change
Life: Life insurance under which the benefits
relate to the value of assets behind the contract at the
time the benefit is paid. The assets fluctuate according
to the investment experience of funds managed by the life
insurance company. Premium payments may be fixed as to timing
and amount (scheduled premium variable life) or subject
to change by the policyholder (flexible premium variable
of Premium Rider or provision included in
most life insurance policies exempting the insured from
paying premiums after he or she has been disabled for a
specified period of time, usually six months.
Life Insurance Life insurance that is kept
in force for a person's whole life as long as the scheduled
premiums are maintained. All Whole Life policies build up
cash values. Most Whole Life policies are guaranteed as
long as the scheduled premiums are maintained. The variable
in a Whole life Policy is the dividend, which could vary
depending on how well the insurance is doing. If the company
is doing well and the policies are not experiencing a higher
mortality than projected, premiums are paid back to the
policyholder in the form of dividends. Policyholders can
use the cash from dividends in many ways. The three main
uses are: it can be used to lower or vanish premiums, it
can be used to purchase more insurance or it can be used
to pay for term insurance.
Renewable Term (YRT) (See Annually Renewable