| Life
Insurance Definitions |
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Beneficiary |
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The person(s)
named in the policy to receive the life insurance proceeds upon
the death of the insured. |
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Cash
(Surrender) Value |
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The amount
that is available in cash for loans and that may be available
for withdrawals. Accessing Cash Surrender Value may reduce the
death benefit and may increase the risk of lapse. |
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Convertible
Term Insurance |
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Term insurance
which can be exchanged (converted), at the option of the policyowner
and without evidence of insurability, for a permanent insurance
policy. |
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Face
Amount |
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The amount
stated on the face of the policy that will be paid in case of
death. It does not include additional amounts payable under
accidental death or other special provisions, or acquired through
the application of policy dividends. |
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Insurability |
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Acceptability
to the company of an applicant for insurance. |
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Insured
or Insured Life |
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The person
on whose life the policy is issued. |
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Level
Premium (Life Insurance) |
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Life insurance
for which the premium remains the same from year to year. The
premium is normally more than the actual cost of protection
during the earlier years of the policy and less than the actual
cost in the later years. The building of a reserve is a natural
result of level premiums. The payments in the early years, together
with the interest that is to be earned, serves to balance out
the underpayment of the later years. |
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Loan
(Policy Loan) |
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A loan
made by a life insurance company from its general funds to a
policyowner on the security of the cash value of a policy. |
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Paid-up
Insurance |
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Insurance
that will remain in force with no need to pay additional premiums.
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Participating
Policy |
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A life
insurance policy that is eligible for the payment of dividends
by the insurer (see also Dividend.) |
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Permanent
(Life Insurance) |
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Any form
of life insurance except term; generally insurance that builds
up a cash value, such as whole life. |
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Policy
Owner |
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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. |
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Premiums |
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Payments
to the insurance company to buy a policy and to keep it in force.
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Renewable
Term Insurance |
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Term insurance
which can be renewed at the end of the term, at the option of
the policyowner and without evidence of insurability, for a
limited number of successive terms. The rates generally increase
at each renewal as the age of the insured increases. |
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Term
Insurance |
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Term life
insurance is life insurance coverage at a guaranteed rate for
a specified period of time. (Example: 30 year level term would
guarantee a level premium for 30 years based on a specified
death benefit). Term life insurance is usually the least expensive
form of life coverage. |
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