Beneficiary
The person(s) named by the owner of the policy
to receive the life insurance proceeds upon the death of the
insured.
Cash Value/Cash Surrender Value
The amount that is available in cash for loans
and/or withdrawals. Accessing cash surrender value may reduce
the death benefit and may increase the risk of lapse.
Withdrawals may be subject to surrender charges and could have a
permanent effect on the cash value. Loans reduce the cash value
and death benefit by the amount of the loan outstanding plus
interest. If the policy is surrendered, the cash surrender value
is paid to the policy owner.
Convertible Term Insurance
Term insurance that can be exchanged
(converted), at the option of the policy owner and without
evidence of insurability, for a permanent insurance policy.
Dividend
A return of part of the premium on participating
insurance that is based on the insurer's investment, mortality
and expense experience. Dividends are not guaranteed.
Face Amount
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.
Insurability
Acceptability to the company of an applicant for
insurance.
Insured or Insured Life
The person on whose life the policy is issued.
Level Premium Life Insurance
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 cash value is a natural result of level premiums over a
long period. Term policies generally have level premiums for the
initial term, though they generally have no cash value. 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.
Loan (Policy Loan)
A loan made by a life insurance company from its
general funds to a policy owner on the security of the cash
value of a policy. Generally, loans reduce the policy's death
benefit and cash value by the amount of the outstanding loan
plus interest.
Paid-up Insurance
Insurance that will remain in force with no need
to pay additional premiums.
Participating Policy
A life insurance policy that is eligible for the
payment of dividends by the insurer (see also Dividend).
Permanent Life Insurance
Any form of life insurance except term;
generally insurance that builds up a cash value, such as whole
life. Coverage can last a lifetime.
Policy owner
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 trust, partnership or a corporation.
Premiums
Payments to the insurance company to buy a
policy and to keep it in force.
Renewable Term Insurance
Term insurance that can be renewed at the end of
the term, at the option of the policy owner 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.
Term Life Insurance
Life insurance that does not build up cash value
and where the premium normally increases as the insured gets
older.
Universal Life Insurance
A flexible premium life insurance policy under
which the policy owner may change the death benefit from time to
time (with satisfactory evidence of insurability for increases)
and vary the amount or timing of premium payments. Premiums
(less expense charges) are credited to a policy account from
which mortality charges are deducted and to which interest is
credited at rates, which may change from time to time.
Whole Life Insurance
A basic type of permanent life insurance which
can provide lifetime protection at a level premium. Premiums
must generally be paid for as long as the policy is in force.
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