Life insurance Terms:
1.Application for Insurance
This is the form you use to apply for life insurance. It asks for
information about you and your medical history, and may include a medical
examination form to take to your physician.
The person or persons listed on a life insurance policy to whom the
policy is payable upon the death of the insured.
Also referred to as Surrender Value, this is the amount that is
available for loans or withdrawal on a universal life insurance, whole
life insurance or survivorship life insurance policy. Using the cash value
of a life insurance policy may reduce the amount that is available upon
the death of the insured.
Contestability Clause: This is the clause in a life insurance policy which
explains the conditions in which the insurance company may be able to
cancel the policy. In most states, the company only has two years after
the life insurance policy is issued to contest the policy.
5.Convertible Term Insurance:
Convertible Term Insurance: A specific type of term life insurance policy
that can be changed to a whole life policy at the discretion of the
The amount stated in the policy that is payable upon the death of
the insured. This does not include any additional amounts payable under
special provisions such as accidental death benefits, or through the
application of policy dividends.
The amount of time after a premium payment is due in which the
policyholder can still make the payment without a lapse of the policy –
usually 30 days. If a payment is not made within the grace period the
policy may be canceled by the insurance company.
A term used to describe whether or not an individual is eligible for
life insurance. Insurability can be affected by age, health conditions and
9.Insured or Insured Life:
The person upon whose life the insurance policy is issued.
10.Key Person Life Insurance:
If there is a person in a business whose death would cause the business
to suffer financially, this type of policy helps alleviate the financial
loss to the company which could result from the death of that person.
11.Level Premium Life Insurance:
This is a type of life insurance policy in which the premium is
fixed and does not change from year to year.
This is the number of years a person is expected to live.
A contract between the policy owner and the life insurance company
guaranteeing a set payment to a beneficiary upon the death of the insured
14.Mutual Life Insurance Company:
Mutual Life Insurance Company: This is a type of life insurance company
that is owned by the policyholders. Policyholders can receive dividends
from the company which can lower their premiums or add value to their
The owner of a life insurance policy is the person, company or
trust that purchases the policy.
This is a life insurance policy that remains effective without the
need for additional premium payments.
This term refers to a life insurance policy that is eligible to receive
dividend payments from the insurance company.
18.Permanent Life Insurance:
A type of life insurance which does not have a set term or expiration.
This type of life insurance policy builds cash value over time, and
includes universal life and whole life policies.
A loan that an individual can take against the cash value of a life
This is the person, partnership pr corporation that purchased the life
Payment made to the insurance company to purchase a life insurance
policy and keep it in force. Premiums can usually be paid annually or
monthly. Many insurance companies offer a discount to individuals who pay
their premiums annually.
22.Renewable Term Life Insurance:
This is a type of term life insurance which can be renewed for a limited
number of terms at the discretion of the policyholder. Premiums on this
type of policy typically increase as the age of the insured increases.
23.Return of Premium Life Insurance:
This is a type of term life insurance in which the policyholder can
receive a return of the premiums paid if the insurance policy is kept in
force for the duration of the term.
24.Second to Die Life Insurance:
This term refers to life insurance that is paid out after the death of two
insured individuals. See: Survivorship Life Insurance.
25.Stock Life Insurance Company:
A life insurance company that is owned by individual stockholders.
26.Survivorship Life Insurance:
This is a type of life insurance policy that covers two insureds and is
payable upon the death of both individuals. This type of life insurance is
used most often by married couples as a way to pay estate taxes. The
premiums on this type of policy are usually less than the premiums paid
for insuring only one person.
27.Term Life Insurance:
This is a type of insurance policy that is only in effect for a specified
period of time – typically between 1 and 30 years. After the end of the
term, the policy can renew at a higher premium rate or it could be
28.Universal Life Insurance:
This is a type of permanent life insurance for which the premiums are not
guaranteed. This type of policy has premiums that are based on the
insurance company's expenses, the cost of the insurance (mortality cost),
and the projected interest rates. Universal life policies can usually be
set up with a lower initial premium than whole life insurance policies.
29.Waiver of Premium:
Also called a rider, this is optional coverage that can be added to a life
insurance policy and waives the payment of premiums if the insured person
is disabled. The terms and conditions regarding the length of tine a
person must be disabled for this waiver takes effect can vary, but is
usually around six months.
30.Whole Life Insurance:
This is a type of life insurance policy that has set premiums for the life
of the insured and also has a guaranteed cash value.