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.
